{
  "kind": "story",
  "slug": "housing-forecast-update-4746291",
  "id": 1780200602284746291,
  "record_id": 1780196076886449658,
  "headline": "Housing forecast update",
  "summary": "",
  "source": "westpac-economics",
  "source_url": "https://westpaciq.com.au/economics/2026/05/housing-forecast-update-26-may-2026",
  "home_domain": "economics-business-work",
  "claim_type": null,
  "sentiment": "mixed",
  "significance": "high",
  "claim_count": 113,
  "reading_time_minutes": 10,
  "published_date": "2026-05-26",
  "created_on": "2026-05-31T04:10:02.031727+00:00",
  "claims": [
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      "id": 1780200602778962998,
      "text": "Treasury states the reforms \"will help level the playing field for first home buyers, preserve the gains investors have made, and support investment in new housing supply.\"",
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      "confidence": "stated",
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    {
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      "text": "Combined with recent and expected interest rate increases, the changes are expected to see a 34% fall in new investor activity near-term.",
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      "text": "Total housing market turnover is expected to decline 20%.",
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    },
    {
      "id": 1780200602584665375,
      "text": "Tax changes announced in the Federal budget on May 12 are expected to significantly affect Australia's housing markets.",
      "evidence_type": "paraphrase",
      "confidence": "stated",
      "home_domain": "economics-business-work",
      "published_date": "2026-05-26"
    },
    {
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      "text": "Dwelling price growth is now expected to stall flat on average across the major capital cities for calendar 2026.",
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      "text": "Over the medium to longer term, the changes are expected to see more muted price cycles.",
      "evidence_type": "paraphrase",
      "confidence": "stated",
      "home_domain": "economics-business-work",
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    },
    {
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      "text": "This risk is due to slowdown in turnover, uncertainty about tax changes, and higher interest rates.",
      "evidence_type": "paraphrase",
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    {
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      "text": "The risk is mitigated somewhat by grandfathering provisions and positive price expectations.",
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      "text": "Over the medium to longer term, the changes are expected to see a small, gradual lift in rental yields.",
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      "text": "Over the medium to longer term, the changes are expected to see a modest lift in new dwelling construction.",
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      "text": "Over the medium to longer term, the changes are expected to see a gradual shift towards 'landlordism'.",
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      "text": "From July 2027, the capital gains tax discount applied to future capital gains on investments will move from a flat 50% to cumulative inflation over the holding period.",
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      "text": "The taxable component of capital gains will continue to be taxed at marginal rates but with a new minimum rate of 30% being applied.",
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      "text": "From budget night, net losses on new residential property investments will not be able to be deducted from other (non-property) income, such as wages.",
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      "text": "Net losses on new residential property investments will still be able to be deducted from rental income, including from other rental properties.",
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      "text": "Any resulting losses from new residential property investments can be carried forward to future tax years.",
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      "text": "From July 2028, there will also be a new 30% minimum tax rate applied to discretionary trusts and similar vehicles.",
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      "text": "Negative gearing will continue to be available for investments made prior to budget night (grandfathering).",
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      "text": "Capital gains on existing investments up to July 2027 will also continue to receive a 50% discount (grandfathering).",
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      "text": "New investments in newly built dwellings will still be able to be negatively geared.",
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      "text": "New investments in newly built dwellings will have an option for capital gains to be discounted by either 50% or cumulative inflation.",
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      "text": "The changes unwind the 50% CGT discount that was introduced in 1999 for new investment in existing dwellings.",
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      "text": "The changes to negative gearing remove a treatment that was introduced in 1936 (with limits briefly in place in 1985-87).",
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      "text": "The overarching goal of the reforms is to shift the balance from house purchase as a pathway to wealth-creation back towards home ownership.",
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      "text": "House price growth has been more than double the growth in average full-time earnings since 1999.",
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      "text": "Home ownership amongst 25-34 year olds has declined from 50% to 43% over the last 20 years.",
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      "text": "The primary effect of the reforms is to reduce the relative attractiveness of new leveraged investment.",
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      "text": "Inflation indexation for CGT means it is still discounted, and in some cases, can be more favorable than the previous 50% discount for moderate or steady capital gains.",
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      "text": "Large 'jackpot' capital gains are treated very differently, with the 50% discount being a much bigger concession than inflation adjustment.",
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      "text": "The removal of negative gearing is the more material change for most investors.",
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      "confidence": "stated",
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      "text": "Treasury estimates about a third of negatively geared rental properties receive an outright tax subsidy over the life of the asset.",
      "evidence_type": "paraphrase",
      "confidence": "stated",
      "home_domain": "economics-business-work",
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      "text": "Grandfathering strongly encourages current holders of leveraged investments that are negatively geared to retain these assets for as long as possible.",
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      "text": "Current holders are likely to retain assets and seek to maximize tax benefits, e.g., by carrying higher levels of debt.",
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      "text": "New investors in newly built dwellings will also be eligible for the negative gearing tax treatment.",
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      "text": "The carve-out for new investment in newly built dwellings will be significantly more attractive compared to investment in existing dwellings.",
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      "text": "Currently, 18% of new investor finance approvals are for the construction or purchase of newly built dwellings.",
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      "text": "About half of property investors are negatively geared, implying this is an important consideration for about half of all investor purchases (around 110k a year).",
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      "text": "Sharply lower investor activity will skew more heavily towards new dwellings, with the share potentially rising towards 40-50% of new investor loans.",
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      "text": "The new minimum tax rate on CGT reduces the tax advantage of realizing capital gains when income is low.",
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      "text": "The average marginal tax rate on capital gains over the last 13 years was 25%, 7 percentage points lower than the individual's average marginal tax rates over the 15 years prior.",
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      "text": "The tax-free threshold is $18.2k, with the lowest 16% rate applying up to $45k.",
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      "text": "The introduction of a 30% minimum rate raises the rate on up to $45k of any taxable capital gain an individual records, equating to $9.2k.",
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      "text": "The minimum rate is still below the 37% and 45% marginal rates, so sellers can still reduce tax by realizing gains in low income years, but the benefit is smaller.",
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      "text": "The RBA's three 25bp interest rate increases in February, March, and May have taken official interest rates back to restrictive levels of 2023-24.",
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      "text": "These RBA moves already appear to be weighing on activity and prices in some markets.",
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      "confidence": "stated",
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      "id": 1780200602879162107,
      "text": "Most of Australia's housing markets continue to see tight supply, with conditions extremely tight in several capital cities.",
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      "confidence": "stated",
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      "text": "Rental vacancy rates have been holding around historical lows since mid-2023 and are below 1% in Brisbane, Adelaide, and Perth.",
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      "text": "On-market supply has been low, with total listings across major capital cities dropping to a 20-year low of two months of sales late last year.",
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      "text": "Brisbane, Adelaide, and Perth stand out as having particularly tight on-market supply.",
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      "text": "Underlying physical demand for housing, driven by population growth and household formation rates, has been relatively solid and is expected to sustain its recent pace.",
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      "text": "Population growth has been robust, holding at 1.5% per year.",
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      "text": "Robust population growth was a key factor in the market's resilience through the 2022-24 interest rate tightening cycle.",
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      "text": "The 2022-24 cycle saw an initial price correction in 2022 followed by a surprisingly strong rebound in 2023 and 2024.",
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      "text": "The mix of new investor activity is expected to skew more towards newly built dwellings.",
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      "text": "Growth in the total value of outstanding investor credit is expected to slow from around 9.5% per year to below 7% per year by end of this year.",
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      "text": "Growth in the total value of outstanding investor credit is expected to slow to around 4.0% per year by the end of 2027.",
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      "text": "There will be mixed impacts on investor loan repayments, with an incentive for existing investors to refrain from selling but also to hold more debt.",
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      "text": "The share of newly built dwellings in investor activity is expected to rise from 20% to around 40%.",
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      "text": "The share of newly built dwellings is expected to rise in absolute terms despite the fall in total investor activity.",
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      "text": "The decline in dwelling turnover is led by the slowdown in investor demand and few investor properties being sold.",
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