Two budgets, one market, and the fight for investor attention
ATOM GO TIAN ECONOMIST, RAY WHITE GROUP
Two budgets landed in May. One tightened settings for property investors, while the other got out of the way. The contrast between Australia and New Zealand’ s fiscal settings has sharpened a question that was already forming: is the Tasman Sea wide enough to keep Australian investors from looking at what’ s on the other side? And how soon will they act?
WHAT AUSTRALIA CHANGED
From 1 July 2027, the existing 50 per cent capital gains discount for assets held longer than a year will be replaced by an inflation-indexed method with a minimum 30 per cent tax on gains. Negative gearing on established rental properties purchased after budget night has been curtailed, meaning landlords will no longer be able to offset rental losses against other income, except on new builds.
The intent from Canberra is clear: reduce investor competition for established homes and redirect capital into new supply. But investors facing materially worse after-tax returns on established Australian property are now looking elsewhere. New Zealand is the most obvious alternative.
WHAT NEW ZEALAND DID INSTEAD
Budget 2026 in New Zealand took a different path. A disciplined fiscal package delivered an earlier-thanexpected return to surplus in 2028 / 29, a credible track to deficit reduction, and no new surprises for property investors. Tax settings for rental property remain unchanged, and no new compliance burdens have been introduced.
A credible path back to surplus reduces pressure on inflation, giving the Reserve Bank of New Zealand( RBNZ) room to keep the Official Cash Rate( OCR) lower for longer- a meaningful tailwind for mortgage holders and buyers.
Treasury forecasts growth recovering to a little over two per cent by June 2027, unemployment easing gradually, and inflation settling back around two per cent. That is the kind of macroeconomic backdrop in which a fragile property recovery can consolidate rather than stall.
No capital gains tax beyond the two-year bright-line test. No stamp duty. No land tax. Interest deductibility for investment properties fully restored in April 2025 remains intact.
The two markets are now pulling in opposite directions on tax, and Australian investors have noticed.
RAY WHITE NOW NEW ZEALAND | 10