Broker Notes – 6 June 2026

Every Major Lender Has Rewritten Its Investor Calculator After the Budget

When the federal government announced on budget night – 12 May 2026 – that negative gearing would be restricted to new builds, most borrowers assumed it was a tax story. It turned out to be a lending story too, and one that moved faster than almost anyone expected.

Macquarie Bank was first to act, notifying brokers on 18 May that it had stripped negative gearing add-backs out of its serviceability calculators for new investment loans on established properties. NAB, ANZ, Great Southern Bank, and Suncorp followed within days. Then on 1 June, CBA – the country’s largest home lender – sent its own updated policy to the broker network, completing a sweep across every major lender in under three weeks.

The mechanism being changed is one many borrowers never knew existed. When an investment property costs more to hold than it earns in rent, lenders historically counted the projected tax refund as income in their serviceability models – effectively boosting how much a borrower could qualify for. Remove that add-back, and the same borrower earns the same income but qualifies for significantly less.

The cut-off date matters. Contracts for investment properties executed on or before 12 May 2026 remain eligible for negative gearing add-backs under most lender policies – though borrowers need to provide evidence of the pre-budget contract date. For new builds acquired at any time, lenders are treating the government’s exemption as applicable: negative gearing can still be recognised where the property genuinely adds to housing supply.

CBA also clarified that refinances of pre-budget investment properties can still use add-backs on existing debt, but any additional cash-out is assessed under the new rules. Suncorp noted that applications not unconditionally approved by 27 May would be reassessed under the revised framework. Systems are still catching up – several lenders stated their calculators are being rebuilt and advised brokers to follow interim guidance until updates are live.

What the Budget’s Negative Gearing and CGT Changes Actually Mean

The detail behind the 2026-27 federal budget’s property tax changes is worth unpacking, because the rules differ depending on when a property was purchased, whether it is new or established, and what investors do with any future gains.

For negative gearing: from budget night on 12 May 2026, investors purchasing established residential properties can no longer offset rental losses against wage income. They can still offset losses against other property income. Investors buying new builds retain access to traditional negative gearing, as the government’s policy intent is to channel investment toward new housing supply. Properties purchased before budget night are grandfathered under the old rules.

For capital gains tax: from 1 July 2027, the 50 per cent CGT discount is replaced by a system of cost base indexation combined with a 30 per cent minimum tax on gains. Investors in new residential properties can choose to retain the 50 per cent discount. This change reaches beyond residential property – shares, commercial assets, and small business interests are affected, which has raised concern from business groups including CAFBA, whose CEO David Bushby noted the complexity of the new rules could generate unintended consequences. The tax implications vary significantly depending on individual portfolio structure, income level, and the timing of any transactions, so a qualified tax professional is the right starting point for any investor working through these changes.

Property Values Are Now Flat Nationally as Sydney and Melbourne Continue to Slide

Cotality’s national Home Value Index recorded zero growth in May 2026 – a sharp step down from the 0.7 per cent monthly gain seen in March. The national median dwelling value sits at $933,137. The headline figure, however, masks a market increasingly divided by geography and price point.

Sydney and Melbourne are leading the retreat. Sydney fell 0.9 per cent in May and is now 1.4 per cent below its November 2025 peak. Melbourne dropped 0.8 per cent, with values running 1.9 per cent below their 2022 high. Auction clearance rates across the combined capitals have held below 55 per cent since late March, and advertised stock levels are rising in both cities – giving buyers more negotiating room than at any point in the past two years.

Perth is the standout outlier. Values rose 2.5 per cent in March and have remained elevated, with the quarterly gain of 7.3 per cent adding approximately $69,000 to Perth’s median dwelling value. Cotality’s research director Tim Lawless noted that advertised stock in Perth remains roughly 40 per cent below the five-year average for this time of year, which is sustaining prices despite the higher rate environment. Brisbane and Adelaide are also outperforming, with annual growth of 19 per cent and 11.4 per cent respectively to the end of March.

The broader picture, as Cotality’s Tim Lawless summarised, is one where affordability and serviceability constraints are shrinking the pool of buyers who can comfortably transact. With three rate hikes behind us and the effective mortgage stress-test now running at around 9 per cent on current variable rates, the upper end of the market in Sydney and Melbourne is bearing the heaviest pressure. More affordable segments and markets with tight supply – Perth being the clearest example – are proving more resilient.

Rents Are Accelerating Again as Vacancy Rates Hold Near Record Lows

Australia’s rental market has found no relief this year. The national rental vacancy rate sits at 1.6 per cent – well below the decade average of 2.5 per cent – and rents are running 5.7 per cent higher annually, the fastest pace since October 2024. That translates to roughly $37 per week added to the median rental rate over the past year.

Adelaide remains the tightest capital, with a vacancy rate of just 0.9 per cent. Perth follows at 1.1 per cent. Even Sydney, historically the most liquid rental market among the capitals, is sitting at just 1.7 per cent. Every capital city is below the 2 per cent level typically associated with a balanced rental market.

Cotality’s data shows renters are now spending approximately 33 per cent of their pre-tax median household income on rent – a record share. The acceleration in market rents also has a knock-on effect for inflation: rents carry a 6.6 per cent weighting in the CPI basket, and market rent movements typically feed into CPI with around a 12-month lag. That lag means rental pressure from 2025 is still flowing through into inflation data now, and the current pace of rental growth could add further pressure through 2026 and into 2027.

What the Shift to New Builds Means for Investors and First Home Buyers

The combined effect of the budget’s tax changes and lender policy resets is accelerating a structural shift in where investor activity is likely to concentrate. Finsure CEO Simon Bednar was direct: “New builds will become more important.” That is not just a comment on tax incentives – it reflects where lenders are still willing to apply full serviceability benefits, where the CGT discount remains available, and where the government is explicitly trying to direct capital.

Loan Market CEO Sam White flagged a likely bifurcation: investors moving toward new-build stock in higher-density areas or city fringes, while owner-occupiers continue to compete for established property. AFG CEO David Bailey raised a counterpoint worth noting – directing investment toward new builds could concentrate demand into a narrower segment, potentially pushing prices in that segment higher without meaningfully increasing total supply, particularly given ongoing construction cost pressures and labour shortages in residential building.

For first home buyers, the policy change carries a different implication. Less investor competition in the established property market could reduce pressure on prices in segments where first home buyers compete directly. The existing deposit guarantee scheme remains in place, though Cotality’s data shows that strong price growth in more affordable segments, combined with higher rates and cost-of-living pressure, means stimulus is delivering diminishing returns on access.

Brokers who understand construction lending – progress payment structures, valuation risk on off-the-plan purchases, builder due diligence, and new-build investor lending policies – are likely to see stronger demand from clients who want to stay active in the investor market without forfeiting their full serviceability position. The tax treatment of any new investment purchase depends on individual circumstances, and a qualified tax professional alongside a broker is the right combination for investors working through their options.

Key Takeaways