Property investors are already feeling the impact of the federal budget’s proposed negative gearing reforms, despite the changes not beginning until 2027. Brokers report some major lenders have started reducing borrowing capacity calculations for investors purchasing established properties.
In some cases, borrowing power has reportedly fallen by as much as 30%, meaning buyers who previously qualified for loans above $1 million may now only secure finance closer to $800,000.
The proposed reforms would restrict negative gearing benefits to newly built homes only, creating uncertainty across the investment market. Rodney McLoughlin notes this could significantly reduce investor competition at auctions while increasing the importance of cash flow and long-term strategy.
Off-The-Plan Apartments Under Scrutiny
Off-the-plan apartments may continue to attract tax incentives under the proposed rules, but experts warn many developments have historically delivered weaker capital growth compared to established homes.
Research highlighted concerns that future buyers of these properties may not receive the same depreciation or tax benefits, potentially reducing resale demand. Analysts pointed to several apartment-heavy precincts where price growth has been flat or negative over the past decade.
While some investors remain attracted to affordability and tax advantages, others are prioritising scarcity, land value and long-term growth potential instead. Rodney McLoughlin says investors should look beyond tax incentives alone and focus on asset quality, location and future buyer demand.
Sydney’s Prestige Waterfront Markets Face Price Falls
Sydney’s premium property market is showing signs of correction, with several blue-chip waterfront and prestige suburbs recording sharp annual declines.
Areas including Kirribilli, Waverley and Kurraba Point have seen significant unit price drops, while houses in suburbs such as Warrawee and North Avoca have also weakened. Economists attribute the downturn to higher interest rates, affordability pressures and growing buyer caution.
Premium markets that experienced rapid growth during the pandemic are now proving more vulnerable as borrowing costs rise. However, some analysts believe the softer conditions may only be temporary before confidence returns later in the year.
Investors Warned to Secure Property Valuations
Another major issue emerging from the federal budget is the proposed overhaul to capital gains tax calculations.
Experts are urging investors to obtain independent valuations before the new rules begin in 2027, warning it could save tens of thousands in future tax liabilities. Under the proposed changes, gains accumulated before and after the deadline may be treated differently.
Without formal valuations, investors risk the government applying broad assumptions that may overestimate future taxable gains. Rodney McLoughlin says understanding these changes early could help investors make smarter long-term decisions and avoid unnecessary tax exposure later.
Real Estate Newsletter
This article is a curated summary of various news stories from the past week, offering insights and updates on the real estate market. 22 May 2026
Rodney McLoughlin is a trusted real estate professional with deep insights into the Australian property market. For personalized advice and market expertise, reach out to Rodney today.
