Investors hit hardest
The May budget wound back negative gearing – the arrangement that allows property investors to offset rental losses against other taxable income – for established residential properties purchased after Budget night, while also removing the capital gains tax discount on newly acquired investment assets.
Loan Market’s data shows the policy shift, combined with the RBA’s tightening cycle, has driven a clear divide in investor behaviour: lodgements for new-build investment properties, which remain eligible for negative gearing, are down a comparatively modest 15% since February, while lodgements for existing properties – now excluded from the concession – have collapsed 40%.
First home buyers have not been spared, with lodgements down 23% by number and 19% by value since early February.
Owner-occupier upgraders have proven more resilient, recording a comparatively smaller 14% fall by number, suggesting existing homeowners are more insulated from the twin pressures of tighter borrowing capacity and shifting investment tax settings than either first-time buyers or investors.
The pullback is not evenly spread geographically. Victoria recorded the smallest decline, down 19% by number, which Loan Market Group attributes partly to a softer starting base heading into 2026. New South Wales and Queensland lodgements are down 25% and 27% respectively, while regional markets across South Australia, Western Australia, Tasmania, the ACT and the Northern Territory have been hit hardest, falling 32% by number.