New research from valuation and advisory firm Herron Todd White has found widespread scepticism among property professionals about the federal government's newly legislated tax reforms, with three-quarters of respondents expecting a significant number of residential investors to sell up or stop investing altogether.
The live poll, conducted on 25 June and involving more than 500 legal, financial, banking, and property professionals, found 78% expect the reforms to push residential property values down, while fewer than one in ten believe the changes will do anything to improve housing supply, news.com.au reported.
Herron Todd White chief executive officer Peter Maloney (pictured) said the results reflect the views of those working closest to property transactions day to day.
"These findings reflect the views of professionals who advise, finance, value, and regulate property transactions every day," Maloney said. "The overwhelming view among respondents is that the tax reforms will reduce investor participation and do nothing to lift housing supply, which remains one of Australia's most pressing economic challenges."
That pullback is already visible in lending policy. CBA, ANZ, NAB, Macquarie, and several other major lenders have tightened how they factor negative gearing into investor serviceability since the budget, with broker modelling suggesting borrowing capacity could fall by as much as 20% in some cases.
Maloney raised a specific concern for brokers to flag with investor clients: rather than driving fresh investment into new housing stock, the reforms could put investors in direct competition with first-home buyers for the same properties.
"There is nothing to suggest that investors will suddenly pile in and take advantage of negatively gearing new dwellings to help fuel supply, and if they did, we now have the perverse equation of first home buyers having to directly compete with investors for new dwellings," he said.
On price expectations, 37.7% of respondents forecast values falling 5% to 10% over the next two years, with a further 12% expecting declines beyond ten per cent, against just 7.4% who anticipate values rising.
The rental market is showing early strain too. National rents had risen 7.8% year-on-year, with vacancy rates still under 2% in every capital. A separate report on the rental market noted it "has already lost tens of thousands of properties in just three months as landlords sell ahead of the changes."
The survey also found little faith that the reforms will ease Australia's housing supply challenge.
"Nearly three in four respondents (74.5%) believed the reforms would either worsen housing supply or have no material beneficial impact," Maloney said, adding that the gap between the policy's stated aims and industry expectations was stark.
"Less than one in ten professionals surveyed believe these reforms will improve housing supply outcomes," he said.
For brokers, the findings suggest investor clients may need support navigating a more cautious lending and valuation environment as sentiment continues to shift.
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