The 2026 Federal Budget has made new builds look like the obvious choice for property investors. New research suggests the established property next door might still be the better bet.
Under changes announced on Budget night, negative gearing will be phased out for established residential properties bought after 7:30pm on 12 May 2026, with the change taking effect from 1 July 2027. New builds keep access to negative gearing and the choice between the 50% capital gains tax discount and cost-base indexation – benefits established properties bought after that date will lose.
On the surface, that settles the question. However, modelling released by North-West Sydney buyer's agency InvestorKit this week argues it doesn't.
The firm modelled two $750,000 properties – one new build, one established – bought on the same day, held for ten years and sold in year ten. The new build came out ahead on cash flow, saving the investor $108,000 more over the decade thanks to depreciation and uninterrupted negative gearing. But it lost on capital growth, coming out $208,000 behind, largely because InvestorKit assumes new-build corridors grow more slowly and carry higher vacancy risk than established suburbs. Net result: the established property finished the model almost $100,000 ahead.
The reason isn't just a preference for older suburbs. InvestorKit's theory is that a rush of investors chasing the new tax concessions could concentrate demand in new-build estates already constrained by high construction costs and land prices. That gives developers room to raise prices and lean the product toward investor buyers rather than the owner-occupiers who typically anchor a suburb's long-term stability. When those investors eventually try to resell, the next buyer won't qualify for the same tax benefits – since the concessions apply only to the first investor-purchaser – while the wave of near-identical new stock arriving at once pushes up vacancy and caps rent growth in the meantime.
To test the theory, InvestorKit pointed to three historical examples. Comparing Melbourne's Frankston (established) with the Melton–Bacchus Marsh corridor (new-build heavy) over the decade to January 2025, it found a 1.4 percentage point gap in annual price growth and elevated building approvals and vacancy in the new-build corridor for years at a time. A matched pair of near-identical houses in Tarneit, Victoria — bought the same year, sold 11 years later — showed the established home gaining $415,000 versus $169,000 for the new build. And in North Lakes, Queensland, a master-planned estate, prices and rents plateaued for years during the build-out phase before accelerating once the suburb matured and the oversupply was absorbed.
InvestorKit's conclusion isn't that new builds are a bad investment, but that the tax changes shouldn't be read in isolation. Tax treatment determines how much of a return an investor keeps - it doesn't determine how large that return is in the first place, and the firm argues capital growth, driven by genuine supply and demand fundamentals, still does more of the work over a ten-year hold.
A local test case
The dynamic InvestorKit describes isn't hypothetical for the Hawkesbury. Vineyard, Box Hill and Oakville sit inside Sydney's North West Growth Area, and all three are seeing active new-build estates come to market - the kind of properties that stand to benefit most directly from the Budget's new build tax concessions. Homes NSW has also flagged Box Hill and Riverstone as sites for a mix of market and social housing, adding further supply to the pipeline.
That makes the growth corridor an obvious drawcard for investors chasing the new negative gearing and CGT settings. But it's also exactly the kind of market InvestorKit's modelling is warning about: one where a wave of new stock arriving at once can weigh on vacancy rates and price growth well before the tax question of resale demand even comes into play. For investors eyeing a Hawkesbury new build on the strength of the tax changes alone, the fundamentals of the local market - how much new supply is coming, and how deep genuine owner-occupier demand really is – remain the harder, and arguably more important, calculation.
Source: InvestorKit, "The Tax Trap: Why the 2026 Budget May Actually Hurt New Build Investors," 23 June 2026.
