A month after the federal budget was handed down, brokers say strategies, structures, and borrowing limits are being rewritten.
One month on from the federal budget’s investor tax package, brokers have revealed that clients are already revisiting long‑held strategies as lenders strip out negative‑gearing benefits and the market begins to price in a different future for property investment.
Chris Bates, co‑founder, owner, CEO, and mortgage broker at Alcove, said that while the reforms had not yet cleared the Senate, the direction was now clear enough that investors could not afford to wait on the sidelines before rerunning their numbers.
“Nothing has been made law yet, and we are still around two years away from the next election, but the direction is clear enough that every property strategy now needs to be reassessed,” he said.
Drawing on recent client conversations, Bates said he expected a pivot towards higher‑quality homes and a broader mix of wealth‑building tools rather than a singular focus on leveraged investment property.
“The biggest changes we see are: a greater premium on quality owner-occupier assets; more pressure on investor-driven stock and investor-heavy markets; a rise in first home buyer activity; a major rethink of rentvesting strategies; more focus on upgrading, renovating, and building wealth through the family home; a bigger role for share investing, dollar-cost averaging and debt recycling; and a possible bank refinance war,” he said.
Bates said that the tax changes had landed in a market where lenders were already tightening credit, making many pre‑budget assumptions obsolete.
“Banks have also materially changed borrowing capacity, which means many old pre-approvals, upgrade plans, and investment strategies may no longer make sense,” he said.
Serviceability impacts and a tilt towards new builds
For Finni mortgage broker Costa Arvanitopoulos, the effect of lenders removing negative‑gearing add‑backs from serviceability calculators was showing up in live files.
“Every broker should really be checking their clients’ pre-approvals – a lot of them are worth nothing now. I submitted a pre-approval for $1.7 million thinking everything was fine, but once Macquarie factored in no negative gearing, it came back closer to $1.26 million. That’s a huge difference,” he said.
With the government opting to confine full negative‑gearing benefits to new dwellings, Arvanitopoulos expects committed investors to follow the incentives.
“If investors still want to keep buying residential property, they’ll probably shift towards new builds because that’s where the incentives remain,” he said.
“There’ll still be buyers looking at off-the-plan apartments or brand-new stand-alone homes, even if historically, those properties haven’t always grown as quickly.”
He is also seeing a rise in conversations about different vehicles and asset types that sit outside the scope of the reforms.
“I’ve already had a couple of clients start considering SMSFs, so I think that space is going to boom. There are going to be a lot of new investment vehicles and structures being created as people look for ways around these changes,” Arvanitopoulos said.
A ‘double hit’ to investors and long‑term wealth concerns
Eventus Financial director and mortgage broker Alex Veljancevski characterised the combined effect of rate rises and tax reform as a squeeze from two sides.
“Investors are facing a double hit: higher assessment rates from lenders and reduced servicing benefits from negative gearing changes,” he said.
“We’ve already seen a lot of investors reassess their plans over the last couple of years because of what rising rates have done to their numbers.
“If you then layer on a 20 per cent hit to borrowing capacity because negative gearing is no longer part of the servicing equation, fewer investors can qualify for loans, and you could eventually see less rental stock entering the market.”
Beyond immediate servicing tests, Veljancevski is worried about what a structurally tighter environment means for everyday wealth building.
“For many Australians, property investment has historically been one of the main pathways to building long-term wealth outside of superannuation,” Veljancevski said.
“If borrowing becomes significantly harder for future investors, there’s a broader conversation around what that means for long-term financial security and passive income generation.”
[Related: Brokers split on how fast banks should rewrite investor rules]
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