Australia’s property market is set for a major reset following the 2026 Federal Budget, with changes to negative gearing and capital gains tax putting investors firmly in the spotlight.
One of the biggest proposed changes is that negative gearing benefits may be limited for investors buying established homes from July 2027 onwards. Instead, those tax advantages would be largely directed towards new builds, with the aim of pushing more housing supply into the market. At the same time, the long-standing 50% capital gains tax discount would be replaced with a system linked more closely to inflation. Existing property owners would not be affected under proposed grandfathering arrangements.
The government’s argument is that these changes are needed to improve housing affordability and increase construction activity across the country. By shifting investor incentives toward new developments, they hope to ease pressure on housing demand and give first-home buyers a better chance of entering the market.
However, not everyone agrees with the approach. Critics warn that reducing tax benefits for established properties could discourage investors, which may flow through to the rental market. With demand already high in many cities, there are concerns that rental availability could tighten further if fewer investors are active.
In Perth, the effects could be quite noticeable. The local market has been driven by strong population growth, low rental supply and steady price growth, and any change in investor behaviour may add another layer of movement. If more investors turn to new builds, it could support construction activity, but also shift competition away from existing homes.
While the full impact won’t be known for some time, the direction is clear — housing policy is becoming a central focus again, and both buyers and investors will be watching closely as these changes move closer to 2027.
