Treasurer Jim Chalmers is still insisting rents will only increase by $2 a week despite a major bank forecasting increases of up to 30 per cent to compensate for landlords no longer being able to negatively gear their properties.

National Australia Bank is forecasting that rents in Sydney and Melbourne could increase by 25 to 30 per cent over two years as a result of Labor’s Budget restricting negative gearing to brand new homes from July next year, if they were exchanged after May 12.

Should that forecast materialise across all capital city markets, the mid-point rent would increase by $239 a week or $12,425 a year.

In Sydney, house rents would climb by $342 a week or $17,782 a year.

An economics professor who wrote a report for a Labor-aligned think tank more than a decade ago, recommending the scrapping of negative gearing for established homes, is predicting rent increases of up to 15 per cent over the next 18 months to two years.

Despite those forecasts, Dr Chalmers is sticking by Treasury’s Budget prediction that rents would only increase by $2 a week for a household paying the median rent.

“Well, we haven’t changed the expectations that we printed in the Budget, and that’s for a very simple reason,” he told Sunrise host Natalie Barr on Tuesday.

Dr Chalmers noted NAB’s forecasts didn’t take into account the grandfathering provisions for landlords, who would be able to continue to negatively gear their investment properties if they owned them before Budget night.

“It doesn’t take into consideration a whole range of factors, whether it’s the grandfathering and the design of our policy, whether it’s developments in the housing market or in the economy more broadly,” he said.

“In fact, the NAB note itself recognises and acknowledges that it doesn’t take a lot of those things into consideration. And so it’s not a forecast for what they expect to see happen with rents. It leaves out a whole range of important considerations.”

University of New South Wales economics professor Richard Holden, the architect of Labor’s plan to scrap negative gearing for existing properties ahead of the 2016 election, said rent increases of up to 15 per cent were likely, as fewer investors either put their money into real estate or raised rents to cover being unable to offset rental losses against taxable income.

“I suspect it will be somewhere in between,” he told The Nightly.

“I wouldn’t be surprised to see a 10 to 15 per cent increase in rents but over something like 18 to 24 months as leases don’t all come up at once.”

Professor Holden wrote a report for the Labor-aligned McKell Institute in 2015 that formed the basis of Labor’s 2016 and 2019 election plans to restrict negative gearing to brand new properties, which the Federal Government adopted in the May Budget despite ruling it out ahead of the 2022 and 2025 elections.

Shadow treasurer Tim Wilson said it appeared Prime Minister Anthony Albanese’s Labor Government was in denial about their own forecasts.

“Now the Albanese government are denying their Budget dream isn’t coming true,” he said.

“The Albanese government was warned their higher taxes would increase rents, and kneecap first home buyers and now it is happening they’re gaslighting Australians because they’ve got their way.”

NAB’s head of Australian economics Gareth Spence on Monday released a note arguing a 3.5 per cent to 4.5 per cent in rental yields in Sydney and Melbourne, to account for Budget tax changes, would imply a 25 to 30 per cent increase in rents if property prices stayed the same or fell.

That’s based on the annual rental income as a proportion of a property’s value.

“In the end, the adjustment towards more attractive gross rental yields will likely require a combination of both higher rents and lower dwelling values,” he said.

Under that scenario, the median capital city rent would increase by $239 a week to $1035 based on SQM Research data.

Sydney’s mid-point house price would increase by $342 to $1483 a week.

Labor’s Budget is also replacing the 50 per cent capital gains tax for property price increases occurring from July 1, 2027.

A system of indexation for inflation will be introduced along with a minimum 30 per cent tax on gains.