There’s been no shortage of headlines following the 2026 Australian Federal Budget, with housing firmly dominating the conversation.

With proposed changes to negative gearing and capital gains tax (CGT) concessions now firmly in the spotlight, questions are already being asked about what happens next for first home buyers, renters, investors and the broader housing market.

On today’s FIVEAA Real Estate Radio segment, Bronte Manuel joined Stacey Lee to unpack the budget and discuss what these changes could realistically mean on the ground, particularly here in South Australia.

And while there was plenty of discussion around policy, economics and taxation, one theme sat at the centre of the conversation:

Housing affordability cannot improve unless housing supply improves alongside it.

"There are winners and there are losers"

Bronte opened the discussion candidly, explaining that while the budget reforms may appear straightforward politically, the real-world outcomes are likely to be far more complex.

“There are definitely some winners and definitely some losers,” he explained during the segment. “And I think the wrong people are kind of winning and the wrong people are losing.”

The concern raised throughout the discussion was not necessarily about investors receiving less favourable tax treatment. Instead, it was about where investor demand may now shift and who that directly impacts.

Understanding Negative Gearing in Practical Terms

A key part of the discussion focused on demystifying negative gearing in practical, real-world terms, moving away from political slogans and back to how it actually works on the ground.

Bronte used a simple investment example to illustrate the point, noting that even a well-located investment property can come with significant ongoing costs once you factor in mortgage repayments, maintenance, council rates and general holding expenses. In some cases, these costs can outweigh rental income in the short term, even after the tax settings are applied.

The intention of the explanation was to clarify a common misconception—that negative gearing automatically results in a strong short-term financial gain. In reality, it is often part of a longer-term investment strategy where the focus is on capital growth over time rather than immediate cash flow.

He also touched on the broader market role these investment structures have played historically, particularly in supporting rental supply in suburbs where demand for housing is strong and home ownership is out of reach for many buyers.

Why First Home Buyers Could Face More Competition

A major talking point throughout the segment was the likely redirection of investors toward new housing stock.

Under the proposed changes, negative gearing benefits would largely apply to newly built homes. In theory, this is designed to stimulate construction and increase housing supply.

However, Stacey raised an important question during the discussion:
What happens when investors and first home buyers are suddenly chasing the exact same properties?

For South Australians, that question matters enormously.

As Bronte explained, many first home buyers are already purchasing in growth corridors and new developments across Mount Barker, Two Wells and Adelaide’s outer northern and southern suburbs. Urban infill developments are also heavily attracting entry-level buyers trying to enter the market.

“The investors are now going to want to snap those properties up,” Bronte explained.

He also revealed that within hours of the budget announcement, developers were already reassessing pricing expectations due to anticipated investor demand.

“If I told you developers weren’t already talking about putting prices up today, I’d be lying,” he said.

That was one of the more significant moments of the discussion because it highlighted how quickly policy changes can influence behaviour in the property market.

The Bigger Problem: Australia Still Needs More Homes

Throughout the segment, Bronte repeatedly returned to what he believes is the underlying issue driving affordability pressures across the country.

Supply.

South Australia is currently navigating unprecedented infrastructure demand through projects including AUKUS infrastructure, the North-South Corridor and major hospital developments, all while still needing to rapidly increase housing construction.

The challenge is that those same projects are drawing skilled labour away from residential construction.

Bronte spoke openly about private builders struggling to compete with wages being offered on major government projects, questioning how smaller residential builders are expected to keep pace when trades are increasingly being absorbed elsewhere.

“We’re going to have more demand for homes being built in South Australia than we’ve ever had in history,” he said. “And less capability of building them than we’ve ever had in history.”

That labour shortage, combined with material costs and ongoing migration growth, continues placing enormous pressure on housing delivery.

The discussion also touched on whether Australia may eventually need to embrace faster modular construction methods, similar to overseas markets like Japan, in order to meaningfully increase supply at scale.

Could Rents Continue Rising?

Another major concern raised during the segment was the potential impact on renters.

Drawing on historical context, Bronte referenced the period between 1985 and 1987 when Australia previously altered negative gearing arrangements, noting that rents increased significantly across parts of the country during that time.

“Rents went up 40% in two years,” he said during the discussion.

Bronte was also direct in his view on where rental pressures could head if housing supply continues tightening.

“Rents will run.”

The reasoning behind that concern is relatively straightforward. If fewer investors purchase established rental properties, or if investors choose to hold existing assets longer due to grandfathered tax arrangements, rental supply may tighten even further.

At the same time, landlords facing higher holding costs may seek stronger rental returns to offset those pressures.

Importantly, both Stacey and Bronte acknowledged that rents had already been increasing since COVID-era supply shortages began, meaning it may be difficult to isolate the impact of any single policy change.

However, the broader concern remains unchanged:
Australia does not currently have enough homes to comfortably accommodate demand.

The Potential Shift Towards Owner-Occupied Housing

The conversation also explored how these reforms may influence buyer behaviour more broadly.

Because Australia’s principal place of residence remains exempt from capital gains tax, Bronte suggested more Australians may increasingly direct wealth into their own homes rather than investment properties.

In practical terms, this could mean:

• Larger renovations

• Higher spending on family homes

• Increased competition in tightly held owner-occupier suburbs

• Stronger long-term demand for premium lifestyle locations

Particularly in Adelaide, where blue-chip suburbs continue experiencing limited turnover and strong buyer demand, this may become an increasingly important trend to watch.

Foreign Investment and New Compliance Changes

The segment concluded with discussion around foreign investment and the incoming anti-money laundering reforms commencing from 1 July.

Bronte explained that the new compliance framework will introduce significantly stricter identity verification and reporting obligations across the real estate industry.

While foreign ownership often becomes a highly emotional topic in property discussions, both Stacey and Bronte acknowledged that Australia already has extensive restrictions around foreign buyers purchasing residential property.

The incoming reforms are expected to strengthen oversight even further and increase transparency around the movement of funds through property transactions.

What Happens Next?

The reality is that housing policy rarely produces immediate or perfectly predictable outcomes.

Property markets are shaped by confidence, population growth, supply pipelines, construction capacity, interest rates and consumer behaviour all at once.

What today’s discussion highlighted most clearly is that affordability is not simply about restricting investors or adjusting tax settings. Without enough homes being built, pressure inevitably shifts elsewhere in the system.

At TOOP+TOOP, we expect the coming months will bring significant discussion around how these reforms evolve and how markets respond in practice.

For buyers, sellers, investors and renters alike, the key themes remain unchanged: supply, confidence and accessibility.

And as today’s conversation made clear, solving one part of the housing puzzle is rarely as simple as it first appears.

Watch the radio segment at radio.toop.com.au