For five years Brisbane was one of the country's strongest property markets. In October it recorded the sharpest monthly fall of any Capital city, and the downturn is now spreading well beyond Sydney and Melbourne. One local agent says the federal government's negative gearing and Capital Gains Tax changes have weighed on activity since May, as the Reserve Bank lifts rates again and investors weigh what the new rules mean for them.

Brisbane leads October's falls

Cotality's home value index, published on 2 November, showed Brisbane values fell 2.0% in October, the fastest monthly decline of the capitals.

Over the rolling three months, Brisbane values were down 6.1%. Perth was close behind, falling 1.7% in the month and 5.7% over the quarter. Sydney fell 1.6% in October and 4.7% over three months.

Activity has dropped away as well. Cotality said sales volumes over the year were down 29% in Brisbane and 30% in Sydney.

Across the combined capitals, values have fallen 8.1% over seven months, which Cotality said is the fastest pace in 40 years of data. The 2022–23 downturn, by comparison, fell 7.0% over the same period.

Nationally, values are now 6.7% below their March peak, putting the national median dwelling value at $884,855 on Cotality's figures.

What the analysts and agents are saying

Cotality's Tim Lawless said the mid-sized capitals "are now well and truly in a correction", adding that buyers "are noticeably absent".

Cotality economist Gerard Burg said: "This is really a demand-led downturn." He said Brisbane, Perth and Adelaide have the most room to fall after strong growth over the past five years.

Harcourts Brisbane's Sam Devlin pointed to federal tax policy. He said that "the government's taxation policies around negative gearing and capital gains tax" had affected activity in Brisbane since the May budget.

That is one agent's view of local conditions, and rising interest rates are also squeezing buyers. Still, it reflects a broader debate about how much of the slowdown is policy-driven.

There are some buffers. Challenger's Jonathan Kearns said that widespread Mortgage defaults are unlikely while Unemployment stays low and most borrowers have equity, though he identified Job loss as the main trigger.

The tax changes buyers are reacting to

The changes Mr Devlin refers to are already law under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026.

From 1 July 2027, cost-base indexation plus a 30% minimum tax replace the 50% CGT discount for gains accruing from that date. It is not a reduced discount but a different method that adjusts the cost base for Inflation and sets a minimum tax on the gain.

Negative gearing is also limited to new builds for properties bought after 7:30pm AEST on 12 May 2026, with that limit applying from 1 July 2027. Investors who already held property before the cut-off are grandfathered.

In practical terms, someone who bought an established Brisbane house as an Investment after the cut-off will not be able to offset rental losses against wage income from 1 July 2027. A buyer of a qualifying new build keeps that ability.

For long-term owners, gains that accrued before 1 July 2027 fall under the existing rules, including the 50% discount for eligible Assets held for more than 12 months.

The follow-up Tax Reform No. 3 Bill, now before the Senate, defines a "new residential dwelling" and sets out negative gearing exemptions, including for affordable and public housing, according to the Treasurer's second reading speech.

Hypothetical example: a month and a quarter of falls

Hypothetical example: Consider a Brisbane property valued at $900,000 at the start of October.

A 2.0% monthly fall, in line with Brisbane's October result, would reduce its value by $18,000 to $882,000.

Applying the 6.1% fall Brisbane recorded over the rolling quarter to a property worth $900,000 at the start of that period gives a decline of $54,900, taking it to $845,100.

For an investor, a fall in value is not a tax event in itself. A capital gain or loss arises only when the property is sold or another CGT event happens, and under long-standing rules capital losses can only be offset against capital gains, not wages.

For a grandfathered investor who bought several years ago, a fall of this size may simply trim an existing unrealised gain rather than create a loss.

This is a simplified illustration. Individual properties can move very differently from a city-wide index.

New homes, rates and the road ahead

Because post-budget investors must buy new builds to keep negative gearing, the Supply pipeline matters. ABS figures show 2,407 private house approvals in Queensland in September. Nationally, private house approvals fell 5.3% to 10,432, which the ABS's Daniel Rossi called "the largest since August 2025".

The REIQ's Antonia Mercorella said that higher rates, lower borrowing capacity and policy uncertainty were a "perfect storm" for new housing, and that new-supply momentum was losing steam.

Rates are adding to the pressure. The Reserve Bank lifted the cash rate to 4.85% on 3 November. Its statement said "housing prices have fallen significantly and the unemployment rate has risen", and that higher rates and falling prices and turnover are expected to weigh on dwelling investment and household consumption.

The RBA also said inflation is not expected to reach the top of its 2–3% target range until late 2027, which suggests borrowing costs may stay high for some time.

CBA expects Brisbane prices to fall about 18% from peak to trough, alongside Perth. That is a forecast, and forecasts can change.

Key dates to watch

  • 4 November: the RBA's Chart Pack is released.
  • 5–6 November: Senate committee hearings on the Tax Reform No. 3 Bill, including the new-dwelling definition, with a report due 13 November.
  • 25 November: the next monthly CPI figures.
  • December: the federal government's mid-year budget update.
  • 1 July 2027: the negative gearing limit and new CGT settings take effect.