I have been writing about budgets for 12 years and for almost all that time the government has been claiming that it wants to do something about housing affordability.

But every policy successive governments have put up has been rubbish.

The best you can say is that some of them would have no effect on housing affordability. These are the best because many of them would actually make housing affordability worse.

The evidence shows this. In the past 25 years, house prices have boomed. Young people have watched as prices have run ahead of them, putting home ownership further and further out of reach.

But for the first time there is a policy on housing affordability that isn’t crap. An actual policy that will make a real positive difference.

What is that policy? Changes to the capital gains tax discount and negative gearing.

Negative gearing is to be scrapped for everyone who isn’t buying a new house. The 50 per cent capital gains tax discount will revert to the previous system where it is linked to the inflation rate.

Together these changes will reduce the enormous tax concessions that are encouraging people to speculate on the property market – pushing up house prices and turning the housing market into a casino.

Scrapping these two tax loopholes will tilt the field in favour of first home buyers and owner-occupiers, and away from investors.

This will mean more of the properties that come up for sale will be sold to owner-occupiers and first-home buyers, meaning more people will be able to live in a home of their own.

The Australia Institute has been pushing for changes since the capital gains tax discount was introduced in 1999. We have been calling the discount a distortion of the tax system that is locking people out of housing and saddling those that do get in with huge mortgages.

We and others have pointed out that house prices took off after the discount was introduced rising twice as fast as incomes.

The government has listened.

It haseven been out selling these changes using our evidence. It is saying the discount is a distortion that has pushed house prices to grow much faster than incomes.

Sound familiar?

The government is clearly concerned about the argument that the discount and negative gearing are helping increase housing supply.

It has kept the discount and negative gearing for people who purchase new houses. Those wanting to take advantage of these tax concessions can still do so if they add to housing supply.

There will be grandfather arrangements. This is where people who have previously bought investment properties will be shielded from some of the changes.

If you bought an investment property before Tuesday night, then you will continue to be able to take advantage of negative gearing.

The changes to the discount will not start until next year, but all capital gains after July 2027 will be treated under the new system, while all capital gains before that will still get the 50 per cent discount.

Housing affordability is the biggest issue facing Australians. It has distorted so many aspects of our lives. Housing affordability is only one of them, admittedly by far the largest one.

It has also meant the people spend much longer, using much more of their incomes, paying off huge mortgages.

It has also seen more money flow into existing housing, leaving less money for other things like business investment.

For the first time in a long time there is light at the end of the tunnel for those losing hope that they will every be able to afford to live in a home of their own.

Matt Grudnoff is senior economist at the Australia Institute