Welcome back to The Property Perspective. This issue we want to dig into a conversation that has come up constantly since the budget announcement: new builds versus established property.
The budget changes have made new builds look more attractive on paper and developers have been quick to capitalise on that. Marketing has ramped up significantly over the past few weeks and we are seeing a lot of investors being pointed in that direction before anyone has properly asked whether it is the right fit for them.
We think it is worth slowing down and working through this properly.
Callum & Lucas
To recap quickly: from 1 July 2027, negative gearing on established properties purchased after 7:30pm on 12 May 2026 will no longer be available. New builds retain access to negative gearing and the existing 50% capital gains tax discount.
On the surface, that looks like a clear win for new builds. But tax treatment is one input into an investment decision, not the whole equation. And in our view, it is rarely the most important one.
There are scenarios where a new build makes sense. Retained negative gearing helps with cash flow and for some investors it also improves borrowing capacity. The depreciation benefits in the early years can be meaningful and lower maintenance costs are a genuine advantage.
If a new build genuinely aligns with your goals and the location holds up on its own merits, it can be the right call. But those cases are more selective than a lot of the current marketing would suggest.
For most property investors, capital growth is the primary objective. And the single biggest driver of long term growth is location quality, which comes down to supply and demand fundamentals.
This is where new builds often fall short.
Most new development happens in areas where land is readily available. That same availability means ongoing supply coming onto the market over time, which works directly against price growth. You are also paying a developer premium from day one in these locations. New builds are typically concentrated in areas with large parcels of vacant land, which often means greater distance from established infrastructure, employment hubs and the amenity that tenants and future buyers actually want. The desirability of these areas relative to more established suburbs is not a given, and that question mark sits over both long term sale prices and rental demand from day one.
On rentals specifically, if a significant number of investors move into new build stock at the same time, those areas are going to absorb a large wave of rental supply all at once. That creates a real risk of high vacancy rates, softening rents or both. Yield projections that look reasonable today can look very different when you are competing with a dozen near identical properties on the same street for the same tenant pool.
And when the time comes to sell, the new build premium is gone. The asset is now established stock, competing in the very market you paid above the odds to avoid. Your buyer pool narrows and the key selling point has disappeared. It is worth thinking about your eventual exit before you commit to the entry.
When you compare that against the opportunity cost of buying a well selected established asset in a genuinely constrained market, the numbers often tell a different story. A property in a location with real supply restrictions and strong long term demand drivers will, in our view, outperform a new build with tax advantages but weak fundamentals in most scenarios.
There is one more issue we want to raise directly, because we do not hear it talked about enough.
If someone is recommending a new build to you, the first question to ask is: what are you getting out of this?
Developers carry the largest margins in the market and they have a long history of sharing those margins with the professionals who refer clients to them. Buyer's agents, mortgage brokers and financial advisers can all receive significant commissions from developers for directing clients toward new stock. We have seen it time and time again. The advice may not be as independent as it appears.
We want to be completely transparent: SVG Property Advisory does not and will never accept commissions from developers. Our advice is 100% independent. We have no financial interest in what you buy, only in whether it is the right asset for you. So when we tell you to be cautious, it is not because we have something to gain from steering you elsewhere. It is because the data and our experience support that caution.
If you are seriously considering a new build, ask whoever is guiding you whether they are receiving any referral fee or commission from the developer before you commit. You are entitled to a straight answer.
The right framing is not "new build or established?" The right framing is "does this property, in this location, at this price, get me closer to my long term goals?" Tax benefits should improve a good investment. They should not be the reason you compromise on the fundamentals that actually drive wealth creation over time.
The budget has shifted the playing field but it has not rewritten what makes a good investment. Supply and demand dynamics, location quality, and long term demand drivers still matter more than the tax structure around any single asset.
More than ever, this environment rewards clarity on your own goals and truly independent advice on how to achieve them.
Until next fortnight,
Callum & Lucas