Markets are still unpacking the 2026 to 2027 federal budget, which was handed down earlier this month.
In the property market, the headline measures were the government’s move to get rid of the blanket capital gains tax (CGT) discount and restrict negative gearing concessions to newly-built homes only. The moves were aimed at boosting housing supply while reshaping investor behaviour.
The reforms arrive at a delicate time for the economy. Persistent inflationary pressures, higher interest rates and ongoing global volatility have already weighed heavily on consumer confidence and borrowing activity, leaving many investors, homeowners and industry participants questioning how the market will adapt in the months ahead.
In a two-part series, Australian Broker asked market participants for their thoughts on what the new legislation could mean for borrowers, brokers and the broader housing market.
Senior economist, director – business and industry at Commonwealth Bank of Australia (CBA)
"Ahead of the budget, corporate pressure was building for policy changes centred around productivity-enhancing tax reform, more aggressive fiscal consolidation and a regulatory environment that better supports innovation. The 2026 to 2027 federal budget is a policy-heavy document, balancing intergenerational inequity, property tax reforms, cost-of-living support, revenue tailwinds and more sustainable disability spending. Over the longer-term, the budget delivers a significant fiscal consolidation and it is unlikely to shift the Reserve Bank of Australia's (RBA) near-term view on interest rates. However, it does little to help in the fight against inflation and upside risks remain to borrowing costs.
As expected, the big policy changes in the budget are to the taxation of housing. Negative gearing and CGT have been sacred cows in Australia. Negative gearing has been scrapped and the CGT discount has been replaced by indexation, with both changes grandfathered. We have revised our home price forecasts lower as a result. We now expect home prices to rise by 3% in 2026, down from 5%. Over time, these changes will help at the margin to bring down investor demand for housing, but won’t fundamentally fix affordability.
There are some good measures in the budget aimed at cutting red tape and lifting productivity. These are welcome, but won’t materially lift the economy’s speed limit or supply-side constraints. The budget does not include any big bang personal or corporate tax reform, instead prioritising long-term budget repair. This creates room for larger tax cuts or reform ahead of the next federal election. In the meantime, there are modest personal and business tax cuts."
Chief executive of mortgages and commercial lending at non-bank lender Pepper Money
"The budget puts housing supply firmly in focus. An additional $2 billion in funding over four years aims to unlock new development and deliver up to 65,000 extra homes. By limiting future negative gearing to new dwellings, policy settings actively steer investor demand toward construction and off-the-plan purchases. For brokers, this is a clear signal to revisit construction finance capability. Clients will increasingly need guidance on building, land-and-build packages and developer-led projects, and confidence that their broker understands the lending nuances involved.
Key takeaways for brokers: act quickly on investor demand. Reach out to investor clients now, explain what's changing and move fast to progress deals with transitional windows. Also, lift capability around ownership structures. Expect more conversations about lending in companies, trusts and super funds. Familiarity with non-personal structures will be a growing differentiator. Use specialist strategies selectively. Options like super fund property lending can make sense for the right clients. But only with proper advice and the right lending partners. Lean into new-build and construction finance. Policy settings are pushing demand toward new housing. Make sure your construction offering and lender panel is up to scratch. And, keep the wider environment in view. Interest rates, funding costs and economic uncertainty still shape borrowing capacity and risk. Loan options need to reflect the full picture, not just tax changes.
As policy settings shift and investing grows more complex, Pepper Money is sharpening its focus with lending solutions that reflect how people invest today. From alternative ownership structures to new-build and construction, Pepper supports borrowers who sit outside traditional lending and helps brokers guide clients through change with confidence."
Economic director at digital comparison platform Compare the Market
"The cost-of-living crisis is not going away for the average Australian household. And I think we’re going to see some tough years ahead. The budget is a little naive in some of its economic forecasts. It says we’re not going to go into an economic recession. Let's keep our fingers crossed that this is correct. [CGT and negative gearing changes mean] the best places for the average Australian to invest are superannuation and their own home. The family home remains capital gains tax free, while the CGT discount is being wound back on other investments, and superannuation continues with its 15% earnings tax and concessional treatment. So, tax-wise, by far, the best places to invest your money are your own home and your super.
We might see less investors in the property market and more property available for first-time homebuyers. But a big casualty of all of this will be renters, because as investors leave the property market there will be less housing available for them to rent, and that is already in crucial short supply. Rising rents are a big inflation generator, and this budget is not going to ease that. There are a lot of Australians who are at a stage of life where rent is their preferred option, and for those renters who are caught there, or haven't got the savings to get a deposit for their own house, or don't have the ability to buy their own property, they're going to be paying a lot higher rent because of the shortage of stock that's going to be available.”
Interim chief executive officer of the Finance Brokers Association of Australia (FBAA)
"Our political leaders have ignored the warnings and broken a solid promise. So they clearly believe they are on the right track and now we must wait and see. While we assume it will pass as is, there is a possibility that [the new legislation] will only pass with some amendments. So there is still an element of the unknown. It is not obvious at this time how a reduced supply of rental properties coupled with increasing demand due to factors including population growth can do anything except drive up rental prices for many who are already struggling.
At the same time, the government seems to think that if more properties are available for purchase, suddenly more first-time homebuyers can afford them. But this ignores the many other factors that lead to housing affordability. It is likely prices on newly-built homes and apartments off the plan will rise as investor demand increases, and this would drag up prices across the entire housing market. If the government is right and the outcome is positive, we all celebrate. But if it’s wrong, how quickly will [the government] react?
Mortgage brokers [should] be proactive by contacting clients and urging them to seek professional taxation advice for their future investment decisions. While brokers can’t provide taxation advice unless professionally qualified to do so, we can initiate conversations and remind clients that once they have an investment strategy based on the new laws. We are there to assist them with the finance options that will help them achieve their goals.”
Managing director at Ray White Group
"This was the most significant shift in property tax policy in 27 years, and it was announced without going to the polls. This is not a niche tax change affecting a small group of investors. It reaches directly into the housing security of nearly a third of Australian households. We were told of a fundamentally different landscape. Any policy that reduces the attractiveness of providing rental housing must be honest about that consequence. We are not confident the rental market is protected. [There will be an] impact on rentvesting, a pathway used by many younger Australians to enter the market by purchasing an investment property in an affordable area while renting where they want to live. Under the new rules, that strategy effectively disappears for established properties. This doesn't just affect investors. It affects labour mobility, it affects how young Australians build wealth, and it affects the 31% of households who rent and have no say in any of this.
It is vital that our members understand the changes and quickly communicate them to our customers. Our role as communicators, competitor creators and asset managers became more important overnight."
Chief economist at Ray White Group
"Affordability pressure does not disappear when you reduce investor incentives; it shifts onto tenants. We have seen this play out before and we would be deeply concerned to see that pattern repeated at a national scale. In many regional markets, there is no active development pipeline. In those communities, a reduction in investor participation in established property means fewer rentals, full stop. That is a real consequence for real people."
