13/05/2026
It's official. π’ The Australian Government ποΈ has essentially removed the 50% CGT discount and negative gearing for residential property in Australia going forward from the Federal Budget handed down at 7:30PM, Tuesday 13 May 2026. π
While you will have heard the details by now, the potential for these changes to impact the country-wide property market is likely being understated by Government forecasts. π
We certainly are not here to discuss the "right or wrong" aspect of the changes that have been made; βοΈ this is a complex issue and time will tell if the objectives are met and how consequences play out. β³
However there are several considerations we are thinking about in discussions with clients: π‘
1, Demand for property from investors will drop; π by how much is the big question. Investors currently account for 40% of purchases i.e. 2 out of every 5 buyers by some measures, and so even if only a say a 20% of investors change or delay plans, that translates to 8% fewer buyers active in the overall market. β
2, On a fundamental discount cash-flow valuation basis, properties are worth less today to a investor purchaser than they were before 7:30PM on 13 May. π While this may seem obvious given the valuable incentives have been removed, this will certainly create a downward force on prices, given the recent strength of investors in the market. πΈ
3, π Of course, this is the Government's intended outcome; moving property ownership from investors to principle place of residence homeowners. And while demand from investors may decrease, owner occupiers should step in to fill the void, and the first home owner 5% deposit scheme is now seen to have been a primer for this. The way this balances out is the key to the way property prices respond over the medium to long term to the changed landscape. π―
π£ For property sellers, it will be as important as ever to be clear on who you are marketing your property to and to resonate strongly with that group, as the key players in the buyer pool may have shifted significantly overnight. π