New rules unveiled in the federal budget limit negative gearing to newly built properties from July 2027 and introduce a minimum 30% capital gains tax on investment housing. Budget papers argue these reforms will have only a minor impact on rents, estimating an average increase of less than $2 a week for a household paying the current median rent. Australia’s median rent now sits at $650 a week based on recent research from realestate.com.au.
Property specialists warn that restricting negative gearing to new builds and lifting effective capital gains tax rates will prompt some investors to sell or avoid residential property altogether. Fewer investors means fewer rental properties, which tightens supply in an already constrained market. Rents have already surged about 55% since early 2020 so even a modest further rise bites hard when wages lag. Younger renters, the group the Treasurer says the reforms are designed to help, are likely to shoulder much of the added burden.
Critics argue the budget’s modelling is detached from on-the-ground conditions in capital city rental markets, where vacancy rates are extremely low and competition is intense. Any policy that removes incentives for private investors is likely to amplify those pressures rather than ease them. The government’s claim of advancing “intergenerational equity” clashes with the prospect of escalating rents for younger Australians who do not yet own homes.
