A leading tax expert warns that exploding property values are creating a neo-feudal society where inherited wealth dictates prosperity, offering a stark cautionary tale for Kenya's booming housing market.

The global housing crisis has reached a terrifying new milestone in Australia, prompting dire warnings of a regression to deeply entrenched, generational class divides.

Bob Breunig, the esteemed director of the Australian National University’s Tax and Transfer Policy Institute, has issued a chilling diagnosis of the modern economy: we are hurtling towards a neo-feudal society. Speaking before a parliamentary committee on capital gains tax, Breunig shattered the common misconception that economic inequality is a battle between the young and the old. Instead, he argued, the true dividing line is drawn by property ownership within the exact same generation. Your future prosperity is now overwhelmingly determined not by your education or work ethic, but by whether your parents own land. This structural inequality is a profound warning for rapidly developing economies like Kenya, where the skyrocketing real estate markets in Nairobi and its environs threaten to lock out an entire generation of young professionals from ever achieving the dream of homeownership.

The Myth of the Generational Divide

For years, the political narrative has comfortably framed the housing crisis as greedy "boomers" hoarding wealth at the expense of struggling millennials. Breunig categorically rejects this simplistic view. "If you are young and your parents have a lot of assets, those assets will eventually come to you," he explained. Therefore, the genuine disparity exists entirely within the younger generation—between the "haves," who stand to inherit millions in untaxed property wealth, and the "have-nots," who are condemned to a lifetime of exorbitant rent. This dynamic creates a modern aristocracy, where wealth is passively inherited rather than actively earned. In Nairobi, where prime real estate in areas like Kilimani and Kileleshwa trades for hundreds of millions of shillings, a similar inherited class system is rapidly taking root, quietly destroying the concept of social mobility.

• Exploding property values are the primary driver of modern economic inequality globally.
• The crisis is fundamentally an intra-generational issue based on inheritance, not merely an age divide.
• Current tax systems disproportionately reward passive asset holding over active labor and productivity.
• The trajectory mirrors a return to feudal land-ownership structures, stifling genuine social mobility.

The Tax and Transfer Imbalance

The root cause of this neo-feudal drift lies heavily in outdated and heavily skewed tax legislation. Breunig's influential 2025 report demonstrated meticulously how the tax and transfer system has become dangerously generous to older, asset-rich citizens. Concessions on capital gains and negative gearing have effectively weaponized real estate, turning homes from essential shelter into hyper-lucrative, tax-shielded investment vehicles. The system fundamentally punishes labor while excessively rewarding land banking. The goal of reform, experts argue, is not to maliciously punish the elderly, but to level the playing field. "We should incentivise people to work hard and save," Breunig noted, implying that the current setup actively discourages productive economic contribution in favor of property speculation.

Lessons for the Kenyan Real Estate Boom

Australia's crisis should send alarm bells ringing through the corridors of Kenya's Ministry of Housing and Urban Development. Nairobi is currently experiencing an unprecedented construction boom, yet the vast majority of these high-rise developments remain entirely unaffordable for the average Kenyan worker. If Kenya fails to implement robust property taxation, effective capital gains measures, and aggressive affordable housing programs, it risks replicating the Australian disaster. The Kenyan government’s Affordable Housing Programme is a step in the right direction, but without addressing the speculative nature of land buying that drives up costs, the effort is akin to treating a symptom while ignoring the disease. The specter of millions of Kenyans forever locked into tenancy, paying off the mortgages of a wealthy elite, is a recipe for severe social instability.

The Urgent Need for Radical Reform

Reversing the slide into neo-feudalism requires immense political courage. It demands taking on deeply entrenched lobby groups and restructuring the very foundations of how wealth is taxed. Governments must shift the tax burden away from income and heavily onto passive property accumulation. Furthermore, significant investments in high-density, high-quality public housing are essential to break the private market's monopoly on shelter. As Breunig grimly noted, while we may not be back to pre-French Revolution extremes just yet, the trajectory is undeniably clear. "A society that rewards the accident of birth over the dignity of labor is a society destined for failure," the warning stands, challenging policymakers worldwide to defuse this ticking economic time bomb.