Federal Budget 2026 Could Trigger Major Shift Toward New Property Investment

Last night’s Federal Budget may prove to be one of the most significant turning points for Australian property investors in decades, with sweeping proposed reforms set to reshape investor behaviour and accelerate demand for new housing across the country.

While much of the public conversation has centred around changes to negative gearing and capital gains tax, the broader message from the Government appears clear: incentivise investment that contributes directly to increasing housing supply. For strategic investors, developers and buyers focused on long-term growth, the changes could create significant new opportunities.

Existing investors receive stability

One of the most important takeaways from the Budget is that existing property owners appear largely protected through grandfathering provisions. Investors who owned property prior to budget night are expected to retain existing negative gearing benefits, while also preserving access to the current 50% capital gains tax discount for gains accrued before the new reforms commence.

“The immediate reaction from many investors may be concern, but the reality is existing property owners appear to be in a far stronger position than the headlines suggest. For many current investors, the fundamentals of their portfolio remain intact.”— Adam Duffy, Meridian Australia Partner

The proposed structure may also encourage many existing investors to hold property longer term, potentially reducing available stock and placing further pressure on already constrained housing supply.

New builds positioned as the biggest winners

The clearest winner from the proposed reforms appears to be the new property sector. Under the proposed framework, newly constructed properties are expected to retain access to negative gearing benefits, while investors may also be able to choose between the traditional 50% CGT discount or the new inflation-indexed taxation model. This creates a substantial incentive for investment into new apartments, off-the-plan opportunities, house-and-land packages and build-to-rent developments.

“This is potentially one of the biggest structural shifts toward new property we’ve seen in decades. Demand for quality new property is likely to increase significantly while available stock may become even more competitive.”— Brad Wearne

Demand fundamentals continue to strengthen

Australia’s long-term housing demand outlook remains well supported, with Federal Budget forecasts projecting net overseas migration to remain above 220,000 people annually through to 2030. While migration levels have moderated from the post-COVID peak of more than 528,000 in 2022–23, Australia is still forecast to record approximately 295,000 net overseas migrants in 2025–26, before stabilising around 225,000–230,000 per year over the following years.

This continued population growth is expected to place ongoing pressure on rental markets and housing supply across major capital cities, particularly in well-connected and supply-constrained locations.

“The long-term fundamentals underpinning Australian property remain very strong. Population growth, limited supply, and ongoing rental demand continue to support the market, particularly for well-located new property.”— Adam Duffy

A major strategic shift for the market

For more than two decades, Australian property investing has largely revolved around capital growth and tax advantages attached to established property. The 2026 Budget may signal the beginning of a broader shift toward investment strategies focused on housing creation, rental demand and long-term supply shortages.

“Markets always adapt. The investors who understand where policy, supply and demand are heading are usually the ones best positioned over the long term.”— Brad Wearne

This article is general information only and is not financial, tax or credit advice.