You’ve all seen the 2026 Federal Budget tax changes, but in short:
Negative Gearing • grandfathered on existing investments • disallowed on established dwellings going forward • permitted on new dwellings only
Capital Gains Tax • immediate removal of 50% discount on asset sales • return of old indexation method • 50% discount remains (optional) when selling a new dwelling
Restricting negative gearing and CGT discounts to new property is being sold as a supply‐side fix. The idea: push investment into new homes, not existing ones.
My view: this will further derail the #housingsupply the Government claims to support, pushing us further from #housingtargets.
Treasury has underestimated the friction these changes create. New housing doesn’t exist in a vacuum; it depends on the established market for valuation benchmarks and liquidity.
These changes will stall the established market at the exact moment #feasibility requires prices to rise to keep pace with #inflation. Without a healthy established market, making new projects stack up becomes harder, and more developments will be shelved.
Short–term gain for long–term pain
It may look clever to limit tax benefits to new property. But by de‐incentivising the next buyer, the government shrinks the pool of capital available to the first buyer.
If an investor knows their asset will be harder to sell because tax benefits don’t transfer, future gains fall and investment appetite drops.
Grandfathering negative gearing (which is sensible) also means current owners will hold longer, reducing turnover and tightening supply.
Investors will try to recover lost tax efficiency through higher rents. Fewer new starts widen the #feasibility gap, pushing vacancy rates lower and rents higher.
Expensive studios in #btr projects won’t fix that.
🤔You don’t solve a supply crisis by attacking the secondary market. A tax environment that punishes liquidity trades a PR “quick fix” for long‐term structural damage.
What we needed was a stable, liquid environment where the path from feasibility to moving‐in isn’t blocked by political short‐termism. Certainly not something you do when we are still playing catch-up on costs.
An extra $2b for enabling infrastructure won’t offset the broader damage to new housing supply – or the housing industry.
📉My prediction: the drop in future supply is far greater than the 35,000 over a decade Commonwealth Treasury have modelled. And rents up, fast.
Whose math do you trust more?
Sorry Gen Z, this makes it all worse.