J.P. Morgan Australia FTM 13 May 26 Australian Banks; Australia Economics; Investor Positioning; Spot Scenarios and More

Research evidence excerpt

J.P. Morgan Australia FTM 13 May 26 Australian Banks; Australia Economics; Investor Positioning; Spot Scenarios and More

Asia Pacific Equity Research

Australia First to Market 13 May 2026

Top Stories

Australian Banks (Andrew Triggs)

2026-27 Budget shakes up Investor lending tax policies; sentiment overhang and headwind to credit

growth

The Australian Government announced in the Federal Budget a number of changes to the taxation of property investors.

Property investors account for one-third of system mortgage credit, but investor lending has recently seen stronger growth

rates than owner occupier lending. The two main changes are: 1) A limit on negative gearing to newly built dwellings going

forward (but grandfathering of existing negatively geared properties); and 2) A return to indexation of Capital Gains Tax (CGT),

replacing the 50% CGT discount method. The announced changes stem from a concern that existing tax policies have driven

too much investment in an unproductive asset class; since the establishment of the 50% CGT discount in 1999, house prices

have risen by ~400%, twice the rate of income growth. While Treasury does not expect an immediate fall in house prices, it

does model a slower path of house price growth in future. We presume that housing credit growth will be lower than otherwise

expected (as would housing turnover), with mortgage-heavy major banks (CBA, WBC) likely to be more impacted at face value.

This is likely to compound challenges from RBA rate hikes.

Australia: Follow the money (Tom Kennedy)

Since Liberation Day, de-dollarization has become a prominent theme. Evidence of a preference shift away from USD assets is

limited, but recently-released annual cross-border flow data for 2025 tentatively suggests Australia is participating in the