Federal Budget Explained: What the Housing Changes Could Mean for You

The Federal Budget has placed housing firmly in the spotlight, with proposed changes aimed at shifting investor activity, encouraging new housing supply and easing pressure on buyers.

For property owners, investors, renters and first home buyers across the Gold Coast, these changes are worth understanding. While the full impact will take time to play out, the direction is clear: future policy is focused on steering investment towards newly built homes and reducing investor competition for established properties.

What has been announced?

The key housing changes relate to negative gearing and Capital Gains Tax treatment for investment properties.

Under the proposed changes, negative gearing benefits would be limited to newly built homes from 1 July 2027. Existing investment properties are expected to be grandfathered, meaning owners who already hold negatively geared properties would continue under the current arrangements.

There are also changes proposed to the Capital Gains Tax discount. Instead of the existing 50% discount for assets held longer than 12 months, the system would move towards an inflation-adjusted model for certain investment properties. This means tax would be assessed on gains above inflation, rather than applying a flat discount.

The overall intention is to reduce the tax advantage of purchasing established investment properties and encourage more investment into new housing supply.

What does this mean for renters?

For tenants, the concern is rental supply.

If fewer investors purchase established homes in the future, some areas may experience reduced availability of rental properties, particularly in well-established suburbs where new development opportunities are limited.

On the Gold Coast, demand for rentals remains strong across many suburbs, especially where tenants are seeking proximity to schools, transport, employment, beaches and lifestyle amenities. If investor activity shifts away from established housing, renters may face fewer options in some locations.

While these changes are not expected to create an immediate shock due to grandfathering provisions, the longer-term impact will depend on how much new rental stock is actually delivered, where it is built, and whether it suits tenant demand.

What does this mean for homeowners?

For existing homeowners, the changes may not have a direct tax impact unless they also hold investment property.

However, if investor demand for established homes reduces over time, buyer competition may shift. In some cases, owner-occupiers and first home buyers may face less competition from investors. In other areas, strong population growth, limited supply and lifestyle demand may continue to support property values.

For Gold Coast homeowners, local market conditions will still matter most. Interest rates, buyer confidence, stock levels, borrowing capacity and suburb-specific demand will continue to play a major role in property prices.

What does this mean for investors?

Investors are likely to feel the greatest impact.

For those who already own investment properties, grandfathering may provide some certainty. Current arrangements are expected to remain in place for properties already held before the changes take effect.

For future investors, the decision between buying an established property or a new build may become more important. Newly built properties may retain more favourable tax treatment, while established properties may have reduced negative gearing benefits from 1 July 2027.

This does not mean established investment properties will no longer be attractive. Investors will simply need to look more carefully at the fundamentals, including rental yield, capital growth prospects, tenant demand, holding costs, location and future resale appeal.

A strong investment decision should never rely on tax benefits alone.

What does this mean for first home buyers?

The intention behind the changes is to reduce investor competition for established homes, which may assist some first home buyers.

However, affordability remains a bigger issue. Deposit requirements, borrowing capacity, interest rates and limited housing supply will continue to influence a buyer’s ability to enter the market.

In some suburbs, first home buyers may find improved opportunities if investor demand softens. In other areas, competition from other owner-occupiers may remain strong, particularly for well-located homes, townhouses and units close to amenities.

For buyers considering rentvesting, the changes may also affect strategy. If negative gearing benefits are limited to new builds, purchasing an established investment property while continuing to rent elsewhere may become less attractive for some buyers.

Key terms explained

Negative gearing

Negative gearing occurs when the costs of holding an investment property, such as loan interest and expenses, are higher than the rental income received. Under current rules, investors may be able to offset that loss against other taxable income.

Capital Gains Tax

Capital Gains Tax applies when an asset is sold for a profit. For investment properties, the family home is generally treated differently from investment assets. The current CGT discount has allowed eligible investors to reduce the taxable capital gain after holding the asset for more than 12 months.

Grandfathering

Grandfathering means existing arrangements continue to apply to people who already held an asset or entered into an arrangement before new rules commenced. This is often used to avoid sudden disruption when policy changes are introduced.

New build

A new build generally refers to a residential property that has not previously been sold or occupied as a residence. This can include new apartments, house-and-land packages and newly completed homes, depending on the final policy settings.

Rentvesting

Rentvesting is when someone buys an investment property while continuing to rent in another location. It has been a popular strategy for buyers who want to enter the property market without giving up their preferred lifestyle location.

What should property owners and investors do now?

The most important step is to understand how the proposed changes may apply to your personal circumstances.

Property decisions should be based on a combination of tax advice, financial advice and local market insight. Every property is different, and the impact will vary depending on location, property type, rental demand, purchase price, debt position and long-term goals.

For investors, it may be worth reviewing your current portfolio, assessing rental performance and considering whether your property remains aligned with your broader strategy.

For homeowners thinking about selling, the key question remains the same: what is happening in your local market right now?

Hillsea’s view

Policy changes can influence market behaviour, but local conditions still matter.

Across the Gold Coast, demand continues to be shaped by lifestyle, population growth, rental demand, interest rates and available supply. Some suburbs may be more affected than others, particularly where investors make up a large portion of the buyer pool or where rental stock is already limited.

Whether you are a landlord, tenant, buyer or seller, it is important to stay informed and seek advice before making major decisions.

If you would like to understand what these changes could mean for your property, rental return or selling plans, the Hillsea Real Estate team can provide local insight based on current Gold Coast market conditions.

Contact Us     No Obligation Appraisal

This article is general information only and should not be taken as financial, taxation or legal advice. Please speak with a qualified accountant, financial adviser or legal professional about your personal circumstances.