2026-2027 federal budget preview: what brokers need to know

With the 2026–27 federal budget set to be handed down tonight, attention turns to what it will mean for Australia’s loan and property markets. On the agenda are tax reforms, with Treasurer Chalmers confirming there will be a “tax reform” package in this budget, as well as the potential permanent extension of the instant asset write-off. "What's happening in our housing market now, it's playing out, I think, particularly to disadvantaged younger people, is that the share of owner-occupiers over a very long period has come down as the share of investors has gone up," Chalmers said on Channel 9 on Sunday. "And I think any responsible government needs to acknowledge that. I think that is one of the main concerns and anxieties that people have in our economy. "And, so we’ve said for some time, there’ll be a tax reform package in the budget. The details of that will be released on Tuesday night. But people know that we understand there is a legitimate concern about how hard it is for younger people to get into the market, and so the budget is partly motivated by that. "There will be a focus in the budget on the cost of living and particularly on housing... we’ve made it really clear that even though the problem in the housing market begins with supply, it doesn’t end there," Chalmers added. "As I said, the status quo in the housing market and the tax system is unfair and therefore unacceptable to us. Too many people locked out, not enough homes. And so, overwhelmingly, the government’s focus has been on supply. That’s appropriate, that is the main game." What brokers should watch While the full details remain under wraps, speculation has intensified around possible changes to negative gearing, the 50% capital gains tax (CGT) discount and the taxation of discretionary trusts. Negative gearing is a tax rule that allows property investors to deduct losses on a rental property from their taxable income. Meanwhile, the 50% CGT discount means investors only pay tax on half of any capital gain made on an asset held for more than 12 months. Reports suggest the Albanese government is considering reducing the CGT discount and revisiting negative gearing settings as part of efforts to curb investor demand and improve affordability for owner-occupiers. Changes are expected to include potential carve-outs for newly built housing, as the government tries to avoid slowing residential construction activity at a time when supply shortages remain acute. But at the same time, a reduction in investor tax incentives could dampen appetite for established investment properties over time. Industry warns of rental fallout The Finance Brokers Association of Australia (FBAA) has pushed back against potential changes to investor tax concessions, warning the measures could do more to worsen rental affordability rather than improving housing access. "Less rental properties can only drive up rental prices, which have already risen significantly across Australia over recent years," he said. However, market critics and housing advocates have long argued that the current tax settings overcompensate investors and may contribute to inflated house prices by encouraging investment in property for capital gains, rather than longer-term housing use. Meanwhile, investor lending continues to climb nationwide, with the value of actual lending to investors jumping by almost 20% in the three months to September, according to Sally Auld, chief economist at National Australia Bank (NAB). The growing investor activity has increasingly put owner-occupiers — particularly first-home buyers — in direct competition with investors, contributing to rising prices nationwide. Janine Ashmore, cofounder and director at Darwin-based Bliss Home Loans, told Australian Broker that interstate developers and investors are buying up properties so fast that would-be homeowners are "going in and offering a good $100,000 over the purchase price, just so they can beat the investors. "They're panicking to beat everyone else," she added. Starting 1 February, lenders have been restricted to allocating no more than 20% of new quarterly lending to high debt-to-income (DTI) loans for owner-occupiers, and another 20% for investors. High DTI loans are classified as loans where debt exceeds six times a borrower’s income. The measures were pitched as a way to cool investor activity, with investors typically borrowing at higher debt multiples and using leverage more aggressively than owner-occupiers.