New apartments and the next buyer

Money Magazine examined where investors will look once tax settings favour new dwellings, and PIPA Chair Cate Bakos warned that new property brings its own risks of overpayment, high outgoings and poor locations.

What the article examined

Michelle Singer’s feature in the August 2026 edition of Money Magazine considered how the proposed changes to negative gearing and capital gains tax could move investors toward new residential property, commercial property and secondary dwellings. It drew on buyer’s agents, advisers, a depreciation specialist, a developer and Ray White chief economist Nerida Conisbee.

Cate Bakos on new property

Cate Bakos, Chair of PIPA, told the magazine that the reforms are unlikely to produce a single winning property type. She expects investors to become more discerning about individual assets, and to give more weight to rental yield, purchase price and long-term fundamentals. She predicted a rise in quality, boutique and low-density apartments in the capital cities.

New property will likely thrive, but investors will need to be cautious about overpayment risk, high outgoings, and compromised locations and zones.

Cate Bakos, Chair of PIPA, quoted in Money Magazine, August 2026

She also said demand for specialist advice is likely to rise as investors move into parts of the market they have not bought in before. Defects, sunset clauses, lending policy for new and off the plan property, subdivision and titling all differ from an established purchase. In choosing a buyer’s agent for new property, she recommended checking their knowledge of lending policy for new and off the plan stock, and their ability to manage settlement, including defect inspection and sign-off.

The next buyer

Ms Conisbee noted that under the proposed settings, the tax advantage of a new apartment falls mainly to its first owner. In her words, “a new apartment is also only new once.” If later investors cannot claim the same concessions, the pool of buyers at resale is smaller, which can affect resale demand and long-term growth.

The price of a new apartment is set in a market where the buyer can claim the concession. Its resale price will be set in a market where the next buyer, if an investor, cannot. An investor who pays a premium for the tax treatment may not recover it on resale, because the next purchaser may not receive the same benefit.

Ms Conisbee added that in a low growth environment the property needs to produce enough rent to be viable on its own. In that case, outgoings largely determine the return. Strata levies, sinking fund contributions and building insurance in a new complex can be substantial, and they are often estimated in the sales material before the building has an operating history.

The price on the contract

Anissa Cavallo of Eda Property described buyers of house and land packages discovering that the quoted base price was rarely the full cost. Drainage, easements and slope can add $20,000 to more than $60,000 in site costs where they were not disclosed at the outset. Upgraded finishes seen in a display home are usually outside the base contract. She also noted that a developer’s sales team is employed to sell that product at that price. It is not assessing whether the property suits the buyer’s portfolio or whether the price stands up against comparable stock.

Apartment supply

Redom Syed of Flint Group made a related point: apartment markets move in cycles, and what matters most is whether supply is constrained. Falling approvals and projects that cannot proceed can eventually create scarcity. A new apartment in a precinct with several more towers approved nearby competes with each of them for tenants and, later, for buyers.

Before buying new, an investor should establish:

• The number of apartments approved and under construction within the same precinct.
• The resale history of comparable apartments completed three to five years earlier in the area.
• The strata budget, sinking fund plan and insurance cost, compared with established buildings nearby.
• The sunset clause in the contract, and the developer’s rights under it.
• The lender’s current policy on the building type, the postcode and apartment size, since valuation and lending conditions at settlement can determine whether the purchase completes.

Independent representation

Ms Cavallo’s point about developers’ sales teams goes to the centre of the risk. A buyer of new property is entitled to know how the price compares with resale evidence for similar dwellings, and whether the person recommending the purchase is paid by the developer or project marketer. The PIPA Code of Conduct requires members to disclose that payment, and QPIA accredited advisers can be located through PIPA’s adviser search. PIPA Vice Chair Richard Crabb has also set out the checks before building an investment property.