Banks - Australia: Budget 2026: Tax changes to shock investor housing

Research evidence excerpt

Banks - Australia: Budget 2026: Tax changes to shock investor housing

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Banks - Australia

Budget 2026: Tax changes to shock

investor housing

Industry Overview

Key takeaways 12 May 2026

Equity• Budget measures are likely to slow investor property lending, in our view

Australia

• No growth in investor lending would slow mortgage growth from c.7% to c.4% Banks-Multinational/Universal

• With taxes raised on capital gains, Banks' higher yields are relatively attractive

Matt Dunger >>

Research Analyst

Merrill Lynch (Australia)

+61 2 9226 5329Australian taxes rise, target greater home ownership matthew.dunger@bofa.com

The Federal Budget announced abolishment of negative gearing for investment

Aida Pita >>

properties (except for new builds) and axing of the 50% capital gains tax (CGT) discount Research Analyst

for investments held over 1-year. Existing arrangements (at 12 May 2026) for negative Merrill Lynch (Australia) +61 2 9226-5066

gearing will be grandfathered, whilst CGT reforms will apply to gains that accrue after 1 aida.pita@bofa.com

July 2027. The Budget suggests measures will create 75,000 additional owner-occupiers

over 10-years, reversing the decline in home ownership of the past decade.

ANZ: ANZ Group

Investor lending slowdown could be imminent CBA: Commonwealth Bank

We believe the announced changes could slow investor lending imminently. Investors

accounted for 33% of the stock and 40% of mortgage flows over the last 12 months. NAB: National Australia Bank

Investor lending growth at 9.6% Y/Y is currently outpacing owner-occupiers at 6.2% Y/Y.

WBC: Westpac BankingWe believe the cuts to negative gearing may significantly slow investor demand for

credit. Banks report >80% of applicants for credit earn >$200k i.e. are subject to the top

47% rate.