Is investment property still worth it in Brisbane? The honest answer after the budget

If you have been watching the headlines, the commentary, and the group chats this week, you could be forgiven for thinking the answer is yes.

Negative gearing. Capital gains. Trusts. A 30-minute budget speech that somehow generated more takes than a State of Origin.

The texts started before the budget had even landed. Should I sign a contract before it is announced? I am hearing negative gearing is getting grandfathered. That is a real message, from a real person, sent to us in the days leading up to the budget.

Our answer then is the same as our answer now. If you are buying an investment property and you cannot afford it without the negative gearing refund, this is probably not the right time to buy it. Budget or no budget. Here is the fuller version.

What is actually changing

Negative gearing is not going away. You can still claim losses on your investment property. What changes is the timing: you can no longer offset those losses against your personal income in the same year. The losses accumulate, and you draw on them against future rental profits or against your capital gain when you sell.

The capital gains discount is also on the table. The current 50 per cent discount is proposed to be replaced by a minimum effective tax rate on any gain, with a grace period for assets held before the changes take effect.

For anyone who bought through a trust structure, on good advice and doing everything right, there is a double effect. You retain the capital gain treatment but now face an annual tax impact through the trust vehicle. That is the change that genuinely stings, because those investors followed the rules as they were written

There are now effectively two tiers of investor: those who bought before the changes and those who buy after. That is not good policy. But it is the reality.

Who this actually hurts

The investors who built their entire strategy around the annual tax refund. The ones getting 50 cents back in the dollar on a loss every year, routing that refund onto their home loan, buying the next property, and repeating. That model gets significantly harder.

People who bought in trust structures are facing a materially different position to people who bought personally. Some of them may sell before the grace period ends to access the full discount while they still can. If that happens, it adds supply at certain price points.

And anyone who was buying on very tight cashflow, stress-tested only to current rates and not to a further 3 or 4 per cent above where rates are now. The budget is another reason to run those numbers harder.

Who this does not hurt as much as the headlines suggest

The investor who was buying because property is a genuinely good long-term asset. In a supply-constrained market. With real rental demand. With a budget that actually supports holding costs through rental income. That investor is fine.

The lending picture is also less dramatic than reported. Many lenders were already not factoring negative gearing into borrowing capacity. For them, nothing changes. The headlines about lost pre-approvals reflect a real situation for some borrowers at some lenders. They do not reflect the majority.

What it means for what you buy

This is the part most investors have not thought through yet.

Under the proposed rules, you can still negatively gear a brand new property. Which sounds like a solution until you ask the next question: who do you sell it to?

If you buy new and can claim negative gearing, the person who buys it from you cannot. They are buying an established property under the new rules. That changes the exit. You are no longer selling to an investor who can use the same tax structure you did. You are selling to an owner-occupier.

Which means what you buy needs to have genuine owner-occupier appeal at the end, not just investor demand now. Three bed, two bath, two car townhouse in a suburb where families actually want to live. Not a two-bed apartment in a large complex on the basis of yield alone. That was always better advice. Now it is essential.

You have always had to worry about rental demand in the short term. Now you also have to worry about owner-occupier demand at the end.

What we're seeing on the ground in Brisbane

About 5 per cent of what we do at HBC is investment purchasing. Within that, most of our investor clients are buying because property is a good long-term asset in a market they understand, not because of the tax structure.

Brisbane is not a hotspot market. It is not a market propped up by investor sentiment and speculative demand. It is a growing city with genuine housing pressure, tight supply, expensive construction, and sustained owner-occupier demand. Those fundamentals do not change because of a budget speech.

What changes is this: property investment now has to make sense on the numbers, not just the tax outcome. Better stock selection, more conservative cashflow buffers, and real clarity on your exit before you buy.

The questions to ask before you buy

What does my cashflow look like stress-tested to rates 3 to 4 per cent above where they are now?

What ownership structure am I buying in, and has my accountant reviewed that in light of the proposed changes?

Is this property something an owner-occupier would genuinely want to buy when I come to sell?

Am I buying this because it is a good asset, or because of the tax outcome?

The most likely outcome: investors who were buying purely for the tax refund leave the market. Investors who are buying because Brisbane property is a genuinely good long-term asset stay. That is probably a healthier market than the one we had.

Good luck out there.