How The 2026 Federal Budget Changes Property Investing Choices

The market is spooked by the 2026 federal budget, and we can feel the fear everywhere: crash predictions, doom posts, and investors rushing toward anything that promises a quick tax win. We slow it down and get practical. If negative gearing is changing and lenders are already tweaking serviceability, what does that mean for borrowing power, deal selection, and the way you build a property portfolio in Australia? 

We dig into the biggest mistake we see right now: treating negative gearing like a strategy instead of what it really is, a tax outcome. We walk through why capital growth is still the engine of wealth, how equity recycling actually accelerates a portfolio, and why the “sexy” new-build pitch can be a trap when the asset has weak scarcity. We also call out two hot-button plays getting pushed hard: off-the-plan apartments and house and land packages. We explain oversupply risk, valuation shortfalls, strata cost drag, endless land releases in greenfield estates, and why some lenders avoid certain stock and postcodes entirely. 

Then we share the two approaches we’re using with clients to adapt without sacrificing fundamentals: our yield amplifier strategy (buy established, add a granny flat) and our yield equity amplifier strategy (create dual occupancy and potentially strata title). The aim is straightforward: keep the asset in an established, high-demand area while manufacturing stronger rental yield, extra income streams, and new-build depreciation benefits where they make sense. 

If you’re investing through policy shifts and tightening credit, this is your playbook for staying clear-headed and outcome-driven. Subscribe for more, share this with a mate who’s getting sold a “budget-proof” property, and leave a review if you want us to break down real 10 to 15-year scenarios next.

Transcript

Budget Fear Hits The Market

0:00

The 2026 federal budget has caused massive fear in the marketplace. Those who just chase negative gearing benefits are going to get burnt massively right now. Many Australians are going to fall for the trap of going for an off-the-plant apartment or a house and land package. Negative gearing is a tax outcome and not a strategy. In this episode today, we're going to be breaking down some of the strategies that you want to avoid and some of the strategies we're helping clients implement to be able to mitigate some of these changes that have taken place while not sacrificing on that overall strategy long term. I guess to kick things off, there is a massive amount of fear out there right now. People are freaking out. They think that there's going to be property crashes and people are predicting that. They think that certain strategies just won't work moving forward. But there is a lot of moving parts, and there's going to be many locations that still perform strongly, but it is getting the right location and the right asset to be able to make that performance work for you.

Lenders Pull Negative Gearing Buffers

1:12

What we are seeing as well is there's a number of lenders coming out already and announcing that they're removing negative gearing from their serviceability. So Macquarie were one of the first to announce that. We had NAB and Westpac have made an announcement. They won't honor pre-approvals until the time of assessment with a uh a property under contract. It's going to be interesting to see how that plays out. But this is something if you're thinking of investing now, it's better to get in now. We've got a great buying window, but it can also mean that in the future your serviceability is going to get capped. It's going to reduce with those negative gearing benefits. We'll get to that today on some of the strategies to still be able to get some of those benefits without sacrificing on the asset as a total.

Capital Growth Beats Tax Outcomes

2:08

The fundamentals of property investing, we want to be able to go out and purchase a property that's going to perform strongly over the next two to five years. Because once we get that capital growth and performance, we can pull that equity and we can deploy it into another asset. Opposed to just going and purchasing a property just for negative gearing that is just a tax outcome and a tax benefit. It does not make sense to get a tax benefit if that property sits there and does nothing with its performance. The end of the day, we need capital growth because that is what builds wealth. And the strategies we implement to be able to reduce holding costs or mitigate some of those holding costs.

Off The Plan Apartment Red Flags

2:52

One of the big assets to avoid right now is off-the-plant apartments. Every property shark out there will be pushing this shit right now, saying it's great with the budget changes, it's got negative gearing, it's got depreciation, it's this sexy new thing. You will find that you're not paying that person a fee for them to be able to help you with that purchase, but they're getting paid massively from the developer who's pushing this stock. Now, with these off-the-plan apartments, they're typically in high rises. There is no scarcity with these. There could be 100, 200 builds in the same block. There's no scarcity. What happens is once that build is finished, everything comes to the market at the same time. You've got 100 rentals there available. So it's going to take you a long period of time to rent that property out, but you don't have that scarcity as well to push that capital growth. If you're purchasing something in a 100 to 200 build, then if you compare your purchase price to the land component that you're purchasing for, it isn't, you're not gaining a large land component with that purchase. You will see some banks just won't touch this sort of stock. And because those valuations actually come in lower than what the purchase price is, because of the oversaturation in those marketplaces. So be very careful here. We see people they're spending 750, 800K on a one-bedroom, one bathroom unit, or a two-bedroom, one bathroom unit. It is crazy money to spend on that when you can go and purchase a property in a metro location, sub 650K, with a nice large land component with value add potential. Now they might be also selling you that it's got great, it's got a great strong yield, but that's your gross yield once you then factor in. Well, we've got our strata fees on top of that. You've got 100 to 200 units, you've got a lift, you probably got a pull, you've got all these bits and pieces. The strata fees there are going to be very expensive and it's going to take off from your net yield. It's another thing that these property sharks and developers are going to be selling you on. It sounds sexy, but unfortunately, sexy does not grow in value. It is not fundamentally what we're looking for when we are purchasing property. So be very, very careful with the off-the-plant apartments. Doesn't make sense to purchase something. It sits flat for two or three years, just so you can get negative gearing benefits where you could have purchased at a lower purchase price in a marketplace that does 100, 200K in the first couple of years. You pull equity and you're going into another asset sooner. It is crucial for the fundamentals to build a property portfolio.

House And Land Package Pitfalls

5:56

That leads to the next one: house and land packages in greenfield estates. Same principles. You're going to have property sharks, developers flogging this rubbish stock. And there's just a lot of things wrong with this in the same way as your after plant apartments. There is an endless supply of land in these areas. They've built it out in a greenfield estate. They'll typically be releasing that in stages. They do that to position that there is limited land. But what they're going to do is they're going to do stage three, stage four, stage 20, and just continue to release land. So if you're then finishing a build in these locations and you can go and buy a piece of land very similar to that and build a property on your own, there is that risk again of scarcity of valuations coming in short. We want to be in established areas and established locations because that scarcity drives growth. We want high demand, low supply. Whereas these house and land packages are very much the opposite. Again, they're going to be selling you on the negative gearing, the depreciation benefits. It's a brand new property. It's sexy, it's shiny, but that is not the fundamentals for property performance. Okay. They'll sell you on higher yields as well. This, that, and the other. But again, if that property sits flat for two, three, four, five years because there is an abundance of land, that is going to extremely, it's going to slow down your portfolio growth extremely. Okay. So it is another one to be extremely careful of. And some lenders, again, will not purchase in certain postcodes and locations for this exact reason.

Construction Risk And Valuation Shocks

7:58

The construction piece on both of these strategies, off-the-plant apartments and house and land packages, are a whole nother topic on its own. With construction increasing right now, some of these builders are doing massive numbers, and there is a high risk that they can go into administration right now as well. And that is something that the government's bringing out that it's going to increase supply in these areas. But if the numbers don't stack up to build these properties, is it going to take place anyway? That is the two strategies you want to avoid right now. Every man and the dog is going to be talking about them. They're going to be pushing them, saying that it's the strategy right now in 2026 based off the budget. But primarily, we want to focus on capital growth and negative gearing benefits, is essentially, like we said, just a benefit. Okay. Capital growth is what we want. What we are doing right now to assist clients, and we've been doing this for years, and it still fits the bill now more than ever, is we we have two strategies we help implement.

Yield Amplifier With A Granny Flat

9:09

We have our yield amplifier strategy, meaning we purchase an established property and add a granny flat, or we have our yield equity amplifier. Again, purchasing an established property and we're creating a dual occupancy. And there is some difference between our Granny flat and a dual occupancy. I'll break that down a little bit today. But this means that we can go out, get in the established location, get a property in a scarce location with high demand, low supply, but then we can go and add a second dwelling onto that property, increase our yields, increase our equity. And then with those new builds, we have some of those negative gearing benefits. So our first strategy being the yield amplifier strategy is we're going to go and purchase a property that is on a 600 to a 700 meter square block on average. Can look a little bit different to that, but we're going to add a granny flat to that property. Now, depending on the capital city, the local government area, and their planning scheme is going to depend if that starts at a two-bedroom, one-bathroom, 60-meter build, or it could go up to a 120-meter build and be a three-bed, two-bath, grainy flat. So it can vary. On the high end of that, we've got a large build, which is essentially a small home. All right. Now, with these builds, again, depending upon size and location, is to how those builds will cost. They can range from about 200K up to 350K, and our yields are going to depend on the individual asset itself. But they can be from the high 6% gross to 9% yields. And we've got to remember with these, we're going to get those negative gearing benefits, the depreciation, but we don't have high, we don't have the high strata fees with those. So it doesn't reduce our gross yields on that asset. So we're getting the fundamentals for long-term growth, but we're coming back over the top and we're manufacturing and adding cash flow to a property. Some of our clients will look to do the granny flat straight away. Some will sit on it. They might go through a land banking cycle. They'll purchase another property. And then we revisit, we come back and we add the granny flats to these properties. This is also diversifying our income. We've got two income streams on the one asset, and it really just helps give us that boost in the cash flow on the property portfolio long term. The Granny flat, you can't sell separately from the established property. So in the future, if you're looking for a resale or looking at a valuation, that purchase would be on one title with the established property and the granny flat. There is a key difference between that and our dual occupancy play, which is our other strategy.

Dual Occupancy To Manufacture Equity

12:18

Our yield equity amplifier, we're creating a dual occupancy property. How that differs is that we're purchasing a property on a 700 to a thousand meter squared block on average can vary a little bit depending on the overall side. This only works in some locations in some local government areas. And with this, we would go down the private certifier route to be able to strata title these properties. Meaning we purchase an established property, we build a new dwelling at the back. And because of that size, because it meets certain checks from a local planning scheme, we can then strata title those. They'd be on separate titles and we can sell those in the future. Again, the build on those can be a three-bed, two-bath, a four-bed, two-bath, two garage. The build costs on those will vary roughly from a 350 build for the smaller end up to 500K. Now, those yields on those builds can be seven to seven and a half percent as a gross yield. And again, yes, we're strata titling these, but we don't have lists, we don't have all those levies and strata fees on this individual build. But the power with the yield equity amplifier is not only are we boosting the cash flow, but we can go out and build something, for example, at 500k for a four-bed, two-bath, two garage. And then the equity and the valuations on complete on completion are far higher. They can range from 850 to 950 on completion. So we're manufacturing 350, 400k as kind of a conservative amount, and that is where we can pull that equity from that property. We can go into another asset sooner. But we've got those benefits from the negative gearing being a new property, um, but pulling that equity to go again. Again, it's multiple income streams, it's stronger yields, um, and we're just still getting a purchase within an established area that is going to get that upwards pressure for price growth long term. It is crucial to go out and make sure you're not sacrificing on the fundamentals from a capital growth perspective, but how can we now add value? How can we manufacture value to be able to increase our cash flow to mitigate some of these changes moving forward and continue to build wealth? And this is what sophisticated and experienced investors do. Right now, the typical mom and dad investor are freaking out, but it's going out there, playing the card we've been dealt. These are the changes. How can we focus now on adapting our strategy to be able to continue to move forward? And it might mean you go out and purchase this property. Like I said, you don't add the cash flow straight away. You might get a couple of assets, then we come back, we revisit, and we start to build and add those additional dwellings on that property. That is going to be crucial between those strategies.

Final Takeaways And What Comes Next

15:45

I guess just to close this out, a great investment can survive tax changes. Yes, we're going to sacrifice on some of those benefits from negative gearing. We'll be able to carry those losses forward, but it's not going to come back to your initial cash flow each year. So it is a bit delayed. But what we can do is we can make sure we stick to the fundamentals and we go out there and manufacture yields, manufacture equity. If you go out there and you purchase the wrong asset just to get a negative gearing benefit and it sits flat for two to three years, it's going to be a massive handbrake on you building wealth. Don't think that the sexy, shiny thing is going to get you there. If you cover dog shit in glitter, at the end of the day, it is still dog shit. So just think of that when you're out there and you're speaking to people and they're pushing these assets, these stock, because even just with our emails, we're getting peppered with people trying to push this already. It's great, it's budget friendly, and people, people are going to lose out. We're going to do more content on these two strategies, our yield amplifier and the yield equity amplifier in the future. We're going to start to map out what those properties look like over a 10 to 15 year period with the capital growth, with the additional cash flow, and show how that can create passive income for you over the next 10, 15, 20 years and what that looks like for your goals. Let us know in the comments if that's a piece of content that you would like to see so we can make that sooner in the future and add that value. Hope this has been insightful, educational for the current strategies and the current changes that we're facing. Hope you've enjoyed. See you on the next episode.