03/09/2026
The removal of Negative Gearing on existing dwellings has put renewed focus on yields.
Prior to Negative Gearing being scrapped, investors were willing to accept a lower return, knowing the Capital Gain would ultimately justify the overall investment play.
In the interim, the investor was content with a tax break that made it easier to carry a low yielding investment.
The benefit to the Government of the day in providing tax relief to investors, was investors were inadvertently subsidising the rental market, in part taking pressure off Government for social housing.
Investors also paid CGT on profits and drove confidence amongst developers to continue providing housing supply.
With falling property prices, rising rents and the economic outlook foggy, the Net Yield is now paramount for investors, which is why so many are staying on the sidelines.
Developers have also gone to the sidelines, shelving new projects and watching to see how this new taxation regime plays out in the next couple of years.
Why and how the Albanese Government thought they could drive property prices down and inspire property developers to build much needed housing stock at the same time, is one of many significant misjudgements of the Federal Budget.
Investors will return at some stage, possibly sooner than anticipated in some markets.
Realistically, to have yields on residential property improve sufficiently to attract investors, 1) prices need to fall dramatically, 2) rents need to rise dramatically or 3) both these shifts need to occur at the same time, albeit in a more modest fashion.
There have been forecasts that rents will rise up to 30% over the next few years, which people on both sides of the debate emphatically accept or reject.
Read more via https://bit.ly/RERSeptemberIssue224
