Negative Gearing Exposure for Every Australian Property
Abstract
The 12 May 2026 federal budget removes the salary-offset deductibility of net rental losses on established residential property for new investors from 1 July 2027. Existing investors with binding contracts before announcement night are grandfathered. New builds remain exempt. We score every Australian dwelling for its negative-gearing exposure: the share of nearby stock held by private landlords who are likely running a tax loss. Across more than 3,700 suburbs with an established private rental market, the typical figure is about 8%, ranging from under 3% in settled owner-occupier areas to roughly 40% in the most investor-dense apartment districts. That is more than a ten-fold spread between two suburbs that may sit in the same city and the same price band. The score is published per-suburb and per-property inside Microburbs reports. It is the dataset a buyer needs to judge whether their shortlist places them in tax-subsidised competition, and where post-2027 investor demand is most likely to thin.
Contents
Key findings
Coverage. Every Australian residential dwelling (8.94 million in our property database) carries a negative-gearing exposure score, surfacing in suburb reports, property reports, and Suburb Finder.
National distribution. Across more than 3,700 suburbs with a measurable private rental market, the typical share of dwellings held by negatively-geared private landlords is about 8%. Three suburbs in four sit below 13%.
The ten-fold spread. Suburb-level exposure runs from under 3% in settled owner-occupier areas to roughly 40% in the most investor-dense apartment districts. The top 100 suburbs all sit above 25%. Two suburbs in the same city and the same price band can differ by more than an order of magnitude.
Capital-growth impact. In very-high-exposure suburbs a larger slice of buyer demand has come from tax-advantaged investors, so the post-2027 removal of the salary-offset shield should thin new investor demand there first. The capital-growth effect is demand-side and gradual. Federal Treasury has projected national dwelling prices settling around 2% below the no-change baseline across 2027 to 2029; the score shows which suburbs carry the most tax-advantaged demand exposed to that change.
Supply side is muted. Existing investors keep their deductions for the life of the asset, so the policy does not force selling. There is no measured capital-growth effect from forced supply. The capital-gains tax transition remains a watch item for the 2018 to 2022 buyer wave holding large nominal gains.
Yield gradient. Exposure is highest where rental yields are thinnest. The most-exposed apartment districts cluster around 4% to 5% gross yield, where rent struggles to cover a geared position, so a large share of resident investors run a loss. Higher-yielding markets carry lower exposure for the same investor presence.
Background
On 12 May 2026 the federal government announced a cap on the deductibility of net rental losses against salary income for new investors purchasing established residential property. The new rule begins 1 July 2027. Investors who entered binding contracts before 7:30pm AEST on 12 May 2026 are grandfathered for the life of the property. New builds remain exempt. The capital gains tax discount on assets held more than twelve months is moving to an indexation-based regime with a minimum 30% rate, transitioning from 30 June 2027.
The policy has two distinct effects on residential markets. The first is on demand: from 2027 the marginal new investor cannot use the tax shield, so investor demand for established stock should attenuate. The second is on supply, and it is essentially absent, because existing investors are not pushed out by the rule itself.
For prospective buyers and homeowners, the practical question is the demand-side one. Where the existing investor base is large and heavily reliant on negative gearing, buyers have been bidding against tax-subsidised competitors, and the post-2027 thinning of new investor demand will be more pronounced. Where that base is small, the effect is muted because there was little marginal investor demand to remove. Quantifying this exposure suburb by suburb, and property by property, is the purpose of the score we present here.
Methodology
The score is the output of a model, not a single formula. The calculation is deliberately involved, but the inputs that feed it are straightforward to describe. There are three.
Private-landlord presence. For every microburb we estimate the share of dwellings that are privately rented, the base on which negative gearing can apply. This draws on Microburbs' investor-concentration work, calibrated against multiple independent ground-truth signals over a multi-year build cycle. It is a calibrated model estimate, not a tax-record join.
Rental-loss prevalence. We carry an observed measure of how commonly resident investors in an area report a net rental loss, taken from official 2022-23 postcode-level tax statistics and used without modelling adjustment.
Tenure type. Not every rented home can be negatively geared. Public-housing and community-housing rentals have no private landlord and no salary-offset deduction at stake. We separate private-landlord rentals from social-housing rentals, so that remote communities and public estates, which can read as almost entirely tenanted, are not mistaken for investor-dense markets.
These inputs are weighed into a single directional estimate for every dwelling, then aggregated to the microburb and suburb level. The calculation produces a score for 8.94 million properties. We publish it as a calibrated, directional estimate. Its most reliable use is tier-banding, from very low to very high, rather than precise point comparison between two suburbs whose scores differ by a few percentage points.
Validation
The private-landlord input is calibrated independently against rental flow, tenure, and ownership signals, and is the published headline of Microburbs' investor-concentration research. The tax-side input is an official statistic with no calibration uncertainty of its own; we exclude a small number of postcodes where the published figure is non-finite due to zero-denominator artefacts, and we drop localities dominated by social housing so that public estates do not inflate the ranking.
The result is checked against the known character of the suburbs it ranks. Sydney Olympic Park, NSW (Sydney), master-planned for renters after the 2000 Olympics, lands at the very top. The most-exposed large suburbs are inner-city and master-planned apartment districts such as Parramatta, NSW, Zetland, NSW and Docklands, VIC (Melbourne). Settled owner-occupier suburbs such as Castlecrag, NSW sit near the floor. The ranking's direction is consistent with the demand-side channel Federal Treasury identified in its 2026 budget assessment.
Results
National distribution
Across more than 3,700 suburbs with an established private rental market, exposure is distributed as follows. The measure is summarised here for residential suburbs where a private rental market exists; social-housing-dominated localities are held out.
| Percentile | Suburb category | Tier | Exposure |
|---|---|---|---|
| 5th | Settled owner-occupier areas | Very low | 2.5% |
| 25th | Lower-investor suburbs | Low | 5.2% |
| 50th (median) | Typical Australian suburb | Low | 8.3% |
| 75th | Higher-investor suburbs | Medium | 12.8% |
| 90th | Investor-heavy suburbs | High | 18.3% |
| 95th | Apartment-investor districts | High | 22.0% |
| Maximum (per-suburb) | Purpose-built renter districts | Very high | 40.4% |
The most exposed suburbs
The ten most-exposed suburbs with at least 500 dwellings are inner-city and master-planned apartment markets. Their gross rental yields, shown alongside, all sit below 5% and cluster around 4%, which is the economic reason loss-making is so common there.
| Suburb | SUA | State | Gross yield | Tier | Exposure |
|---|---|---|---|---|---|
| Parramatta | Sydney | NSW | 4.1% | Very high | 39% |
| Bowen Hills | Brisbane | QLD | 3.6% | Very high | 37% |
| Zetland | Sydney | NSW | 4.7% | Very high | 37% |
| Fortitude Valley | Brisbane | QLD | 4.5% | Very high | 37% |
| Chippendale | Sydney | NSW | 4.1% | Very high | 37% |
| Harris Park | Sydney | NSW | 4.4% | Very high | 37% |
| Wentworth Point | Sydney | NSW | 4.2% | Very high | 36% |
| Homebush West | Sydney | NSW | 4.3% | Very high | 35% |
| Westmead | Sydney | NSW | 4.3% | Very high | 35% |
| Wolli Creek | Sydney | NSW | 3.9% | Very high | 35% |
The very-high tier is not confined to Sydney. West Melbourne, Docklands and Southbank (all Melbourne), Cockburn Central (Perth) and Gladstone Central (regional Queensland) all sit just below the leaders, each around 34%.
The single most-exposed suburb in the country is Sydney Olympic Park, NSW (Sydney) at roughly 40%, a smaller suburb of about 450 dwellings that was purpose-built as rental stock.
The full range
The following suburbs span the distribution from very high down to very low. They make the spread concrete.
| Suburb | SUA | State | Tier | Exposure |
|---|---|---|---|---|
| Sydney Olympic Park | Sydney | NSW | Very high | 40% |
| Bondi Beach | Sydney | NSW | Very high | 27% |
| Pyrmont | Sydney | NSW | Very high | 25% |
| Truganina | Melbourne | VIC | High | 23% |
| Tarneit | Melbourne | VIC | High | 22% |
| Werribee | Melbourne | VIC | High | 21% |
| Hoppers Crossing | Melbourne | VIC | High | 19% |
| Balmain | Sydney | NSW | High | 17% |
| The Ponds | Sydney | NSW | High | 16% |
| Castlecrag | Sydney | NSW | Very low | 5% |
Illustrative examples
To illustrate, Sydney Olympic Park, NSW sits at the very top of the distribution. Most of its stock is privately rented and a large share of those landlords report a rental loss, which is what a suburb master-planned for renters looks like. The capital-growth effect of the post-2027 demand-side thinning should be most pronounced in markets of this character.
To illustrate the other end, Castlecrag, NSW sits near the floor at about 5%. The suburb is predominantly owner-occupied, so buyers compete largely against other owner-occupiers rather than tax-shielded investors. The capital-growth effect of the 2027 change on Castlecrag's stock is expected to be minimal.
Capital-growth and yield interaction
The most-exposed suburbs share a clear profile. Their private-rental base is deep, and as the most-exposed table above shows, their gross rental yields sit at the bottom of the urban range, all below 5% and mostly around 4%. At those yields a geared position rarely covers itself, which is why such a high share of resident investors run a loss. Detached-house suburbs in the outer growth corridors reach high but lower scores by a different route: the private-rental base is smaller, even though loss-making is just as common. Thin yields are the economic reason loss-making clusters in apartment districts, and that loss-making prevalence is what the score carries.
Defence against likely criticism
“The tax data is from 2022-23. Rates have changed since.”
The loss-making rate is a slow-moving statistic relative to the structural composition of a suburb. The national rate moved from 62% in 2014-15 to 42% in 2021-22, then back to 50% in 2022-23. Cross-sectional variation across postcodes is far larger and far more stable than the year-to-year movement. For ranking suburbs by relative exposure, the 2022-23 vintage is sufficient, and a newer national vintage would not materially reorder the suburb ranking.
“The tax statistic is measured at the landlord's postcode of residence, not the property's postcode.”
This is correct and we flag it on every public deliverable. In most metropolitan suburbs the two coincide closely, because resident investors disproportionately own local stock. The mismatch matters more for absentee-landlord markets such as coastal holiday-let areas and mining-town stock owned by metro residents. We treat the suburb-level score as a directional ranking, not a property-level claim, and the note travels with every published number.
“The score doesn't tell you which individual landlord is loss-making.”
True, and out of scope. We do not access individual-property tax records and do not seek them. The score is a population-level proportion: what share of the local stock is held by private landlords of a loss-making type, given the observed character of the suburb and its postcode. For asset-level due diligence the per-property report reads this score alongside the property's other contextual signals.
“Why do remote and Indigenous communities not appear at the top, when they are almost entirely tenanted?”
Because almost all of that tenancy is public or community housing, not private rental. There is no private landlord and no salary-offset deduction at stake, so those localities carry low exposure despite very high rented shares. Separating private-landlord rentals from social housing is what keeps the ranking pointed at genuine investor markets rather than public estates.
Limitations
- The tax-residence postcode and the property-location postcode are not the same concept. They correlate most of the time, but the mismatch is real for absentee-landlord markets.
- The score is a proportion estimate at the suburb and property level. It is not a per-landlord tax determination.
- The tax-side input is from 2022-23. The 2026 population of negatively-geared investors is inferred, not observed.
- Markets dominated by social housing are held out of the distribution, so the score is least informative in localities with little private rental, including much of the Northern Territory.
- The capital-gains tax transition is still being legislated and may affect supply-side dynamics in ways not captured here.
- The score does not model individual depreciation positions; a cash-positive but tax-loss-making investor is treated the same as a cash-loss-making one.
- The score measures today's negatively-geared base. The 2027 change acts on new-investor demand, and investors who signed binding contracts before 12 May 2026 keep their deductions, so the demand-thinning the score points to is an inference about marginal new buyers rather than a direct measure of it.
- The score reflects a property's microburb and postcode context. Two dwellings in the same microburb carry the same score, so it is a locational signal rather than an assessment of an individual title.
Conclusion
Microburbs has scored 8.94 million Australian residential properties for their exposure to the 2026 negative-gearing change. The estimate weighs how much of the local stock is privately rented, how commonly those landlords run a loss, and the split between private and social housing. The national distribution is wide: from under 3% in settled owner-occupier suburbs to roughly 40% in the most investor-dense apartment districts, with a typical suburb near 8%.
For investors and buyers, the score answers a question the headline national number cannot: how much of the suburb you are looking at is propped up by tax-subsidised demand today, and how much of that demand is likely to thin from 1 July 2027. The score is published inside Microburbs suburb reports, property reports, and Suburb Finder. For asset-level due diligence it reads alongside the property's other signals; for suburb selection it reads alongside capital-growth, yield, and demographic context.
The policy change reshapes the demand side of the residential market. The score locates, suburb by suburb and property by property, where that reshaping will land hardest.
Coming to the API. The address- and suburb-level negative gearing data is being added to the Microburbs API and is not yet in the public API. Request API access → to register your interest for early access.