Why the Budget Steering Investors Into New Builds Doesn't Fix the Fundamentals

The 2026-27 Budget gives investors one clear nudge: buy new builds and you keep negative gearing and the 50% capital gains tax discount; buy established and you lose them from 1 July 2027. The tax incentive is real. The problem is that it points investors toward the part of the market with the weakest long-term capital growth.

The first principle the policy ignores

Land appreciates. Buildings depreciate. That is the foundation of residential capital growth, and it does not change because the tax code does. A new house and land package on the urban fringe is typically split close to evenly between land and building. The building half starts losing value the day it is finished. The land half is sitting in an outer-ring estate where the next stage is still being released by the developer.

What the growth numbers say

The gap is not marginal. New builds in greenfield estates have historically averaged around 3 to 5% annual capital growth over their first decade, held back by fringe locations, building depreciation and oversupply when multiple builders release stock at once. Established properties in proven suburbs have averaged closer to 6 to 8% long-term.

Run that over ten years on a $700,000 purchase. At 4% growth, the new build reaches about $1.04 million. At 7%, the established property reaches about $1.38 million. That is a difference of more than $300,000 in capital growth, before you count the tax deductions the new build was supposed to deliver. The deductions do not close a gap that size.

The case for new builds, stated fairly

New builds are not always the wrong call. They suit investors who need the depreciation and cash flow to hold the asset, who want lower maintenance and builder warranties in the early years, and who are buying in genuinely land-constrained infill locations rather than open greenfield. The point is to choose with eyes open, not to let the deduction make the decision.

JSC Property Investments buys on what actually drives growth, not whatever the Budget is pushing this year. Book a Kickoff Call with our team and let's find a property that stacks up on its own merits.