In this milestone 300th episode of the Brisbane Property Podcast, Scott and Melinda Jennison unpack the proposed 2026 Federal Budget and explore what the announced policy changes could mean for Brisbane property buyers, investors and renters.
In this episode, we discuss:
- Why housing supply remains one of Australia’s biggest challenges
- What the proposed negative gearing changes could mean for investors
- How changes to capital gains tax may impact long-term wealth creation
- Why Brisbane’s property market is not one single market
- The potential effect of shrinking rental supply on future rents
- Why established properties continue to outperform in scarce locations
- The risks associated with chasing brand-new property purely for tax incentives
- How first home buyers may be impacted by the proposed reforms
- Why local supply and demand fundamentals still matter most
- The importance of professional advice before making investment decisions
- How investor behaviour could change if the proposals become legislation
- Details about the upcoming Brisbane live event at Ballymore Stadium
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Transcript
00:00 –> 00:30
Australia has a housing supply and a rental supply crisis.
In today’s episode of the Brisbane Property Podcast, we are going to be unpacking the 2026 federal budget and what this means for property
here in Brisbane.
We hope you enjoy this episode.
Hi everyone, and welcome back to another episode of the Brisbane Property Podcast with Scott and Melinda Jennison.
An exciting one today.
It’s episode 300 for us.
We started way, way back in COVID and we’ve been delivering the podcast now for 300 episodes.
Well, this is number 300.
00:30 –> 01:00
This is number 300.
And I would like to take a moment just to thank all of those loyal listeners that have been on this journey with us.
It’s been quite a journey, the amount of research and time and energy that’s gone into producing this podcast for you.
We have really enjoyed it.
And one thing that we enjoy most is when we are out and about at inspections or networking events,
when people come up and actually thank us for the contributions that we are making to the industry by sharing information
This valuable information.
01:00 –> 01:32
It does mean a lot to us.
So thank you to all of our loyal listeners over the years.
We really enjoy bringing this information to you and we hope to continue to bring valuable content to help you make property decisions in Brisbane
that informed and not guesswork into the future.
And I think all of my research on weather updates and sporting updates and things like that as well.
Also a big shout out, not only to our loyal listeners and as Melinda said, thank you very much.
It does mean a lot to us when people do tap us on the shoulder, I should say,
and say they listened to the podcast.
01:32 –> 02:06
It is really nice to know that there’s a lot of people out there still listening and getting good value out of it,
but also a shout out to all our guests that we’ve had on in the past.
Thank you to all our guests that have come on and given their time to help and share information.
The research behind the scenes, I know Pauline does a lot as well.
Thanks Pauline for the work you do.
And obviously without saying who does most of the work and the research here, I guess, Melinda,
a big pat on the back to you for all the hard work and the preparation you put in.
You deliver a lot of paperwork to me and I just get here and have a chat most weeks and So the hard work’s
02:06 –> 02:45
done behind the scenes.
It’s definitely not me doing all of that work, that’s for sure.
But it’s nice to be able to deliver that information to our listeners as well.
And let’s not forget our team here at Streamline who produce each episode,
pull it together to ensure that it is streamed out on all of the podcast players and also on YouTube.
So big shout out to everyone involved.
It’s been quite the journey and we look forward to delivering the next 300 episodes in the years ahead.
Yeah, I think if I wanted to thank everyone, I would definitely forget people.
So thanks everyone.
So today’s episode, obviously the federal budget, which came out just recently, Labor’s put out their proposal for the federal budget.
02:45 –> 03:19
It’s an interesting one.
It does have quite an impact on the property market.
So we’ll dive into basically what our thoughts are, I guess, and what it can have an impact on the Brisbane market specifically.
Obviously, we’d always recommend getting some advice from your accountant and your financial planners as well to make sure that You are set up
in the correct way and how you’re buying property is correct for you, obviously.
So that’s not our job to do that advice either.
But yeah, definitely get that advice and we can jump into some of the things that they’ve actually proposed as well.
03:19 –> 03:57
And of course, we’re not going to just deliver this episode as a recap of the budget and what’s been proposed.
We are going to make this relevant to what that might mean for Brisbane and Brisbane property.
And I also want to make a very important statement at the time of recording none of what has been announced in the budget
has been legislated so we are in a period where we’re effectively in limbo we’re waiting to see whether this all passes through parliament
and at this stage it’s very hard for people to make
Informed decisions without the facts because we are now waiting to see what becomes legislated so that we can continue to help people to understand
03:57 –> 04:31
what this might mean for the property market.
So I think without further ado, let’s sort of get into what this might mean.
Sorry, I was just going to jump in very quickly.
And just to all our listeners, if you’re in Brisbane on the 3rd of June,
We’re actually doing a live event at Ballymore Stadium in Brisbane.
So we’ve got a room there.
We’ve got Melinda.
We’ve got a panel of a financial broker.
We’ve also got an accountant, financial planner.
So we’ve got a panel there set up, which we’d be more than happy to answer any questions.
Obviously, there’ll be a lot of talk about the budget and the property market and things like that.
04:31 –> 05:01
But there’ll also be opportunity there to ask the questions, talk to people and ask some advice and some feedback.
Get some knowledge out of the panel there, which will be exciting.
So that’s the 3rd of June at Ballymore.
It starts at 6 o’clock sharp.
And you just can’t turn up.
There is a registration link.
Head over to our socials on Instagram, Streamlined Property Buyers.
You’ll find the post advertising the event.
And there is a link in the Instagram profile where you can actually register for the event.
In the event, you can’t make the event live.
05:01 –> 05:33
There’s also potentially the opportunity to receive a summary of the event after.
You’re going to get a lot more value by being in the room on the night because you will have the opportunity to ask
direct questions to the panel.
We are capping the event at a maximum number.
So when we are at capacity, obviously we’re going to remove that link.
So if you’re wanting to come along, please head over to the Streamlined Property Buyers Instagram page.
The link is in the bio and you can register to come along at no cost.
Yeah, it’s a free event.
So come along and get some knowledge.
05:33 –> 06:03
All the team will be there and we’re more than happy to chat to people and have a good chat and share some information
as well.
So budget-wise?
Yes, so of course we all know now that the proposal is to remove negative gearing on existing homes.
We also know that the capital gains tax discount will be changing from the 1st of July 2027 and additionally one of the big
kickers in the budget that’s been announced is changes to how tax or sorry, how trust structures are taxed.
06:03 –> 06:36
So they’re probably the big three things that relate to property.
One thing that I guess is a small positive for property is the allocation of a budget to go towards infrastructure to help build
more homes.
However, that is unlikely to deliver a huge volume of new homes when you divide that by the number of markets around Australia that actually
need to create new land for subdivision.
So when we talk about infrastructure, we’re talking about things like sewer lines, water lines,
06:36 –> 07:10
things that make land that sits on the fringes of capital cities and regional areas, things that make that land
More feasible to be developed.
You actually need those services to subdivide.
So the government is actually allocating some funds to that.
However, the reforms that have been proposed, and this is the underlying thing that I’d like to focus on in this episode,
they mostly change the tax treatment of who owns homes, but they do not build sufficient volumes or sufficient numbers of new homes.
07:10 –> 07:42
So this is probably the thing to take away from this budget whilst we’re trying to help the property market.
And the proposal is to try and encourage more affordable housing when we’re not making a meaningful contribution to the supply of new housing,
especially in a location like Brisbane, where if you are a regular listener on this podcast,
you will understand how much we’ve been speaking about the structural undersupply that exists in our market we do not have enough homes currently
07:42 –> 08:18
available to buy we do not have enough homes currently available to rent and we’re certainly not building enough new homes to deliver meaningful
supply to the market
So I want you to consider that as we talk through some of these budget proposals,
because what we’re going to be explaining is how the composition of buyers may actually shift and change and what that might mean for Brisbane
property values and Brisbane rent values over time.
It’s interesting that when we talk about the reforms and billing, I mean, if you’ve got an investor, obviously,
08:18 –> 08:55
then that sells an established dwelling to an owner-occupier, it’s not increasing the stock.
That’s right no there’s no stock increase and i think one of the assumptions with with the budget is that it’s great for you
know a property investor or a landlord to sell an asset and it’s great for an owner-occupier to buy that asset but what that actually
means is that that’s one less home in the market available for rent now when a population is stagnant so that means we’re not
growing in terms of the volume of people moving to or living in a certain location that scenario is actually okay when you actually
08:55 –> 09:26
replace one owner occupier or rather one landlord with an owner occupier in a market where the population is steady that that’s great and we
would like to encourage that the big issue
And the thing that is quite often not discussed is that we are not in a situation, certainly not in southeast Queensland,
where we have stagnant population growth.
We still have record high immigration from overseas.
We still have a strong volume of people coming in to southeast Queensland from interstate.
09:26 –> 09:59
Just want to correct my fact.
We have come off in terms of the volume of international migrants, but we’re still well above long-term averages.
So we’ve got this population that keeps expanding.
There’s more people that need a home.
Now, a lot of the time people will rent first and then they will potentially buy at a later time.
So effectively, if we’re reducing the number of established properties that are available for rent,
because we are discouraging investors from buying into these locations, but we are encouraging owner occupiers,
10:00 –> 10:31
To purchase established dwellings.
Obviously, if a landlord leaves that market and an owner-occupier replaces that landlord, that’s one less rental property in the market.
Over time, we might see a compositional shift in who that buyer demographic is.
And if we see more owner-occupiers, which is the government’s intent, if we see more owner-occupiers moving into established market areas,
we’re going to see a diminishing rental supply.
Now, When you see supply shrinking, but that demand remaining elevated, you will see rents increase.
10:31 –> 11:07
That is a factual result of diminishing supply at a time where demand is maintained or in fact increased.
And that is a significant issue, especially in Brisbane,
where we’ve already seen rents increase well above the level of inflation for many years now since COVID.
If we can stick with the housing supply.
Side of things before we get on and talk about negative gearing and a capital gain side of it.
So when we break it down a little bit more and we say to investors, okay,
you’re not going to get the benefits from buying established properties.
So obviously investors then won’t buy the established properties or probably will be discouraged, I guess I should say,
11:07 –> 11:39
from buying established properties for people to rent.
Then it pushes the pressure back on the owner occupiers to buy in the established areas.
Okay.
The investors are then pushed to areas where there are new supply and new housing, if we can build them,
because at the moment we’re short on construction and the cost of construction is definitely not going down.
So that’s pushing the investors, I should say, into outer areas.
And this would happen, I guess, Or high density new unit development.
And this is obviously going to be common, I would have thought, everywhere, not just Brisbane.
11:39 –> 12:15
So then the investors buy out in, let’s say they’re out the local area close to the CBD and they’re buying a brand new
house.
Then when they go to sell that house, it’s not a new house anymore.
So the next investor or the next person can’t benefit from that side of things as well.
That’s correct.
So obviously if an investor does purchase brand new because of the tax incentives, which by the way,
is not an effective investment strategy whatsoever.
However, obviously we’ve already seen a lot of property spruikers, you know,
hitting inboxes with the fact that their brand new builds are now the most tax effective way to invest in property noting it’s not
12:15 –> 12:47
yet legislated, but we’re going to see more and more of this.
But of course, for an investor that vests their money into that brand new product, of course,
that product becomes a secondhand product once that property settles.
And so their market for resale will automatically shrink because you won’t have investors that are wanting to buy back into that market in the event
that these tax changes are actually legislated.
So the other thing that I think it is important to say is that already we have a lot of incentives for first home
12:47 –> 13:20
buyers to be purchasing brand new properties so this budget is designed apparently to to benefit the younger generation so if we’re already incentivizing
our our younger first home buyers to be purchasing their first home being a brand new product because that’s where a lot of the state
government incentives sit in terms of first home buyer incentives all of a sudden we’ve made it more competitive for the very people we’re
trying to help by
Actually shifting investor demand into that brand new market simply because of those tax incentives.
13:20 –> 13:54
Now, I will say for more sophisticated investors, we’re not going to see that behavior change simply because the tax strategy may have changed.
In fact, what we are finding with many people that we’re partnering with is that already they’re looking for more tax effective ways to continue
to purchase established properties because when we look at the long-term capital growth,
It is always and has always outperformed in established locations compared to new locations.
So of course, as a property investor, everyone invests for different reasons,
13:54 –> 14:26
but people that typically are looking for long-term wealth creation will still get stronger long-term capital growth in the markets where there is a scarcity
of land and there’s a lack of available supply.
And that’s going to be in the established markets, not in the brand new property space.
We’ve had some clients in the past, exactly what you just talked about,
where young couples have purchased an established property in a good location,
held it for a period of time because of the equity and the uplift they’ve had from the capital growth side of things.
14:26 –> 14:57
They might have sold that property.
And we’ve had a few people do this, where they’ve sold that property and used that money then to go and buy themselves their
principal place of residence.
So- This is one of the kickers from the budget that I really want to address.
So again, the government is trying to make it easier.
Apparently, according to the marketing message, they’re trying to make it easier for the younger generation to buy their first home.
Now we know through not only our own, the clients that we’ve represented over many years, but also through many industry colleagues,
14:57 –> 15:32
that there’s many people that live in locations that may be quite expensive to purchase.
For example, in Sydney, We’ve helped many clients who live in Sydney to buy an investment property because they cannot afford to buy a home
in Sydney.
So they rent vest.
They use the or have in the past used the benefit of negative gearing to purchase in a more affordable location.
And we’ve had some clients already cycle through this process where they then sell that asset relying on the 50% capital gains tax discount.
To use the equity that they have built up to go back into Sydney, which is a much more expensive market,
15:32 –> 16:08
to purchase their first home.
Now, that is a real strategy that many investors in the past have relied upon to actually make home ownership a reality.
Right now, with the budget announcements, we are going to see a divide based on where people live.
Some people that are already living in more established locations where property values are much more expensive will be locked out of home ownership
for much longer.
The other thing is with the capital gains tax changes,
even if those young individuals wanted to invest their income in other asset classes under the proposed changes,
16:08 –> 16:40
they’re now going to be taxed a minimum of 30% on that income being any capital gains that they make,
which again is actually going to handbrake them and slow them down to the path of home ownership.
So it’s an interesting one then.
And we had this conversation just the other night with one of our boys and we were talking about the new homes and encouraging
people to buy new homes.
And we actually had a really simple, it felt like a simple conversation, I think,
to say they’re encouraging you to go and buy a brand new home, but
16:41 –> 17:12
Where they’re actually building those homes is so far away from the city.
So for work in the city, for universities, for hospitals, for the major areas where most people will probably work,
but yet you’re probably going to have to drive one to two hours or commute quite a long distance.
So as much as it sounds like it’s encouraging people to go and buy a brand new home in a good area to get
into the market, it actually makes it quite difficult.
From a lifestyle perspective.
And that’s for those people that choose to purchase a house and land.
17:12 –> 17:44
Obviously, the policy changes will capture higher density living as new properties as well.
So something that you purchase perhaps off the plan or alternatively something that’s brand new that no one has lived in previously,
that’s also going to be captured as a brand new property.
Now, of course, we’ve talked about the fact that in Brisbane right now, we’re struggling, developers are struggling to deliver.
A high density product that’s feasible.
So the ones that are being developed are likely to be targeting a much higher price point.
17:44 –> 18:17
So we’re not really building the type of supply that first home buyers typically are able to target.
So this is not a problem in terms of trying to purchase a property.
The problem is an affordability problem.
We’re not building an affordable product that actually aligns with what first home buyers can afford to buy and that again shifts first home
buyers into markets potentially that become less affordable.
That is if they’re wanting to rely on those incentives that government provide.
I was going to say now the incentives obviously for that type of product then if we start to move back in towards the CBD
18:17 –> 18:51
and we’re only talking Brisbane here I don’t know the numbers on all other capitals or anywhere else but if you look at Brisbane
then and you say okay now you can you want to buy closer to the CBD you’re going to have to move into a unit
you’ll struggle to get any kind of that one million dollar threshold.
That’s right.
So what you’re talking about with the $1 million threshold is the ability for first home buyers then to rely on the 5% deposit
scheme, which came into effect in October last year.
Now, obviously that does actually enable first home buyers to purchase established dwellings,
18:51 –> 19:23
but you certainly won’t be buying many established dwellings under that price point, not in Brisbane at the moment.
There will still be some established unit purchases that first home buyers can make and now with investors potentially pausing and sitting on the sidelines
there is real opportunity right now for first home buyers in that segment of the market but it’s pretty tough in Brisbane to be
buying certainly in the Brisbane City Council region to be buying an established house and land in the Brisbane City Council region simply because
19:24 –> 19:58
To meet that threshold of $1 million to qualify for that 5% deposit scheme,
the market’s just shifted too far for that to apply in many locations in the Brisbane City Council region.
I know when we’re talking through all this information,
we’re throwing through that $1 million threshold and the 5% deposit scheme and then the new builds and it sounds really confusing.
I think it’s very confusing and we’re throwing in the negative gearing side of it.
I mean, from an investment point of view, and I know you touched on this earlier and we always do talk about this,
19:58 –> 20:28
is the scarcity is what drives the capital growth.
So we want to buy property that’s closer where there’s the scarcity there as opposed to going further out where there’s more and more
land opening up.
Again, when you’re trying to encourage the younger generation, I guess, the ones that we’re trying to encourage them to get into property,
we do want them to also benefit financially from this.
Not just buy something because they can buy something,
but also buy something that is going to help you and set you up for that future down the track as well.
20:28 –> 21:02
And that’s another sad reality of the current proposal.
Our generation had the benefit of negative gearing and the 50% capital gains tax discount to enable us to build wealth.
However, the younger generation and we have three adult
Sons, they no longer will have that same opportunity that we had.
And that is the real reality.
And I guess that’s the confusion that’s come off the back of the budget announcements,
because the population group that the federal government were trying to protect and trying to encourage to build more wealth, they’re they’re being,
21:02 –> 21:34
I guess, disadvantaged because of some of these changes to policy as well.
So I guess, you know, it makes very little sense when the federal government said that this is to create intergenerational equity,
because more so than not, it’s created more division.
And we’re now seeing that some of the younger population groups are actually being impacted more so than the older generation.
So they’re claiming then that negative gearing and the capital gains concessions will push prices, do push prices up.
21:34 –> 22:10
So that is the claim.
And the claim is that the investors who are competing with the owner occupiers are the ones that are pushing prices up.
Now, certainly in some markets across the country, which are potentially more investor driven,
we may see that the distortion between local buyers and investors, because a lot of investors may be investing from capital cities,
they’re on higher incomes, they can afford to pay more, they can push those property values up.
Now, in a capital city market like Brisbane, you don’t actually get that same distortion or that same change in the composition of buyers.
22:10 –> 22:48
In fact, we had one conversation with one agency this week,
36 properties sold in the last month before any of these announcements came through.
And of those, 31 purchases were made by owner occupiers.
So that only left five out of the 36 purchases that were being made by property investors.
Now, this is a location that’s in the Brisbane City Council.
Region and of course our on the ground experience also points to the fact that the depth of buyers in Brisbane more recently this
is an owner-occupier driven market largely when you look at some other areas of Brisbane and we’ve had owner-occupiers looking for homes in some
22:48 –> 23:22
of these locations we’ve seen a trend whereby investors have sort of pulled back a little bit since the war interest rates increasing and also
obviously as information about this budget was starting to be leaked in some locations we’ve actually seen listing volumes start to increase and we
have already seen that demand start to shrink so one of the points I’d like to make about Brisbane and how Brisbane might fare
in the coming months is that Brisbane’s not one property market There’s going to be markets that are largely driven by owner occupiers that will
23:22 –> 23:59
see very little impact in terms of price changes.
And in fact, we’ll still see those prices escalate because there’s still more buyers than sellers and those buyers are those owner occupiers.
The markets to watch closely and I say this with a high degree of caution,
the markets to watch closely are those markets that have been driven largely over recent years by interstate investors and where affordability has been
stretched for local buyers, because if we see all of a sudden that we’re not going to have the benefit of negative gearing for new
23:59 –> 24:32
investors buying into established markets that have been driven in the past by interstate investment, we’re going to see demand shrink.
Now, unless you see the local buyers step up and obviously maintain that demand,
you will see pressure on prices that is actually on the downside, not on the upside.
These are markets to watch closely and anything that happens in Brisbane’s median value trend in the months ahead must be treated with caution.
We’re going to be watching it at a suburb level, even though we’ve got to be cautious relying on suburb level data.
24:32 –> 25:07
We are also starting to see some tracking evidence of listing volumes starting to increase in some of those markets that we’ve talked about
previously.
That become at-risk markets, especially when economic conditions change.
We’re in those situations or we’re in those conditions right now.
Now, I know you talked a little bit about rent vesting earlier.
So I think we sort of covered that side of things, unless there’s anything you need to add to that one.
But I think, as you talked about, we’ve helped people with that type of strategy, the rent vesting.
And I think it is a good way for people to be able to get into a market, benefit from that capital growth,
25:07 –> 25:37
help themselves again then if we want to buy their own principal place of residence.
And it’s a good strategy to get into that place.
One thing I would like to mention in relation to rents is that Treasury were forecasting through their modelling that the changes to the tax
that have been proposed will only increase rents by $2 per week.
My argument is where?
Because Australia is not one property market.
And when we’ve already seen such diversity in terms of capital growth rates over the last 12 months and rental price changes over the last
25:37 –> 26:10
12 months, Being very different in different locations, a blanket modelling impact of $2 per week makes no sense.
We’ve got to look at what’s happening locally.
And right now in Brisbane with vacancy rates sitting at 0.
8%, According to SQM research, we’re at critically low vacancy.
Supply of rental properties already and if we start to see those rental properties being sold and owner occupiers replacing those those replacing the ownership
status so we’ve got fewer landlords in the market we will see a shrinkage of rental supply and then there’s nothing that can happen
26:10 –> 26:45
then then more upward pressure being placed on rents and it’s not what renters want to hear
That this is a result of some you know compositional change in in who the buyer group may be and this will roll out
over time it’s not going to be an instant effect i think definitely when you look at the rents and we’ve we’ve been down
to around one percent vacancy rates for for so long now i kind of remember the back of covert yeah since covert um rents
have increased all the way along you know i i probably can’t see more something else than putting more pressure on rents that’s right
26:45 –> 27:18
I think one of the things that the federal government is hoping to achieve is that negative gearing changes will increase the supply of property
and by shifting the demand that investors have previously had in established properties into new properties.
Unfortunately, that doesn’t work in theory either because supply obviously needs to be balanced carefully with the availability of land, the developability,
if that’s the word, of land, but also the affordability of what those new projects cost.
And I pointed that out in the high density space.
27:18 –> 27:48
If we’re not building an affordable product, perhaps it’s going to be harder to sell.
And we’re going to limit who we can sell that product to.
The same applies to house and land packages.
If we’re not building an affordable product, it’s going to be hard to sell that on.
And investors are not all just going to automatically pivot and purchase brand new properties.
Policy change like this will influence some investor behavior, but sophisticated investors that understand why they’re investing and what long-term outcomes they’re looking for.
27:48 –> 28:20
Potentially, we’ll just look at different structures in terms of how to progress in the most tax-effective way.
Because one thing that has come out in the proposal is that all of the losses will be quarantined.
So what that means is even in the event that you do purchase an established property,
the losses associated with holding that asset will be captured or quarantined, when you start to earn future income on that asset, or alternatively,
you sell that asset and there is a capital gain, the losses will be offset against that capital gain or against that future income.
28:20 –> 28:54
So that is the proposal at the moment.
So the investor doesn’t lose the, I guess, the losses associated with holding that asset.
They just don’t get the immediate 12-month offset against their income against their take home income.
So that is the big difference.
I guess if those losses were not quarantined, it would be more diabolical, would see investors shift out of the market.
But again, I feel like this incentivises the wealthy more so than the mum and dad investors,
because it’s the mum and dad investors that actually contribute meaningfully to the rental supply.
28:54 –> 29:26
And yet they’re the ones that probably find it harder from a cash flow perspective to hold these assets without the benefit of negative
gearing.
Whereas those that are more wealthy potentially are already earning higher incomes.
They’re potentially already in a position where they have assets in their portfolio that are already positively geared.
So adding another asset that that might have a negative cash flow means less for them because they can offset that negative cash flow
against any positive cash flow that they may already be receiving from other assets.
29:26 –> 29:58
So although the intent was there to shift investment behavior, it might not actually have that outcome in practice,
especially when we’re looking at who invests and and how difficult it is for those investors to hold different assets from a cash flow
perspective.
Yeah, I think that’s a really important part when you talk about, and if you really break it down in a simple way,
that the people that are probably going to be affected the most, what you call your mum and dad investors,
that might buy one investment property or maybe two, you know, not a lot of a large portfolio, but they’re trying to get ahead.
29:58 –> 30:32
They’re trying to buy investment properties and to get ahead.
They’re the ones that are probably going to struggle the most and find this will hurt them probably the most compared to anyone.
And what I urge everybody to do is do not make knee-jerk reactions and do not automatically think, okay, well,
I’m going to invest in property.
I’m just going to buy brand new.
Buying brand new property comes with risks.
And we’ve talked about this on previous episodes of the podcast.
And I’ve also written a number of blogs on the Streamlined Property Buyers website about the risks associated with buying brand new property and also
30:32 –> 31:06
how how much the government actually earns from a brand new property through so many layers of tax.
So of course, government are now incentivizing the very product that they make the most income from.
And if you haven’t already heard me talking about this on previous episodes,
obviously we’ve discussed the layers of government taxes from infrastructure charges at a council government,
a local government level to stamp duty charges at a state government level to GST on the products associated with building a new home,
payroll tax, all of these federal government taxes that are applied to a brand new build.
31:06 –> 31:36
And the increase in the cost to deliver a brand new product over the last five years,
the increase that’s been attributed to tax increases is extreme in some locations.
And if you’re interested in finding out more about this on the Streamlined Property Buyers website,
I have just actually published a blog about what these proposed tax changes mean and why you shouldn’t always pivot straight away to brand
new property.
I encourage you to go and have a look at that blog, streamlinedpropertybuyers.
31:36 –> 32:09
Com.
Au forward slash blog.
You’ll find the link to the article that we just published as well as a lot of data to support why the government encouraging
investing in brand new and just how much money they make from that type of investment.
Yeah, I’d be very, very careful going, buying brand new house and land packages as we talk about the scarcity,
getting ahead in life and things like that.
So break it down simply as well.
I mean, the grandfathering side of things, grandfathering, they’re saying it protects existing investors.
32:09 –> 32:46
Yeah and I guess this is what you know makes no sense from an intergenerational wealth perspective those of us many many investors that are
already in the market and already own assets we retain the negative gearing benefits that are associated with any assets that that were purchased
prior to budget night of course the capital gains tax changes will apply to all existing investors and It is important for anyone that holds
an existing asset.
In fact, it’s critical if this gets passed through as legislation that you conduct an independent valuation as at June 30 next year,
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June 30, 2027, because from July 1, the capital gains tax will be calculated in a different way.
So you will still get the 50% capital gains tax discount on any capital gains up to June 30 next year,
from July 1 next year, that will transition over to the alternative indexation model that’s been proposed under these new tax changes.
Now, if you don’t get that valuation, the government’s going to give you a tool to automatically calculate that.
Now, I can guarantee you that tool will not be in your best interest.
So getting an independent valuation will ensure that the gains that you’ve made are locked in up until that point.
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And then in the event you sell in the years ahead,
you’ll obviously have to provide that independent valuation to your accountant who’ll do those tax adjustments for you.
So you’d probably then find that if the grandfathering is happening, that that might reduce turnover of existing properties.
So investors would probably then have an incentive just to hold their properties.
Well, that’s what many people are talking about within the industry.
There’s less incentive to sell.
Obviously, people that perhaps are not as encouraged by the new capital gains tax regime that’s proposed from the 1st of July,
33:53 –> 34:28
we may see some sell off in the next 12 months.
But ultimately, with the grandfathering of negative gearing, of course, once an existing investor does sell,
they would have to buy a brand new product to have the benefit of ongoing negative gearing.
So we’re unlikely to see a major sell-off unless people are wanting to pull their money out of property and look at other asset
classes.
And look, again, I would encourage people not to make any knee-jerk reactions.
I’m already seeing some of those headlines out there about property values are going to fall and it’s going to be diabolical in the market.
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The reality is a market
Is is only subject to local supply and demand metrics and when we’re still seeing multiple offers in Brisbane on properties of course not
all properties I will be honest in saying that there are some properties now that are becoming a little bit stale they’re sitting on the market
for a few more weeks agents are not able to use as much pressure because they don’t have as many buyers that’s actually a good
thing because it’s more representative of a standard market or normal market conditions where Whereas we’ve been in such a strong seller’s market for so long,
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we’ve certainly seen some investors step aside, but there’s still enough owner occupiers in some segments of the market that we’re still seeing that demand
and we’re still seeing those properties sell for a strong price.
So a couple of points, I guess, I guess some summary on a few things here.
So, I mean, they talk about the theory is that fewer investors means more opportunity for first home buyers.
And then the practical reality of that is that one third of Australian households rent.
So those rental properties, they’ve got to be supplied by someone.
35:33 –> 36:03
Yeah that’s right and you know there’s also that theory that a home that’s been transferred from an investor to an owner occupier obviously
it’s not a new home that’s just transferring the ownership but it does not add to national housing supply and this is the problem
that we have right now we don’t have enough homes we’re not building enough homes so you know it’s not really solving the underlying
problem Investors, I mean, we talk about investors separate from renters, but in Australia, the private sector, as we touched on, they’re
36:03 –> 36:35
a major part of the rental housing supply.
Yeah, so we need to be very careful of not actually changing that structure too much.
In Queensland, it’s more than 95% of investment properties are actually supplied by private mum and dad investors.
So if you’re actually going to.
Disrupt that process or that ability for those investors to be purchasing anywhere then potentially that can cause a structural under supply in that rental
market over time and that’s one of the things that we need to be very mindful of and and we would be watching closely
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Have you got any other points to add?
No.
To sum things up?
Look, I think there’s been a lot of people that potentially have been relying on tax minimization,
certainly those sort of properties in blue chip locations that are yielding quite low.
At the end of the day, they are still contributing to rental supply.
They are still providing an accommodation, a home for someone to rent.
If those people do step aside and move out of the market,
we’re going to find that there’s going to become fewer rental properties available in the locations that ultimately people want to live near their
37:10 –> 37:43
employment, near those lifestyle hubs, near public transport corridors.
Over time, I do think we’ll start to see investors look at different ways to purchase property.
And of course, we can’t cover that as part of this podcast,
but we were already seeing different ways to structure perhaps the purchase of an investment.
But again, they’re the wealthy individuals that are having these conversations they’re getting the advice they’re paying for the advice it’s not the mum
and dad investors that are able to do this so potentially we’ll still see a segment of the market continue to invest in those
37:43 –> 38:17
established properties they’ll just do it in a different way And I think that we’ll also see an increase in the number of people
setting up self-managed super funds.
And again, I urge with caution those people that then go and buy a brand new property within their super fund.
It’s not always the best option.
And I would encourage you to work with a professional team to understand what structure might be best if you do still intend to purchase
property as an investment vehicle.
But more so ensuring that you target the right type of asset that’s going to deliver on your results and do not always just
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chase tax incentives because they’re not always going to deliver you the results that you may be looking for long-term.
So I encourage you to get advice from qualified property investment advisors, from financial planners, from your accounting team,
and also working with mortgage brokers on ensuring that the mortgages that you are setting up are still going to work in your favor
from a tax perspective.
So this is, out of times like this, it becomes even more important to ensure you’ve got a professional team working collaboratively together.
38:49 –> 39:23
I certainly wouldn’t be just going and saying, I want to go and buy a property in this vehicle without seeking advice from a professional
team.
Don’t forget the 3rd of June, as we mentioned earlier, our live event at Ballymore Stadium here in Brisbane,
where we’ll be talking all things property, tax, investing, you name it.
There’s a whole panel there.
Come and meet everyone.
It’s a free event, as we said.
If you can’t make it, you can still register for some information.
Jump over, as Melinda said, on the Streamlined Property Buyers socials and you’ll be able to see the link where you can register for that.
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It’s free.
So come along and have a chat and we’ll be able to talk more about property with everyone.
Yes, look forward to seeing many of you at that live event.
Yeah, it’s exciting.
So thank you again for everyone, our 300th episode of the Brisbane Property Podcast.
And as I’ve said probably 300 times now, I’ll let Melinda wrap things up.
Thanks very much for listening.
Take care and bye for now.
Thanks once again for joining us on this, the 300th episode of the Brisbane Property Podcast.
We would love for you to leave us a review, subscribe to the channel if you are watching on YouTube and, you know,
39:56 –> 40:12
share the episode with friends and family so that they too can benefit from the information that we share with you, our audience.
Thank you again for being on this journey with us and we look forward to delivering more valuable content again in the future.
We’ll talk to you again soon.
Bye for now.