Australia's Housing Tax Overhaul

Goldman Sachs analyzes Australia's 2026-27 Budget housing tax reforms, predicting a modest 3% decline in property prices despite significant hits to investor cash flows. The report highlights that structural leverage advantages will keep residential property attractive relative to other assets.

Key Takeaways

• 1.The 2026-27 Budget proposes abolishing negative gearing for established dwellings and replacing the 50% CGT discount with a tax on inflation-adjusted gains at a minimum rate of 30%.
• 2.The changes will significantly impact annual cash flows for new property investors (~$9,000 p.a. reduction), but total returns will decline only modestly.
• 3.The aggregate impact on house prices is estimated at around 3%, with prices expected to trough at -5% yoy in the next 12 months.

Table of Contents

• What changes to housing tax policy were proposed in the 2026-27 Budget?
• Why were the changes introduced?
• The mechanics of the policy change for new investors
• Cash flow impacts will be significant but the impact on total return will be more modest
• How does this affect existing property holders?
• We expect the impact on house prices to be modest
• New Zealand's (Brief) Experiment Removing Negative Gearing
• Will the changes get through?

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