Wednesday, 13th March 2026.
The 2026-27 Federal Budget was handed down on Tuesday, 12th May 2026. Housing affordability and supply was a central theme, with defining shifts announced to negative gearing and capital gains tax (CGT) for property investors, alongside a record $47 billion government investment in housing.
From 1 July 2027, negative gearing will be limited to new builds. Existing arrangements remain unchanged for all properties held prior to budget night. Investors who purchase established housing after that point will still be able to deduct losses against residential property income, and carry unused losses forward to future years, but will no longer be able to deduct them against other income such as wages.
Meanwhile, the current 50% CGT discount will be replaced with an inflation-adjusted model, with a minimum 30% tax on capital gains, also effective from 1 July 2027. However, the changes only apply to gains arising thereafter. Assets sold before that date, and gains accrued before it, retain the existing 50% discount.
Investors in new builds will retain the option to choose between the 50% discount or the new arrangements.
BresicWhitney Chief Executive Officer Will Gosse described the reforms as “the most significant shifts in property investment policy in a generation.” For those looking to enter the market or continue building portfolios as wealth-generating strategies, the value proposition of property has fundamentally shifted. “Established property as an investment asset has become less attractive, and new supply has become more valuable. That’s the point,” he said.
What moves first, Mr. Gosse said, is sentiment. “Consumer confidence will have already shifted. Investors who have been weighing divestment against increased holding costs are now more likely to feel the market has moved against them, much as some younger Australians may have felt for some time now about the broader housing landscape.”
The full impacts on the market will take time to emerge. In the near term, Mr. Gosse said the shifts would support continued opportunities for first home buyers and owner-occupiers. “That’s important. It will support the continued resilience of this segment and help underpin demand for properties up to approximately $2 million in the months to come.” BresicWhitney expects a potential concentration of investor-related sales activity to occur within the window before 1 July 2027. More broadly, property that appeals to owner-occupiers across the lifestyle locations, including freestanding homes, terraces, and A-grade apartments, are likely to remain resilient through that period and may outperform over time.
Those decisions, when they come, will be shaped by the layered thinking that defines how Australians relate to property more broadly. "Policy is abstract until it isn't," Mr. Gosse said. "For many Australians, these changes will be deeply personal and wide-reaching.”
The downstream effects on the rental market are more complex still. "The risk is that the established rental pool shrinks faster than new supply can replace it. Sydney's vacancy rate is already at 0.8%, and it remains unclear how the construction sector will respond to the pace at which new supply is required." While the exemptions for new builds will play a critical role in the future pipeline of rental stock, there is little give in Sydney's existing market and available land is significantly constrained. Rents are likely to keep rising in the short term, with reduced investor participation, even at the margin, adding pressure.
The bigger question is whether these shifts reshape the geographical weighting of owner-occupied, investment, and rental properties over time. "It will take months, possibly years, to answer," said Mr. Gosse. "No single policy reshapes a market of this depth and diversity alone. But it's a reminder of the throughline that housing has in the economy, in society, in culture, and in each of our lives."
