Changes from July 1st affecting first home buyers, owner-occupiers, property investors and self-managed super funds
The Australian property market continues to adjust to changing economic conditions, with the latest Federal Budget introducing significant housing reforms that have sparked plenty of discussion.
While most of the major tax changes are not expected to begin until 1 July 2027, the market is already responding as buyers, sellers and investors consider what lies ahead. At the same time, interest rates have remained steady, providing some welcome certainty in an otherwise unpredictable environment. Property values in many areas have eased by around 6 to 10 per cent, yet well-priced homes are still selling quickly because serious buyers remain active. The biggest challenge continues to be the limited supply of available homes, which is likely to support the market over the longer term.
First home buyers
From 1 July 2026: Existing federal and state schemes continue. No major nationwide changes.
From 1 July 2027: (proposed/passed reforms): No major federal tax changes affecting first home buyers directly.
For first home buyers, there are few immediate changes from a Federal Government perspective. Stable interest rates may improve borrowing confidence, while softer prices can create opportunities for buyers who have been waiting to enter the market. Competition from some investors may reduce over time once the new tax reforms begin, although the ongoing shortage of available homes means buyers should still be prepared to act quickly when the right property becomes available.
Owner-occupiers
From 1 July 2026: No significant federal property tax changes.
From 1 July 2027: (proposed/passed reforms): Generally unaffected. The family home remains exempt from capital gains tax.
If you are buying or selling your family home, the Budget changes are expected to have little direct impact. Instead, local market conditions remain the biggest influence. Sellers should be realistic about pricing, as buyers are becoming more value focused. The positive news is that committed buyers are still making confident decisions, resulting in many properties selling within reasonable timeframes when priced appropriately. Flexibility and good advice remain essential in the current market.
Property investors
From 1 July 2026 No major changes from 1 July, apart from new anti-money laundering obligations for real estate transactions.
From 1 July 2027: (proposed/passed reforms): New negative gearing rules expected to apply mainly to newly purchased investment properties, with existing investments grandfathered. Capital gains tax concessions also change for new investments.
The biggest changes are aimed at property investors. Under the reforms passed by the Senate last week, negative gearing will generally be limited to newly built residential properties from 1 July 2027, while the current capital gains tax discount will move to an inflation based system. Existing investment properties are expected to be largely grandfathered, meaning many current owners will retain today’s tax arrangements. Investors purchasing established properties after the reforms commence are likely to receive fewer tax benefits, making new housing a more attractive option. Anyone considering an investment purchase should seek advice before making long-term decisions.
Self-managed super funds
From 1 July 2026: No change.
From 1 July 2027: (proposed/passed reforms): New borrowing by SMSFs for residential property is expected to be banned. Existing arrangements are expected to be grandfathered.
One of the most significant announcements is the end of new borrowing by self-managed super funds for residential property. Existing arrangements are expected to remain in place, but future investors using self-managed super funds will no longer be able to borrow to purchase residential property. This represents a major change for many long-term investment strategies and will require careful financial planning.
Looking ahead
While the headlines may sound dramatic, property remains a long-term investment. Markets naturally move through periods of adjustment, and experienced buyers and sellers know that understanding the local market is far more important than reacting to national headlines. If you are thinking about buying, selling or investing, now is the time to have a conversation with Trish and the SydneyLinks team. Their local knowledge and practical advice can help you understand how these changes may affect your property goals and ensure you make informed decisions with confidence.
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