Australia’s property market could soon face one of its biggest structural shifts in decades.
The Commonwealth Bank (CBA) has flagged that the federal government is “most likely” to target investor tax concessions — including the 50% Capital Gains Tax (CGT) discount and negative gearing — in the upcoming May Budget.
For property owners and investors, the key question is clear: Will prices fall?
💰 $18 Billion in Property Tax Perks Under Review
Treasury estimates show the government currently forgoes between $15–18 billion annually through investor tax concessions. The bulk — around $13 billion — comes from the 50% CGT discount on assets held longer than 12 months.
CBA chief economist Luke Yeaman believes housing will likely “bear the cost” of broader fiscal reform, particularly as inflation pressures resurface and public spending remains historically high.
Reform options being discussed include:
- Reducing the CGT discount from 50% to 25%
- Phasing out the discount over time
- Capping negative gearing deductions
📉 Would House Prices Actually Fall?
Despite the headlines, most economists agree: price impacts would likely be modest.
Modelling from leading policy groups suggests:
- National house prices may fall by around 1%
- A $1 million home could decline by roughly $10,000
- Rents may rise by about $1 per week
- Owner-occupier market share could increase slightly
In an $11 trillion housing market, tax reform alone is unlikely to dramatically shift values.
Rodney McLoughlin notes that while policy changes can influence investor sentiment, they rarely override the deeper structural drivers of the Australian property market.
🏗️ The Bigger Forces at Play
Property prices over the past 25 years have been driven by:
- Chronic housing undersupply
- Strong migration and population growth
- Rising incomes
- Interest rate cycles
- Limited new construction
Even CBA now expects home prices to rise around 5% in 2026, easing from 8% growth in 2025, despite potential tax reform and further rate hikes.
In Sydney, competition remains strongest under $1.5 million, while premium markets continue to benefit from constrained supply.
🔍 What This Means for Buyers & Investors
For investors, reform could:
- Reduce long-term after-tax returns
- Shift focus toward new builds if incentives change
- Temporarily dampen sentiment
For first-home buyers, any pullback in investor demand may slightly reduce competition — particularly in entry-level markets.
However, without a meaningful increase in housing supply, affordability pressures are unlikely to disappear.
As Rodney McLoughlin consistently advises, successful property strategy requires looking beyond headlines and focusing on long-term fundamentals.
📈 2026 Outlook: Cooling, Not Crashing
With interest rates rising again and tax reform debates intensifying, 2026 is shaping up as a more measured market.
But the consensus remains clear:
- Growth may slow
- Sentiment may fluctuate
- Structural supply shortages still support values
For informed buyers and investors, opportunity often emerges during periods of uncertainty.
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. 13 February 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.
