CBA CEO Matt Comyn has said Labor’s capital gains tax shake‑up should stop at property, as new analysis from Westpac points to a sharp cooling in investor demand.
Commonwealth Bank of Australia CEO Matt Comyn has drawn a line between cracking down on speculative housing gains and eroding incentives for risk‑taking in the broader economy, while Westpac has released a detailed assessment of how it believes the changes will reshape investor behaviour, credit growth, and prices over the next few years.
In an interview on ABC’s 7.30 program on Tuesday (26 May), when pressed on whether he supported the move to scrap the 50 per cent capital gains discount and revert to an inflation‑indexed model across all assets, Comyn said he believed the reforms should be contained to housing rather than applied across the investment spectrum.
“There’s a big difference in my mind between sort of passive asset accumulation versus productive capital or risk taking,” he said.
“If I’m just accumulating an asset and I’m passively holding that versus I’m investing in a start-up, a founder, a business, a junior mining explorer, I think that’s quite different, and I don’t think we want to change the incentives towards risk and enterprise and innovation.”
He also suggested that applying the new inflation‑indexation settings just to residential real estate would be administratively simpler and easier for taxpayers to understand.
“It’s obviously very clean if it’s only for housing,” Comyn outlined.
He cautioned against extending the model to every asset class, saying that complexity and unintended consequences would escalate as the net widened.
“I think when you get into all asset classes, which is where you’re trading off simplicity, I think we’ve got to be careful,” he said.
However, Comyn said he was satisfied with the government’s decision to tighten negative gearing.
Westpac sees steep fall in investor demand
Westpac’s economists homed in on how the new tax mix would affect the volume and composition of investor activity, with their central scenario pointing to a marked slump in new borrowing by landlords.
“Combined with recent and expected interest rate increases, the changes are expected to see a 34 per cent fall in new investor activity near-term with the mix skewing towards newly built dwellings,” the bank said.
Westpac predicts that “the fall is expected to see growth in the total value of outstanding investor credit slow from around 9.5 per cent yr at the moment to below 7 per cent yr at the end of this year and around 4.0 per cent yr at the end of 2027”.
“The share of newly built dwellings is expected to rise from 20 per cent to around 40 per cent, rising in absolute terms despite the fall in total investor activity,” it said.
Westpac also anticipates fewer properties changing hands as both buyers and sellers step back.
The bank is factoring in “a 20 per cent decline in total dwelling turnover – led by the slowdown in investor demand, and, on the supply side, few investor properties being sold”.
On prices, its latest projections imply the current upswing will lose momentum quickly as the new rules bed in.
“A stalling in dwelling price growth, which is now expected end flat for 2026 across the major capital cities – Sydney and Melbourne are expected to see outright declines (-3 per cent and -4 per cent) with growth remaining positive but slowing more abruptly in Brisbane (9 per cent), Perth (13 per cent) and Adelaide (7 per cent),” it outlined.
Tax carve‑out steers investors towards new builds
Westpac highlighted that the budget had made new construction more attractive than established stock and said that this would materially change where the remaining investor dollars were directed.
“More generally, the carve out for new means investment in newly built dwellings will be significantly more attractive compared to investment in existing dwellings,” Westpac said.
Yet Westpac acknowledged that price, build risk, and expectations for capital growth would still influence decisions.
“While there are other important considerations for buyers considering new versus existing – including cost, delivery risk and capital gain expectations – it is likely that at least some prospective investors will switch,” it outlined.
“The implication is that sharply lower investor activity will also skew more heavily towards new, the share potentially rising towards 40–50 per cent of new investor loans.”
Westpac expects these incentives to slowly feed through to construction pipelines and the make-up of the landlord base.
It said the changes could support an extra 15,000–30,000 new dwellings a year once the market adjusts and warned that the ability to offset losses across a portfolio may encourage a gradual shift towards larger, more professional landlords.
[Related: More lenders announce investor servicing reset]
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