What will the negative gearing and CGT changes do to Australian house prices?
We read policy through fundamentals, not politics. From 1 July 2027, negative gearing is to be limited to newly-built homes and the capital-gains-tax discount trimmed, with existing holdings grandfathered. The direct effect is a demand drag on established-dwelling investor buying — modestly price-negative for existing homes, and mostly from 2027, not now.
But it doesn't act alone. Treasury's own figures pair supply sweeteners it estimates at ~65,000 additional homes over a decade against ~35,000 fewer from the tax change — so the net supply effect is contested and small relative to the shortfall. Near-term, high migration and a supply pipeline running behind the Housing Accord still dominate, keeping prices supported into 2026.
Will scrapping negative gearing make housing more affordable?
On the fundamentals, only at the margin and only over time. Affordability is set mostly by interest rates (borrowing power), incomes and the cost of building — the tax change nudges investor demand for existing stock but doesn't touch those bigger levers. Anyone promising it either fixes or wrecks affordability is overstating a second-order effect. We model the direction and flag it as a 2027 headwind; we don't put false precision on a contested, politically reversible policy.
Which cities are most exposed if investor demand pulls back?
The cities that ran hardest on investor-driven momentum and now sit furthest above cost-adjusted fair value — the smaller capitals that led the recent boom — have the most to give back if established-dwelling demand cools. The majors that have already stalled are, counter-intuitively, more defensive. Our stress tests put numbers on each; the ranking is in the report.