Federal Budget Sparks Fierce Debate Over Housing, Investors and Australia’s Property Future

Australia’s 2026 Federal Budget has ignited widespread debate across the property industry, with strong reactions from investors, economists and property analysts.

In a live Hotspotting Members Webinar hosted by Hotspotting managing director, Tim Graham, Hotspotting founder Terry Ryder and Head of Research & Development Cameron Kusher unpacked the Budget’s proposed changes to negative gearing and capital gains tax, outlining the consequences for investors, renters, first-home buyers and the broader housing market.

While the Federal Government positioned the Budget around “intergenerational fairness” and improving housing affordability, both Mr Ryder and Mr Kusher questioned whether it would achieve that goal.

“A Tax Grab Dressed Up as Housing Reform”

Mr Ryder described the Budget and it changes to taxes on property investment as a “Betrayal Budget.”

“By the Treasurer’s own admission, we’re going to have fewer homes built, rents continuing to rise, and property prices still increasing,” he said.

“How does that achieve the goals they’ve stated? Affordability doesn’t improve, supply weakens, and younger Australians trying to build wealth are actually worse off.”

Mr Ryder said the Federal Government fundamentally misunderstood who today’s property investors are.

“The people they say they’re trying to help — millennials and Gen Z Australians — are often the very people out there trying to buy investment properties and build wealth. This doesn’t help them at all,” he said.

He criticised the focus on taxation changes while failing to address what he called “the real issue” behind Australia’s housing crisis.

“The biggest problem is how long it takes and how much it costs to create new housing. Governments keep adding layers of compliance, bureaucracy, and cost — and none of that was meaningfully addressed in this Budget,” Mr Ryder said.

Investors, Renters and the “Unintended Consequences”

Mr Kusher took a more measured but equally cautious view and warned that the changes may have significant unintended consequences to the rental market.

“I think the Government is trying to create space for more first-home buyers by making investing less attractive,” Mr Kusher said.

“But fewer investors also means fewer rental properties — and that’s likely to push rents even higher, making it harder for people to save for a deposit in the first place.”

Mr Kusher also questioned whether the changes would materially improve affordability.

“If you remove investors from the market, you still have strong demand competing for limited supply. Prices don’t suddenly become cheap because there are fewer investors involved,” he said.

The discussion also highlighted concerns that the reforms could disproportionately affect regional markets, where new housing supply is already difficult to deliver.

“In many regional areas, there simply isn’t enough new housing stock available,” Mr Kusher said.

“If you’re pushing investors away from established properties and toward new builds, there are places around Australia where that stock just doesn’t exist.”

Shift Toward New Builds?

Both analysts agreed that the focus on newly built property would increase as a result of the tax changes as investors seek properties which provide the best tax advantages and depreciation benefits.

Mr Graham said although new builds were not an appropriate investment in every market, they could represent strong opportunities under the right conditions.

“There are absolutely markets around Australia right now where you can build for comparable pricing to the established market and still get the benefits of depreciation, warranties, and stronger cash flow outcomes,” Mr Graham said.

Mr Kusher said one largely overlooked announcement in the Budget was that investors purchasing new property may still be able to choose between the proposed indexation model and the existing 50% capital gains tax discount methodology.

“That’s something that hasn’t been widely reported yet, but it could become an important factor for investors assessing new-build opportunities,” he said.