Federal Budget Property Tax Proposals Could Push Rents Up and First-Home Buyers Out
The upcoming May Federal Budget is shaping up to be one of the most consequential for Australian renters and aspiring homeowners in years. With the government openly considering changes to Capital Gains Tax (CGT) concessions and negative gearing rules for property investors, housing experts are warning of a potentially damaging ripple effect — higher rents, less housing supply, and a growing cohort of Australians locked out of homeownership for life.
What Tax Changes Are Being Proposed?
According to the Property Council of Australia, the changes currently being canvassed include:
- Reducing the CGT discount for residential property investors from the current 50% down to 33%
- Capping negative gearing to a maximum of two investment properties
Property Council CEO Mike Zorbas has described this approach as “full of risk for the supply of housing in Australia,” warning that reducing incentives for property investors will deter new development at the worst possible time.
What Does This Mean for Renters and First-Home Buyers?
- 📈 Higher rents: With fewer investors in the market, rental vacancy rates — already low — could tighten further, pushing rents higher for the nearly 30% of Australians who currently rent.
- 🏗️ Less housing supply: Investors who exit the residential market may redirect their money into shares or commercial property, reducing development pipelines.
- ⏳ Delayed homeownership: The national median age of first-home buyers is already 34. Zorbas has warned this could hit 40 in Sydney and Melbourne without radical supply boosts.
A recent survey found that 46% of Australians do not believe they will ever own a home — a sobering statistic that underscores the depth of the housing affordability challenge.
The Broader Housing Affordability Picture
This isn’t just about investors. The housing supply crisis is a structural problem affecting all Australians. Research shows property investors received $12.3 billion in tax concessions in 2025 alone, while investors are currently purchasing almost twice as many homes as first-home buyers.
The debate over CGT and negative gearing sits at the heart of a broader question: how do we build more homes, keep rents manageable, and create genuine pathways to homeownership for younger Australians? The May budget will be a defining moment.
What Should Borrowers Do Right Now?
- ✅ Review your current home loan rate. If you haven’t reviewed your mortgage in the past 12 months, you may be paying more than you need to.
- ✅ Understand your borrowing capacity. Changes to the market could affect property prices. Knowing your position now helps you act quickly.
- ✅ Consider refinancing. With interest rates having shifted significantly, refinancing could help you align your mortgage with your current goals.
- ✅ Talk to a mortgage broker. A broker can provide personalised assistance and access competitive choices from multiple lenders.
Need personalised assistance?
Contact Daniel Nguyen, Mortgage Broker at Finance Hub and Networks.
📞 0430 11 11 88
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