AFR | Property investors shift to new builds as first home buyers drop off

Why Are Property Investors Turning to New Builds in 2026?

The Australian Financial Review's property reporter Sarah Petty has reported on a shift in Victorian property investment activity following changes to federal property tax settings. Data from Oliver Hume shows the proportion of new-build sales to investors in Victoria has risen above 40 per cent for the first time since December 2024, while first home buyer sales have dropped from 66.7 per cent in April to 54.9 per cent in June.

Victorian New-Build Sales and Capital City Price Trends

The increase in investor activity follows the Albanese government's budget changes to property tax discounts, which allow investors in new builds to retain access to the existing capital gains tax and negative gearing regime. Oliver Hume has also recorded a rise in new-build investor activity in South Australia, a trend echoed by other major builders and developers reporting stronger investor inquiries nationally since the budget.

Alongside the shift in buyer composition, capital city house prices have softened. Sydney's median house price fell 1.5 per cent, or $23,500, to $1.56 million between May and the end of June, according to Cotality data. Melbourne's median dropped 1.3 per cent, or $12,000, to $948,400, while Canberra recorded a 0.7 per cent fall, or $7600, to $1.035 million. Auction clearance rates also slipped to levels weaker than those seen during the pandemic in the weeks following the budget announcement.

What the Tax Changes Mean for Property Investors and Buyers

Oliver Hume chief economist Matt Bell said the firm expects the tax changes to drive a structural shift in where investors choose to buy, with a proportion of that activity filtering into the new home market. He forecast investor land sales for Oliver Hume's projects nationally would rise by around 10 per cent, a trend that could see investors increasingly compete with owner-occupiers in markets constrained by approval delays or infrastructure limits.

Bell's comments point to a broader rebalancing of the market, with investors expected to favour new units and houses on the outer city fringe. This could tighten stock in middle-ring suburbs and place upward pressure on rents in those areas, even as overall demand for home loans continues to soften nationally.

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