With the federal budget introducing significant changes to the property market, particularly negative gearing and capital gains tax reforms, how will buyers and investors fare?
In the aftermath of the 2026 federal budget, the sweeping new policies for the property market have been dissected, including their implications for investors and aspiring home owners alike.
In addition to negative gearing and capital gains tax (CGT), the budget has also been flagged as a catalyst for rising construction costs and extra demand from migration, likely to add pressure to the market.
On Property Buzz, hosts Phil Tarrant and Liam Garman are joined by real estate coach Tom Panos to unpack the recent budget and their predictions for who will benefit from the policies.
Panos said that despite negative gearing and CGT changes, the budget fell short of real tax reform and closed off younger generations wanting to get into the property market.
“To me, this was a tax collection or a tax gathering, because they haven’t actually really changed the tax system,” Panos said.
“All they’ve done is basically become a business partner to every person in the country that’s making money without having the risk and without putting any money in.”
Panos said that, with younger people increasingly resorting to rentvesting to build up wealth in a cheaper area than where they live, the higher tax will make entering the property market more difficult.
“If you’re a young person, how can you create security anymore?”
Garman agreed that many young Australians will no longer have the benefits of rentvesting to build wealth, while the older generation would likely endure challenges.
“[Some people have] saved their entire lives and put away superannuation very diligently so they didn’t have to rely on the old age pension,” Garman said.
He said stamp duty and property taxes were the second-largest driver of revenue in Australia, and were critical to its financial structure, including superannuation.
“I don’t think we’ve looked at the second, third, fourth-order effects of what’s going to happen when superannuation starts drying up. So you’ve got the older generation that will be impacted by this as well as younger Aussies.”
When it came to the winners and losers of the budget, Tarrant said the core winners were likely to be investors with principal places of residence due to tax exemptions.
“The best way to make your money is to put it in a really good performing principal place of residence, and you can keep trading up as your family grows or your circumstances change, and at a point in time, you sell the thing completely tax-free,” Tarrant said.
Additionally, he said investors who have subscribed to the idea of buying in more regional or marginal areas for accelerated capital growth would also be losers.
“You chase the growth, don’t worry about the yield, don’t worry about the cash flow too much because the capital growth will keep sorting it, keep recycling, keep drawing down – it will keep you going in those areas.”
“You’re going to find a lot of property investors that may have multiple properties in these areas, which are hugely negative geared.”
For investors who are eligible, Tarrant said the grandfathered negative gearing policy was an asset for as long as they held onto it, and smart investors would know how to benefit from the regime.
“All those things that made the accelerant factor of wealth creation through property investment have now been removed,” he said.
As another repercussion of the budget, Garman said increased migration figures were likely to lead to increased pressure in the market, especially as the 5 per cent deposit scheme had already seen immense demand.
“They will be streamlining migration figures and migration figures will slightly tick up, so you’ll have that demand still there,” he said.
“When I look at the construction industry over the next 12 months, when it comes to the cost of holding debt to build new estates or to build large new apartment buildings, that’s going to go up quite substantially.”
Garman said that with the cost of building new supply likely to go up significantly, it was unlikely that any investments the government made were going to help the matter.
“I look forward to the next 12 months, and I see a lot of disequilibrium in the market,” he concluded.
Listen to the full episode here.
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