Negative gearing changes today: investors rethink property plans

The federal government’s proposed changes to negative gearing and capital gains tax are reshaping investor behaviour across Australia in June 2026, with lenders, builders and property owners already reacting before the rules are finalised. Westpac has recorded a 20 per cent fall in housing investor loan applications over three weeks, while building groups are pushing for the Senate to broaden how the policy treats new homes.

The immediate impact is being felt in two places at once: established-property investors are reassessing purchases and sales, and builders are trying to steer attention towards duplexes, dual occupancies and other new supply. For households watching prices and rents, the key question is whether the policy shifts money away from existing homes without choking off the new builds Australia badly needs.

The Full Story

The budget proposal centres on reforms to negative gearing and capital gains tax. According to the AFR, the government expects the changes to help an additional 75,000 Australians buy their own home over the next decade, while reducing investor demand and creating a modest, temporary slowing in housing price growth.

The clearest early market signal has come from Westpac. The AFR reported that the bank’s housing investor loan applications dropped 20 per cent over three weeks after the budget revealed a minimum 30 per cent tax on capital gains from July 2027 and the abolition of negative gearing for existing properties. The same report said the changes had rattled investors and contributed to weaker auction clearance rates and house prices in Melbourne and Sydney.

For property owners deciding whether to sell, the timing matters. A money column published by SMH and Brisbane Times explained that a contract signed before June 30, 2027 would be assessed under current rules, including the full 50 per cent CGT discount. A contract signed after that date would split the gain between the period before July 1, 2027 and the period after it.

That means long-held properties may not be hit as heavily as some owners fear. In one example, a property bought in 1997 and sold in 2029 would have 30 of 32 years assessed under current rules, with only the final two years affected by the new system. The article also said owners keeping property beyond June 30, 2027 should consider obtaining a professional valuation as at that date.

Who's Involved

The federal government is driving the policy change, with the aim of improving affordability by reducing investor demand for established homes and encouraging investment in new supply. The treasurer has said the post-July 2027 capital gains approach will be based on pre-1999 rules, including indexation linked to the Consumer Price Index.

Westpac is one of the first major lenders to show a measurable response in investor behaviour. Carolyn McCann, Westpac’s head of consumer banking, warned of widespread community concern about the changes, according to the AFR.

The Housing Industry Association is pushing back on the draft legislation. Its managing director, Jocelyn Martin, wants the Senate to expand the definition of new housing so it covers more types of real-world supply, including knock-down rebuilds, dual key and multi-generational homes, secondary dwellings, granny flats and major renovations.

Treasury’s own modelling shows these changes could reduce housing supply by around 35,000 homes over the next decade

Negative gearing

A property tax setting where investment losses can be used to reduce taxable income.

Capital gains tax discount

A tax discount applied to eligible gains when an asset such as property is sold.

New housing

The category at the centre of the policy debate, because exemptions and incentives depend on how the legislation defines it.

By the Numbers

75,000 is the number of additional Australians the government expects could buy their own home over the next decade under the reforms, according to the AFR. That figure frames the policy as an affordability measure, not just a tax change.

20 per cent is the fall Westpac recorded in housing investor loan applications over three weeks. That is an early sign that investors are not waiting for July 2027 to change their behaviour.

55,000 to 80,000 homes is the annual housing construction shortfall cited by The Canberra Times, while Australia’s population has passed 28 million. The gap matters because any policy that reduces investor appetite for new construction could make the supply problem harder to fix.

35,000 homes is the reduction in supply over a decade that HIA says Treasury modelling points to. HIA argues that this risk makes the definition of new housing central to whether the policy helps or hurts supply.

What This Means

For everyday Australians, the policy is pulling the market in different directions. Buyers locked out of ownership may welcome lower investor demand for established homes, especially in expensive markets. But renters and would-be buyers also need new supply to come through, because a tighter rental market can quickly swallow affordability gains.

That is why builders are focusing on duplexes and dual occupancies. The Canberra Times reported growing interest in homes that can house more than one family on a single block, with GJ Gardner Homes and Metricon pointing to stronger demand for flexible designs.

In many established suburbs, planning rules limit higher-density development. Knock-down rebuilds and secondary dwellings are often the only practical way to increase supply

The tension is straightforward: the government wants less speculative pressure on existing homes, while industry groups want the rules to reward more ways of adding usable dwellings. If the Senate narrows the exemptions too far, builders say some projects that would house more people may not stack up.

What to Expect

The next confirmed marker is June 30, 2027, the date before which property sale contracts can still fall fully under current CGT rules. From July 1, 2027, gains are expected to be apportioned between the old and new systems, though the legislation has not yet been finalised.

The Senate process will be closely watched by investors, builders and property owners. HIA is using the inquiry to argue for amendments to the definition of new housing, while owners considering a sale are being urged in the supplied financial advice columns to seek professional tax advice based on their own circumstances.

People Also Ask

What are the proposed negative gearing tax changes in Australia?

The budget proposal would abolish negative gearing for existing properties while keeping incentives focused on new housing. AFR also reported a minimum 30 per cent tax on capital gains from July 2027.

When would the capital gains tax changes start?

The supplied SMH and Brisbane Times advice says contracts signed before June 30, 2027 would be assessed under current rules. Contracts signed after that date would split the gain between the pre-July 2027 period and the period after it.

Should investment property owners sell before July 2027?

The answer depends on the owner’s purchase date, capital gain and tax position. The supplied advice says long-held properties may see only a relatively small CGT impact after July 2027, but owners should get professional tax advice.

Why is HIA opposing parts of the housing tax changes?

HIA says the draft definition of new housing is too narrow. It wants the Senate to include knock-down rebuilds, granny flats, dual key homes, multi-generational homes and major upgrades that add effective supply.

How have investors reacted so far?

Westpac’s investor loan applications fell 20 per cent over three weeks after the budget announcement, according to AFR. The same report linked the policy shock to weaker investor confidence and softer auction conditions in Melbourne and Sydney.