The assumption behind the policy

The government’s housing reforms assume investors will simply redirect from established property into new builds.

On paper, that sounds logical.

But it misunderstands how most investors actually think.

Investors don’t buy based on tax alone

Most investors are not making decisions based purely on tax deductions.

They focus on:
– capital growth
– scarcity
– owner-occupier appeal
– resale depth
– proven demand

Tax incentives matter.
But they are rarely the primary reason people invest.

Why established property has always dominated

Historically, investors have overwhelmingly favoured established property because tightly held suburbs with strong owner-occupier appeal have often delivered the strongest long-term capital growth outcomes.

New build comes with risk

Many investors remain cautious around:
– construction delays
– builder insolvencies
– valuation uncertainty
– oversupply risk
– holding cost blowouts

So rather than redirecting into new builds, many investors may simply step back entirely.

The bottom line

The assumption that tax policy alone will fundamentally change investor behaviour is simplistic.

Investors follow fundamentals first.
Not politics.

And unless new builds stack up from a risk and growth perspective, many investors simply won’t participate.