What the Changes to Negative Gearing & Capital Gains Tax Mean for Hervey Bay Property Owners, Investors, Tenants and Buyers
The Federal Government’s 2026 Budget has introduced some of the biggest property tax reforms Australia has seen in decades, including major changes to Negative Gearing and Capital Gains Tax (CGT).
The Government says the reforms are designed to improve housing affordability and help younger Australians enter the property market. However, many economists, property professionals and investors are already questioning whether these changes may actually place further pressure on Australia’s already strained housing system.
For property owners, investors, tenants and buyers here in Hervey Bay, these changes could significantly impact future property decisions, rental supply and housing affordability.
At Active Agents, we’ve analysed the Budget announcements and what they may mean specifically for the Hervey Bay property market moving forward.
What Changes Were Announced in the Federal Budget?
The Federal Government confirmed:
- Negative gearing on established residential investment properties purchased after July 2027 will effectively end;
- Existing investment properties will remain protected under grandfathering provisions;
- Newly built homes will continue to qualify for negative gearing benefits;
- The current 50% Capital Gains Tax discount will move to an inflation-adjusted model for future purchases.
The Government’s objective is clear — reduce investor competition for established homes and improve access for owner occupiers and first home buyers.
But the property market is complex, and the consequences may extend far beyond affordability alone.
How Will the Negative Gearing Changes Affect Hervey Bay?
Impact on Current Property Investors
Current investment property owners in Hervey Bay may now begin reassessing their long-term plans.
With future investors potentially losing the tax advantages of buying established homes, many landlords may:
- Hold properties longer;
- Sell properties vacant to appeal to owner occupiers;
- Increase rents to offset higher holding costs;
- Shift future investment toward new builds instead.
This could create significant changes in buyer demand across the Hervey Bay property market.
Investors have traditionally played a major role in supplying rental accommodation. If fewer investors enter the market, rental supply could tighten even further.
What Could This Mean for Current Tenants in Hervey Bay?
Current tenants may be among the most exposed groups following these proposed changes.
If some investment property owners choose to sell, especially if they sell with vacant possession to attract more owner occupier buyers, this could reduce the number of available rental properties in Hervey Bay.
For tenants, this may mean:
- Fewer rental homes available;
- More competition at inspections;
- Increased pressure on weekly rents;
- Greater uncertainty around lease renewals;
- More households being forced to move if landlords decide to sell;
- Longer search times when trying to secure another rental.
While the Government’s aim is to make home ownership more accessible, not every tenant is in a position to buy. Many renters are already dealing with rising living costs, higher grocery bills, increased fuel costs, insurance increases and limited ability to save for a home deposit.
A $250 annual tax offset is unlikely to change that reality for most households.
In a market like Hervey Bay, where rental demand is already strong, any reduction in investor-owned rental properties could place further pressure on tenants.
There is also the possibility that landlords who keep their investment properties may need to review rents to manage higher holding costs, particularly if investor tax benefits are reduced for future property decisions.
Our concern is that while some first home buyers may benefit from less investor competition, current tenants could face a more difficult rental market before they are financially ready to purchase.
For tenants in Hervey Bay, the key message is to stay informed, understand your lease position and plan early where possible.
Will First Home Buyers Benefit?
There is little doubt that some owner occupiers and first home buyers may benefit from reduced competition when purchasing established homes.
For years, many buyers have found themselves competing against investors at open homes and auctions.
With fewer investors targeting established properties, first home buyers in Hervey Bay could see:
- Less buyer competition;
- More negotiating power;
- Improved access to established homes.
However, affordability challenges remain far bigger than investor activity alone.
Many households are still dealing with:
- Rising grocery prices;
- Increased fuel costs;
- High insurance premiums;
- Inflationary pressure;
- Elevated interest rates.
The Government’s proposed $250 annual tax offset is unlikely to significantly improve a buyer’s ability to save a deposit or comfortably service a mortgage.
Why New Builds in Hervey Bay Could Become More Valuable
One of the most important outcomes of the Budget may be the shift in investor demand toward newly constructed homes.
Because new builds will continue receiving favourable tax treatment, many investors may now focus on:
- House and land packages;
- New estates;
- Off-the-plan developments;
- Newly completed homes.
This could increase demand — and potentially prices — for quality new homes in Hervey Bay.
However, Australia is already struggling with:
- Construction delays;
- Rising building costs;
- Trade shortages;
- Limited housing supply.
If investor demand heavily shifts into the new-build market while supply remains constrained, new home prices could rise even further.
What This Means for Property Sellers in Hervey Bay
For owners considering selling investment properties, the buyer landscape may soon change considerably.
Properties previously marketed heavily toward investors may now appeal more strongly to owner occupiers.
This means sellers may need to carefully consider:
- Property presentation;
- Timing of sale;
- Marketing strategy;
- Target buyer demographics.
Well-positioned homes with strong owner occupier appeal may continue performing very well in the Hervey Bay market.
The Bigger Housing Affordability Question
The key issue Australia still faces is housing supply.
Housing affordability is being impacted by:
- A shortage of new homes;
- Population growth;
- Infrastructure limitations;
- Construction costs;
- Inflation and interest rates;
- Cost-of-living pressures.
Tax policy alone is unlikely to solve the housing crisis unless Australia can significantly increase housing construction.
If investor confidence weakens too sharply before enough homes are built, Australia may ultimately face:
- Fewer rental properties;
- Higher rents;
- Reduced housing supply;
- Greater pressure on tenants.
Our Outlook for the Hervey Bay Property Market
At this stage, we expect the Hervey Bay property market to remain resilient due to:
- Strong lifestyle appeal;
- Relative affordability compared to major cities;
- Continued population growth;
- Ongoing demand from owner occupiers and retirees.
However, we also anticipate:
- Increased demand for newer homes;
- More investors reassessing portfolios;
- Continued rental pressure;
- Greater competition for quality housing stock.
As always, every property decision should be based on individual financial circumstances and long-term goals.
The full impact of these Federal Budget changes will take time to unfold, and we will continue monitoring how they affect property values, investment activity and rental demand here in Hervey Bay.
If you would like advice on buying, selling or investing in the Hervey Bay property market, our team is always here to help.