Investor Numbers Drop Fastest in Outer Suburbs After the Budget

Open-home attendance in Melbourne and Sydney's outer, more affordable suburbs has fallen faster than almost anywhere else in the country since the May 2026 Federal Budget removed negative gearing on established homes and replaced the 50 per cent capital gains tax discount. Real estate data from Ray White shows visitor numbers at open inspections have almost halved nationally since February, with the sharpest falls concentrated in suburbs where investors were previously most active. For property investors, the numbers are an early signal of where the market is repricing first, and why getting your structure right before you buy matters more than the headline price.

What the data shows

Ray White's rolling four-weekly average open-home attendance fell to 2.2 people per inspection in the past week, down from 3.7 when the company began publishing the figures in February, the same month the Reserve Bank started its most recent run of rate rises. The steepest declines are concentrated in outer, lower-priced suburbs where investors have traditionally made up a larger share of buyers.

In Mickleham, on Melbourne's outer northern fringe, average attendance was just 0.4 people per inspection in the four weeks to 8 August. Housing values there fell 3.8 per cent over the three months to July, according to data provider Cotality, more than Greater Melbourne's overall 3.4 per cent decline for the same period.

The pattern repeats across several other outer suburbs:

• Melbourne's Deanside and Tarneit, in the city's outer west
• Sydney's The Ponds and Tallawong, in the city's north-west
• Colyton, in Sydney's outer west

All were named among the suburbs with the lowest open-home attendance nationally.

Why outer suburbs are moving first

Ray White chief economist Nerida Conisbee said the pattern is a predictable consequence of the Budget. "One of the explicit aims was to reduce investor demand for established housing and, given investors are particularly active at the more affordable end of the market, it makes sense that we are seeing some of the weakest inspection numbers in these areas," she said.

Rahul Malik, who owns M7 Real Estate in Mickleham, has seen the shift directly. Investor buyers have dropped from three or four out of every ten to barely one in ten, and local valuations have fallen $40,000 to $50,000 since the Budget was handed down.

The Budget changes behind the shift

Two changes are driving the pullback out of established property. From 1 July 2027, negative gearing no longer applies to established residential properties bought after 12 May 2026, and the 50 per cent capital gains tax discount is being replaced with an inflation-indexed method from the same date, alongside a 30 per cent minimum tax on gains accrued afterward. In short:

• Established homes bought after Budget night lose access to negative gearing against salary income from 1 July 2027
• New builds keep full access to negative gearing, before and after that date
• Properties bought before Budget night are unaffected by the negative gearing change

New builds retaining negative gearing is a large part of why demand is holding up in masterplanned and off-the-plan markets while established outer-suburban housing feels the pullback first.

It is not uniform everywhere

The slowdown is not limited to Melbourne and Sydney. Eight of the ten suburbs with the fastest-falling visitor numbers nationally are in Brisbane and South-East Queensland, including Morningside, Balmoral, Newstead, Sunnybank Hills, North Lakes and Biggera Waters, even though prices in some of these suburbs are still rising. Conisbee puts this down to timing rather than a shared suburb type, since Queensland's market simply turned later than New South Wales and Victoria.

Not every agent is seeing investors disappear. Hayley Van de Ven, principal at Remax Results Morningside, said fewer people are coming through opens, but those who do attend are more serious buyers, and price falls in Brisbane have been smaller than in Sydney and Melbourne.

What it means if you are still buying or holding

None of this is a reason to abandon property investment, but it is a reason to be more deliberate about it. Worth checking before you act on the headline numbers:

• Does the property you are looking at qualify for negative gearing under the new rules, or was it purchased after 12 May 2026
• Is your current ownership structure, own name, trust, company or SMSF, still the right one under the post-2027 negative gearing and CGT rules
• Does your cash flow still work if a loss can only offset rental income rather than your salary

Get that modelling done before you sign a contract, not after an amendment is needed. If your existing return already relies on a managing agent's statement to work out your position, it is worth checking whether that statement is reporting your income and expenses correctly in the first place.

The market data in this article is drawn from reporting by the Australian Financial Review, using open-home and price figures published by Ray White and Cotality. It illustrates a trend rather than predicts any single suburb's outcome, and every portfolio responds to these changes differently.

Disclaimer: This article contains general information only and does not constitute financial, legal or tax advice. It has been prepared without regard to your objectives, financial situation or needs. Tax and superannuation laws change frequently, and the information in this article may not reflect the current law or may become inaccurate over time. Before acting on anything in this article, you should consider its appropriateness to your circumstances and seek advice from a registered tax agent or qualified adviser.