Highlights

• The key line appears in the review's chapter on household and business resilience.

• The measures the RBA refers to are no longer proposals.

• The review says investor credit growth picked up strongly over 2025 but has slowed recently.

• Fewer than 1% of borrowers are estimated to owe more than their property is worth.

Property investors now face two powerful forces at once: more restrictive financing conditions and a different future tax treatment. Falling prices make the interaction difficult to ignore, even if the banking system remains resilient.

The Sentence That Links Tax to Prices

The key line appears in the review's chapter on household and business resilience. Recent tax changes affecting housing, as well as the higher level of the cash rate, have contributed to lower demand for housing credit in recent months and a decline in housing prices, the RBA said. Elsewhere in the same chapter, the bank was more specific. It said prices had fallen as sentiment weakened, reflecting the somewhat restrictive stance of monetary policy and changes to negative gearing and capital gains tax discount policies. The RBA did not put a figure on how much of the decline is due to tax. The distinction matters because the headline rule rarely tells the entire story. Timing, eligibility and supporting records can change the outcome for two people facing seemingly similar circumstances.

What Has Actually Changed in Tax Law

The measures the RBA refers to are no longer proposals. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received royal assent on 26 June 2026, and its key property measures start in July next year. The tax guidance indicates starting 1 July 2027 negative gearing for residential property will be limited to new builds. Properties held at 7:30pm AEST on 12 May 2026 are exempt from that change. The same Act replaces the 50% CGT discount for individuals, trusts and partnerships with cost base indexation and a 30% minimum tax on capital gains. It applies only to gains accruing after 1 July 2027. A practical decision starts with the numbers, but should not end there. Compare the likely benefit with compliance costs, the chance that assumptions change and any restrictions that apply.

Investors Are Pulling Back, Not Defaulting

The review says investor credit growth picked up strongly over 2025 but has slowed recently. It is expected to moderate further in the period ahead in response to tax changes, tighter monetary policy settings and softer housing prices. The RBA also flagged a behavioural risk. A policy can create an opportunity while still leaving taxpayers responsible for checking the conditions and keeping suitable evidence.

Why the RBA Says Banks and Borrowers Can Cope

Fewer than 1% of borrowers are estimated to owe more than their property is worth. Even in a scenario involving a large uniform fall in housing prices of 20 per cent from current levels, only around 5 per cent of mortgages would fall into negative equity, the RBA said. One observation is useful context, not a guarantee about what happens next.

Hypothetical Example: What a 20% Fall Means for Equity

After several years of repayments, the loan balance is $600,000. If the unit's value fell 20%, it would be worth $640,000. Cash flow, deadlines and documentation deserve attention before any commitment.

What to Watch Before July 2027

The RBA's next Financial Stability Review is due in the first half of 2027. It is likely to show whether investor credit has moderated as the bank expects. Proposed rules and draft administrative guidance should be distinguished from provisions already enacted.

General information only. This article is educational and does not constitute personal financial, tax or legal advice.