The Federal Government’s 2026 Budget has introduced significant changes to negative gearing and capital gains tax, with the stated aim of improving housing affordability and encouraging investment in new dwellings. While the intent is clear, the practical implications for housing supply are more complex.
Recent reporting in The Australian highlights growing concern across the property sector that the changes could materially reduce housing supply and deter investment at a time of critical shortage.
Intrapac CEO Max Shifman said the new settings risk unintentionally slowing the delivery of new homes at a time when supply is already under significant pressure. The Budget reforms include the grandfathering of negative gearing for existing investments, the removal of negative gearing for established dwellings, and the retention of tax benefits only for new homes. The 50 per cent capital gains tax discount will also be replaced with an indexation model, except for new dwellings where concessional treatment may still apply.
According to Shifman, while the policy is designed to redirect investment toward new housing, it underestimates the interdependence between the established and new build markets.
“New housing doesn’t stand alone,” Shifman said. “It relies on a healthy established market for valuations, liquidity and confidence. If the established market slows, the feasibility of new projects becomes much harder.”
This view was reinforced in The Australian, where industry leaders warned Australia is already failing to build enough homes to meet demand, with population growth outpacing construction capacity.
With construction costs still rising and the industry continuing to recover from several years of inflationary pressure, Shifman warned that the new tax settings could reduce the number of projects able to proceed. “Without a healthy established market, making new projects stack up becomes harder, and more developments will be shelved,” he said.
He also noted that the grandfathering of existing tax benefits may have the unintended consequence of reducing market turnover. “When tax advantages can’t be transferred to future buyers, people tend to hold onto properties longer,” he said. “That reduces liquidity, and lower liquidity actually means fewer opportunities to get people buying homes.”
Shifman added that limiting tax concessions to new property may inadvertently shrink the capital available to support development. “By disincentivising the next buyer, the government shrinks the pool of capital available to the first buyer,” he said.
Industry figures quoted in The Australian also warned that reduced investor participation could tighten rental supply and place upward pressure on rents as fewer new homes are delivered.
While the Government’s additional $2 billion commitment to enabling infrastructure is welcome, Shifman said it may not be sufficient to offset the broader structural impacts of the tax changes. “We need a stable, liquid housing environment,” he said. “Without that, it becomes much harder to deliver the new supply Australia urgently needs.”
As the industry adjusts to the new policy settings, Shifman emphasised the importance of maintaining balance across the entire housing ecosystem to support long-term supply and affordability.
Intrapac’s Commitment to Long-Term, Sustainable Communities
Despite shifting policy conditions, Intrapac remains focused on delivering high-quality, well-planned communities that support Australia’s growing population. Our commitment to thoughtful design, strong partnerships and responsible development continues to guide every project.
We will continue to advocate for policy settings that enable the delivery of new homes and support the long-term health of the housing market.
Read the full article in The Australian