Every Australian Budget comes with winners and losers, but this year’s 26/27 announcement hit a particularly raw nerve: housing.
In the middle of a brutal rental crisis, the government has gone after two of the tax settings that have shaped the property market for decades — negative gearing and the capital gains tax discount.
Whether that’s good news for your rent, though, really depends who you ask. Some say the impact will be tiny.
Others think it will quietly make renting even tougher for Gen Z and younger millennials.
Wait, what is CGT and negative gearing?
Negative gearing is when the costs of owning an investment, like an investment property, are higher than the income it earns, and you can use that loss to reduce your taxable income from other sources.
Capital gains tax is the tax you pay on the profit when you sell an investment, such as property or shares, for more than you bought it for.
Quick recap: what did the Budget actually change?
The government is tightening negative gearing so it mainly applies to new builds, and it’s also changing how the capital gains tax (CGT) discount works. The idea is to pull back some of the very generous tax perks that have encouraged investors to pile into property over the last couple of decades.
Treasurer Jim Chalmers has pitched the reforms as a way to “rebalance a system which is more generous to assets than it is to labour” and to undo “about a decade of decline in home ownership in Australia”.
Budget papers say the changes will help around 75,000 more people become homeowners over the next 10 years and that house prices will grow by about 2 per cent less than they otherwise would have over a couple of years, saving a typical buyer around $19,000 on a median-priced home.
On paper, that’s good news if you’re renting now but want to buy in the future. In the meantime, though, you still have to pay rent somewhere.
What the budget papers say about rents
According to the government’s own modelling, rents are expected to rise, but only slightly.
Budget papers estimate an increase of “less than $2 a week for someone paying the median rent”, a figure that’s already being debated.
Findex adviser Sosha Jay told PEDESTRIAN.TV the direction of travel still matters, even if the increase looks small on paper.
“The Budget estimates rents to increase by less than $2 per week for a household paying the current median rent,” she explained.
“Whilst it’s too early to know the exact figures, the new negative gearing changes could deter new investors entering the property investing market. This creates a supply issue of rentals available and naturally could see an increase in rents throughout the nation.”
She also pointed out that some existing investors may sell in the short term, which could tighten rental supply further.
“New CGT rules could also see current investors and property owners offload some of their investment in the short term, again creating a supply issue for renters.”
Bryan Evans, Private Wealth Adviser at Integro Private Wealth has a similar warning that the changes will reshape how people use property and other assets to build wealth, including through negative gearing.
He notes that limiting negative gearing on existing dwellings “materially changes the strategy” for investors who have been using property losses to cut their tax bill, and says “the days of people buying multiple existing dwellings that generate tax losses being written off against earned income to reduce income tax will become a thing of the past”.
He also points out that the new CGT rules, including a minimum 30 per cent tax rate on gains from 1 July 2027, will hit investments “across all asset classes”, not just real estate, which may push some investors to rethink how and where they invest.
Matt’s view: rents might stay steadier than you think
Senior economist at The Australia Institute, Matt Grudnoff, however, is less convinced that investors exiting automatically means a rental shock.
“This Budget is not going to have a huge impact on renters,” he told P.TV.
“What impact it is going to have is actually on renters who are getting close to being able to buy… from the changes to capital gains tax discount and negative gearing… house prices will flatten out.” For those people, he argues, slower price growth could finally let incomes catch up.
He also challenges the idea that fewer investors equals a rental catastrophe. When landlords sell, the properties stay in the housing pool and are usually bought by first home buyers who were renting beforehand.
“People think that because investors are getting out of the market, that means that there’ll be less rental properties available,” he said.
“But the problem with that logic is the houses that the investors are selling, they don’t burn them down… they’re selling them to ultimately expand the number of owner‑occupiers.”
When that happens, “we also see demand for… a family not demanding one rental property because they’ve stopped being a renter and become a first home buyer”.
He points to Victoria as an example, where taxes pushed some landlords out, the number of rentals fell, but rents in Melbourne rose roughly in line with the national average while prices barely grew compared to other capitals.
Where public and social housing fits in
Matt also argues that one of the deeper problems is the “massive chronic underfunding of public housing”. Public housing as a share of all housing peaked in the 1980s and has been sliding ever since, to the point where it is now “really only for people who are in desperate need of housing”, rather than a normal option for full‑time workers as it was in the ’70s and ’80s.
His view is that boosting public housing would ease pressure on private rents by reducing the number of people forced to compete in the private market. He distinguishes that from “social and affordable” housing, where governments subsidise private or not‑for‑profit providers for a set period, but “at the end of that 20 years of paying subsidies, the government doesn’t own the house”, even after pouring money into it.
For renters, that gap matters. Even if tax changes help some people buy and keep a lid on price growth, those on the lowest incomes are still relying on a public housing system that hasn’t been properly rebuilt.
So what does this mean if you’re renting?
Put simply, the verdict is mixed.
The 26/27 Budget does start to shift the rules of the game. Whether it feels like a lifeline or just another complication will probably depend on where you are on the spectrum: trying to scrape together a deposit, hanging on to your current lease, or waiting for a public housing system that still hasn’t caught up.
The post Will The 26/27 Budget Increase Your Rent? Finance Experts Break Down The Changes appeared first on PEDESTRIAN.TV .
