The Australian government has introduced two major policy changes aimed almost entirely at property investors, not everyday home buyers.
As Paul Davey explains, these moves were a direct response to years of runaway price growth. "What the government has now gone and done is that they've seen house prices continue to escalate, and they've said, okay fine, we need to try and put a stop to this." Investors make up roughly 30 to 40 percent of home purchases in Australia, concentrated heavily at the lower, more affordable end of the market, which is exactly where first home buyers compete.
Negative gearing is a tax strategy where a property investor deducts a rental property's losses, such as loan interest, from their overall taxable income. In plain terms, if an investment property costs more to hold than it earns in rent, the investor can use that loss to reduce the tax they pay on their salary or other income.
New Zealand once had negative gearing too, but removed it years ago. Australia has now followed a similar path, though not entirely.
This single change removes one of the biggest financial incentives that made property investing attractive in Australia, and it is already reshaping who shows up to compete for homes.
Capital gains tax (CGT) is the tax paid on the profit made when an asset, like an investment property, is sold for more than it was purchased for. Australian investors previously received a concession that reduced the amount of CGT owed on sale. That concession has now been scaled back.
According to Paul, "capital gains tax on investors has effectively been increased, which means that investors buying residential property have lost a whole bunch of benefits." Combined with the negative gearing change, this makes holding an investment property in Australia noticeably less attractive than it was a few years ago.
If you are a New Zealander buying a home to live in, not to rent out, these tax changes do not apply to you directly. Owner occupiers were never eligible for negative gearing or CGT concessions in the first place, so there is nothing being taken away.
The real impact is indirect, and it works in your favor:
Paul sums it up simply: "It means that you've taken out a big chunk of the demand for those particularly first home... the first home buyer sort of segment of the market. Basically, it means that the buyers, or particularly owner occupied buyers for first homes in particular, they're just gonna get a better opportunity."
Yes, most experts and early market data suggest prices are already softening in some segments, though the picture is more nuanced in the short term versus the long term.
Paul is candid about the media's role in shaping perception: "It's really only been the last couple of months that we've actually seen some evidence coming through that the property market has slowed down... but according to the media, it's been going on for six months, twelve months."
It is also worth noting that the CGT changes do not fully take effect until the middle of 2027, and mainly apply to properties purchased after the changes, not existing investment holdings. That means the longer term impact on prices is still an open question. In the short term, the coordinated effect of government policy, media coverage, and Reserve Bank commentary is working together to slow the market down, regardless of how the deeper structural effects eventually play out.
New Zealand went through a similar cycle during and after COVID, when near zero interest rates fueled a rapid run up in prices, followed by a sharp correction. Many Kiwis watching Australia's current slowdown are asking whether the same thing is about to happen there.
Paul's advice, drawing on that New Zealand experience, is clear: do not try to time the bottom.
The short answer: take your time, but do not sit on the sidelines indefinitely. The market has shifted from a frenzy to something more balanced, which actually works in a buyer's favor.
As Vincent Turner puts it, if your home falls in value by 10 percent, so does every other comparable home around you, which means your relative position in the market barely changes. Your home is not just an investment, it is also a form of currency you can use to trade into your next property later.
The NZD to AUD exchange rate has moved from around 95 Australian cents a couple of years ago to roughly 82 cents more recently, and has been sitting near that level for several months.
His practical advice: "Don't let the currency dictate. Don't say, oh my God, I'm losing money. Well, you're not. You just have to suck up the exchange rate. That's just the way that it is." In other words, if you have a genuine reason to move now, such as a job offer or family circumstances, do not let short term currency swings override a long term life decision. If your move is still six to twelve months out, it is worth keeping an eye on the trend, but not obsessing over it.
Does negative gearing removal affect Kiwis buying their first home in Australia?No. Negative gearing only ever applied to investment properties. If you are buying a home to live in, this change does not apply to you directly, though it does reduce investor competition in your price bracket.
Will Australian house prices definitely fall because of these changes?Prices are already softening in several markets, but the full effect will not be clear for some time, since key parts of the legislation, including the CGT changes, do not fully apply until mid 2027.
Should I wait for prices to bottom out before buying?Most brokers, including Paul Davey, advise against trying to time the exact bottom, since by the time a bottom is confirmed, prices are usually already recovering.
Do the exchange rate changes mean I am losing money by moving now?Not necessarily. A weaker NZD against the AUD affects the money you bring over, but it should not be the deciding factor if your move is driven by work, family, or lifestyle reasons.
Who should I talk to before buying property in Australia as a New Zealander?Speak with a broker who understands both the New Zealand and Australian markets and can explain how lenders, grants, exemptions, and stamp duty rules apply specifically to Kiwis, since these differ from the rules that apply to buyers from other countries.
If you are a New Zealander anywhere in the process of thinking about buying property in Australia, the smartest move is to get an informed second opinion before you act. Reach out to a broker who works specifically with Kiwis to understand exactly how these changes apply to your situation.
Paul Davey can help you with:
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