Updated October 2026, 2026 tax changes: from 1 July 2027, negative gearing for residential property is generally limited to eligible new builds (later buyers of that dwelling can't access it), and the 50% capital gains tax discount for individuals, trusts and partnerships is replaced with cost base indexation and a 30% minimum tax on gains. Properties held at 7:30pm (AEST) on 12 May 2026 keep their existing negative gearing treatment, and the changes to capital gains tax apply only to gains that accrue after 1 July 2027; investors in new builds can choose the 50% discount or the new rules. Both changes are now law; see the ATO. This is general information only; speak to a registered tax agent about your situation.
The Labor Party was re-elected at the 2025 federal election by a landslide. Election outcomes can shake up heaps of areas around the country, and the property market is one that depends a lot on what the government decides to do. A property investment company like Liviti can help you interpret how political outcomes influence the property market.
In this article, we’ll explain what this Labor win means for people who own homes, those who buy properties to make a bit of cash, folks who rent, and the ones building new places. We’ll also have a look at how this could change the bigger picture for Australia’s economy and the rules around property in the years ahead.
Labor Party’s Housing Platform: A Refresher
Labor’s campaign in 2025 placed a heavy emphasis on housing affordability, tenant rights, and social infrastructure. Among the key housing-related policy promises were:
- Increased investment in social and affordable housing.
- Rental reforms aimed at giving renters more stability.
- Support for build-to-rent developments, through financial incentives and planning reforms.
These proposals differ from the approach of the previous Coalition government, signalling potential change for many market participants.
The Impact on Property Investors
One of the most closely watched aspects of Labor’s win was its stance on negative gearing and capital gains tax (CGT). While the party ruled out immediate changes during the 2025 campaign, changes to both were legislated in 2026. From 1 July 2027, negative gearing for residential property is limited to properties held at 7:30pm (AEST) on 12 May 2026 and eligible new builds, and the 50% CGT discount for individuals, trusts and partnerships is replaced with cost base indexation and a 30% minimum tax for gains accruing after that date. See the update at the top of this article.
Potential implications for investors include:
- Reduced tax incentives may dampen demand for investment properties, especially in major cities.
- A possible shift in investment interest towards new builds, as negative gearing for properties bought after 12 May 2026 is limited to eligible new builds from 1 July 2027.
- Increased interest in build-to-rent schemes, as institutional investors seek to take advantage of emerging government incentives.
While this may raise concerns for some investors, others may see opportunity in adjusting their strategies to align with the new tax settings and planning regulations.
First-Home Buyers: A Market Tilt in Their Favour?
Labor’s platform has long aimed to level the playing field for first-time buyers, who have been squeezed by high prices, investor competition, and sluggish wage growth. By reviewing property tax concessions and investing in new housing stock, the government hopes to create more accessible entry points into the market.
Benefits for first-home buyers may include:
- Greater housing supply and reduced competition from investors could ease price pressures in key metropolitan areas.
- Enhanced government support through shared equity schemes and first-home buyer grants.
- More opportunities in the outer suburbs and regional areas due to expanded infrastructure investment.
The success of these policies will depend largely on implementation and market conditions.
Renters and the Rental Market
Labor’s all about helping renters, you know? They promised to make renting less of a hassle: more secure, cheaper, and just better overall. Look, finding a place to live that’s not gonna break the bank is a huge deal for heaps of Aussies right now. So, if they shake things up in the rental market, it could really change things for people renting and the folks who own the places.
Key reforms include:
- National standards for rental increases, such as limits on how often landlords can raise rents.
- Promotion of longer-term leases, aiming to provide renters with greater stability.
- Funding for minimum housing quality standards, including insulation, ventilation, and safety features.
For landlords, these changes may introduce new compliance costs and potentially limit rental yields in the short term. However, they also pave the way for more stable tenancies and could encourage institutional ownership in the rental market.
Developers and the Construction Industry
Labor’s housing plan includes a significant ramp-up in public and affordable housing construction, which may provide a much-needed boost to the construction and development sector, particularly in the wake of material shortages and labour cost increases seen in recent years.
Developers may see:
- Increased demand for partnerships in government-backed housing projects.
- Incentives for sustainable building practices and energy-efficient developments.
- Zoning and planning reform aimed at streamlining approvals for high-density and affordable projects.
While developers may benefit from the volume of work available, compliance with stricter environmental and social mandates may require upfront investment and innovation.
Economic and Regulatory Considerations
The property market does not exist in isolation. Broader economic indicators, such as interest rates, consumer confidence, and migration policy, will also shape outcomes.
- Infrastructure spending is likely to remain robust, with ongoing investments in transport and regional development, factors that can support suburban and regional property values.
Market observers should also pay attention to state-level housing policy, as some measures (e.g., stamp duty reform) fall outside federal jurisdiction.
What Should Stakeholders Watch Next?
In the wake of Labor’s victory, the property sector should closely monitor:
- The negative gearing and CGT changes that take effect from 1 July 2027.
- Further legislative developments around rental reform and taxation.
- Market reaction and sentiment shifts, particularly in metropolitan areas with high investor activity.
Insights from property investment advisors Sydney can help position your strategy effectively after policy changes.
Final Thoughts
Labor’s win in the 2025 federal election marks a potential turning point for the Australian property market. With policy direction shifting towards affordability, sustainability, and housing equity, stakeholders must adapt to a changing environment.
While some investors may see short-term headwinds, long-term opportunities exist for those willing to pivot strategies and align with new market realities. Homebuyers and renters may benefit from increased support and supply, while developers could find new growth avenues in public-private partnerships and green construction.
A change in government can impact lending, incentives, and investor sentiment, making it important to work with investment property advisors Sydney who understand these shifts.
As with any political change, the real estate market will respond not just to promises, but to delivery. For now, watch this space and plan strategically.
