The first tax reform bill has passed Parliament, and from 1 July 2027 investors will generally only be able to use rental losses to reduce taxable income from wages if they buy eligible newly built housing. Properties held before 7:30pm AEST on 12 May 2026 are protected from the change, while investors buying eligible newly built homes, apartments or townhomes can still use rental losses to reduce taxable income. The rules are also changing for capital gains tax, which is the tax paid on profit when an asset is sold. For future gains from 1 July 2027, the current 50 percent discount will generally be replaced by inflation based indexation and a minimum 30 percent tax rate, although investors buying eligible newly built housing can choose between the current 50 percent discount and the new method when they sell.
For investors, this changes how future purchases need to be assessed. Existing homes and older apartments will continue to sell where location, land value, rental demand and long term growth drivers are clear. The difference is that investors buying existing homes after Budget night will not have the same ability to use rental losses to reduce taxable income from wages after 1 July 2027. Those losses do not disappear. They can still be carried forward and used against future residential property income or residential property gains, but they are less useful for investors who previously relied on annual tax savings to help hold the asset.
First home buyers may see some benefit from reduced investor competition, but the size of that shift needs to be put in context. CBA expects new investor lending to fall sharply through 2026, with loan volumes around half of late 2025 levels. ABS data shows investor loan commitments were 60,445 loans worth $43.0 billion in the December quarter 2025, before easing to 57,342 loans worth $41.5 billion in the March quarter 2026. If CBA’s forecast is measured against the December quarter base, investor lending would move closer to about 30,000 loans and $21.5 billion per quarter. That would reduce investor competition, but it would not remove high prices, borrowing limits or deposit pressure for first home buyers.
The expanded 5 percent deposit scheme is also changing buyer access. Housing Australia confirms that from 1 October 2025 the scheme has no place limits, no income caps and higher property price caps, although buyers still need to meet lender criteria and purchase within the applicable price cap. ABS data shows first home buyer loan commitments were 30,241 loans worth $17.9 billion in the March quarter 2026, down 4.3 percent by number and 6.7 percent by value from the December quarter 2025, but still 5.0 percent higher than the March quarter 2025 level by number. This points to a buyer group that is still active, but highly exposed to affordability and borrowing capacity.
The latest Cotality July Home Value Index, reporting results as at 30 June 2026, shows the national market lost momentum through June. National dwelling values fell 0.4 percent over the month, while combined capital city values fell 0.6 percent. Sydney and Melbourne recorded the largest monthly falls, down 1.2 percent and 1.0 percent respectively. Brisbane remained positive, with values up 0.3 percent over the month, 1.3 percent over the quarter and 17.4 percent over the year. For developers, this is an important shift. Brisbane is still outperforming the national market, but the rate of growth has slowed and pricing now needs to be supported by current buyer enquiry, borrowing capacity and settlement evidence.
The Brisbane unit market is still doing more work than the broader housing market. Cotality’s July Home Value Index shows Brisbane unit values increased 20.3 percent over the year to June, compared with 16.8 percent for Brisbane houses. Brisbane units also recorded a 0.6 percent monthly increase and a 2.2 percent quarterly increase, compared with 0.2 percent monthly and 1.1 percent quarterly growth for houses. This is relevant for developers because it shows demand is still favouring more affordable dwelling formats, even as the broader housing cycle slows.
The rental market also supports the case for well located new apartments, but not without limits. Cotality’s July Home Value Index shows national rents rose 5.9 percent over the financial year, adding about $40 per week to the median rent. The national rental vacancy rate was 1.6 percent in June, still below the decade average of 2.5 percent. Brisbane rents remained positive, with annual house rents up 6.6 percent and annual unit rents up 5.8 percent. At the same time, Cotality notes that only 0.8 percent of suburbs nationally had the potential to offer a positive cash flow investment opportunity, assuming a 20 percent deposit and average mortgage rates. This means rental demand remains supportive, but investors are still dealing with mortgage costs, strata, insurance and maintenance.
Place Advisory’s 2025 apartment research shows that inner Brisbane apartment demand was already changing before the tax reforms take full effect. Investors accounted for 50 percent of inner Brisbane apartment purchases in 2025, up from 45 percent in 2024, while owner residents moved from 55 percent to 50 percent. New apartment sales also shifted into higher price bands, with the $1.0 million to $1.5 million band increasing from 31 percent of new sales in 2024 to 36 percent in 2025, and the $1.5 million to $2.0 million band increasing from 9 percent to 15 percent. This suggests the apartment market was already being shaped by borrowing limits, higher construction costs and the price gap between newly built apartments and older apartments.
The supply side is moving, but delivery remains difficult. Place Advisory recorded 20,050 build to sell apartments in the inner Brisbane apartment pipeline in 2025, up from 14,956 in 2024 and 12,138 in 2023. Of the 2025 pipeline, 4,934 apartments were under construction, 6,580 were approved but not yet under construction, and 8,536 were still at development application stage.
Apartment sizes have also reduced materially over the past decade, with one bedroom apartments moving from 80 to 90 square metres in 2015 to 55 to 70 square metres in 2025, and two bedroom apartments moving from 130 to 140 square metres to 95 to 110 square metres. This reflects the need to create homes that buyers can finance, rather than simply adding more apartments to the market.
Further Place Advisory research has corroborated the pressure on feasibility, particularly around construction costs, end values and the need for disciplined pricing. Recent research also records Brisbane construction cost growth at 5 percent for 2026, with a forecast lift to 7 percent from 2027 as Olympic and health infrastructure projects place further pressure on labour availability. Furthermore, the average Brisbane apartment selling rate of approximately $17,600 per square metre, which is consistent with the level now required for many projects to be justified financially. Newly built housing may be easier to explain to investors under the new rules, but pricing, apartment size, buyer depth and settlement risk still need to be supported by current evidence.
Investors buying property through a self managed super fund need to treat the changes separately from a normal residential property purchase. The Government has said borrowing to buy residential property through super funds will be banned going forward, while existing arrangements will remain in place. Treasury Ministers also referred to a 45 day transition period for investments already underway. This is a small but specialised part of the market, and any buyer considering property inside super using borrowed money should obtain tax and financial advice before making decisions.
For developers and project marketers, the practical issue is now clearer. First home buyers have more deposit pathways, but still face high prices and strict borrowing limits. Existing investors have protection on current holdings, but less flexibility when buying older homes after 12 May 2026. Investors buying eligible newly built homes, apartments and townhomes will still have more ability to use rental losses to reduce taxable income. In Brisbane, that sits alongside a market where unit values are still rising faster than houses, rents are still growing, but buyer momentum has slowed and advertised stock is building. The strongest projects will need to be positioned around product that buyers can finance, investors can understand, and lenders can support.