The 2026–27 Federal Budget has delivered the most consequential shift to Australian property tax policy in a generation, and its effects on investor demand will be felt for years to come.
From 1 July 2027, negative gearing will be abolished for established residential properties acquired after 7:30pm on 12 May 2026, meaning affected investors can no longer offset rental losses against salary or other personal income. Properties already held at the time of announcement are grandfathered and remain unaffected until sale.
The impact on existing property demand
For new investors entering the market from budget night onward, the economics of buying an existing home have fundamentally changed. CBA expects the changes to weigh on house price growth, with established dwelling values coming in lower than they otherwise would have been. Without the ability to offset losses against wage income, established dwellings become a far less attractive proposition for investors chasing near-term tax relief. Expect a meaningful cooling in investor competition for existing stock, particularly in the lower-to-mid price bands that traditionally attracted leveraged investors.
Where investor demand will redirect
Crucially, the policy isn’t a blanket withdrawal of support for property investment. Negative gearing remains fully available for new builds that add to housing supply, along with build-to-rent developments and investments supporting government housing programs. Widely held trusts and superannuation funds are also excluded from the changes altogether. This creates a clear incentive structure: capital that once flowed into established homes is now being steered toward new construction. The design intent is explicit, reduce investor demand for existing housing stock while preserving tax support for new supply.
For residential property investors, the message is clear, established property will see softer investor demand, while off-the-plan and new-build segments are positioned to benefit from redirected capital. Investors need to review their longer-term strategy and consider changes to their property portfolio in line with the changing market dynamics.
