Australia’s 2026 Federal Budget & How to Protect Your Investment Property

George Markoski Hello, this is George Markoski coming to you live with the Positive Property Show. And welcome. We’re going to be talking about the latest rate rise with the RBA, but also what to watch out for with this year’s budget that’s coming out next week. So stay tuned. There’s going to be really good. We’re diving deep. A lot of people have been worried about what’s been happening with the rate going up. And it’s understandable because if you look at America, New Zealand, Canada, most of the Western world have had zero rate rises while we have been having rate rise after rate rise. So why is our RBA putting up the rates when every other central bank is actually not doing this? Very interesting. Now, is our inflation slightly higher than the rest? Yes, it is, but only slightly. George Markoski But also because of the Strait of Hormuz, the oil crisis, Australia actually uses a lot more diesel than most other countries. And that’s because we’re such a large country and we do a lot of road transport and road transport requires diesel. So therefore what happens is we have 20% of the world’s oil supply getting constricted, which pushes prices up because of supply and demand. Now, we always talk about supply and demand. And what’s interesting is to see supply and demand in action because, you know, what do we talk about? Property. What we say is if you go to a suburb and there’s less supply, more demand, that pushes up prices. And intellectually we understand this, but now we’ve got a real world example of what happens. And look what happened. They constrained supply, less oil being supplied. George Markoski We’re still at the same demand in the world and prices have gone up quite considerably. So a classic example of supply and demand. And when it comes to capitalism, we can look at everything as a supply and demand chart, really. And that’s why when you look at the fundamentals of real estate, what you’ve got to do is really look at supply and demand and not get caught up in the weeds and listen to people’s opinions when they’re not based on facts. Because in property, facts and principles make you money. But speculating and listening to the latest trend is not going to make you rich. Listening to the news and listening to what they’re going to say is not going to help you become financially successful. So the budget, well, the budget’s interesting. We’re going to talk about this afterwards. George Markoski What I’ve got is Carmine from Well Street coming and joining me later on and we’re going to be talking about finance. So if you’ve got any questions about finance and the RBA putting the rates up, please type in your questions now while I speak. Because then what we’re going to do is we’re going to sit down with Carmine and go through all those Q&As with you and we can start our presentation. Let’s talk about the state of the nation, the federal budget, what to watch. We’re going to talk about that in a minute. But let’s talk about what’s been happening right now. So how global pressure is hitting. Now this is what I want to show you, this chart, how inflation eats your wealth in Australia. George Markoski If you look at this chart, basically $100 today in 50 years is going to lose 90% of its value. Let that sink in. $100 today is only worth $10 in 50 years time. That’s with normal inflation. But at the moment we’ve got hyperinflation. So you look at this graph, each year the worth of your dollar goes down. By 2031 you’ve lost 21%, right? That’s five years. In five years you’re going to lose around 20%. What does that mean for you? Well, this is what it means. The old school way of creating wealth, you know, what they teach you at school and what is drummed into us, is work hard and save. But what you’ve got to understand is working hard and saving is all it’s going to do is make you broke. George Markoski You know, if you look at my mentor, Robert Kiyosaki, you know, Rich Dad, Poor Dad, his poor dad worked hard and saved, his rich dad invested. I’m going to show you some other examples tonight. But the fact of it is, if you’ve got money in the bank at the moment because of high inflation, you are in big trouble, because the next five years you’ll lose at least 20%, if not more. I’d say more is very conservative. And at the moment, inflation’s so high, you’re going to lose even more. So what does that mean? It means that if you work hard and save, all you’re going to do is get poorer and never get ahead. That’s just the fact of it. So it’s not the way to go. So the global conflict could push inflation even higher again. George Markoski So if you look at Brent oil price, that’s per barrel, quarter average. And this is what I was talking about, supply and demand. Right. So basically, the forecast says it’s going to be up to nearly $140 per barrel. Right. So the RBA inflation outlook assumes oil prices stabilise over time. But the problem is, if this war keeps going, they’re not going to stabilise unless they open the Strait of Hormuz. And at the moment it doesn’t look like that’s happening. So the RBA hits a 15 year high at 4.35%. So this is the third consecutive hike with eight or nine board members voting yes. So basically what’s happening is the Middle East is driving energy and commodity inflation and the market is pricing in a 4.6% to 4.85% cash rate by the end of 2026. So what does that mean? George Markoski It means that people are predicting this is not the last hike this year. And we’re going to go in deep later on with Carmine about the setting. If you look at this graph, we’ve gone from 1.5% in August 2016, then it went right down during COVID and now it’s gone up. And if you look at this graph, it looks kind of scary because, like, wow, look how high it is. But it’s all about perspective. And what I want you to do is zoom out and let’s look at the next graph. If you look at this graph, this gives you perspective and this is what you need to look at. So if you look at 1990, we had interest rates that were 17.8%. George Markoski Obviously they went down from there, but as you can see, rates are going up, they go down, they go up, they go down. And where are we at the moment? We’re down here. So relatively speaking, our rates are quite low, even though it feels like they’re high because it was so low during the COVID pandemic. But it’s important to have perspective. We’ve had 17 years without real wage growth. Real wages fell 0.3% in 2025, extending a multi year slide currently at late 2011 levels, which is 6% below the COVID peak. So really, the amount of money people make now is the same as what they were making in 2011. What does that mean? Well, before I was explaining about inflation eating away your savings. Inflation is insidious. What it also does is it actually eats away at your wage. George Markoski Because if $100 now is going to be worth $10 in 50 years time, that means that you earning $100 now is not worth the same amount. Let’s say we’ve got 5% inflation going on for the next five years. That means that if you’ve got $100,000 invested, it’s going to be worth $80,000 in five years. You’ll lose $20,000. But not only that, if you make $100,000 a year, in five years time that $100,000 will only buy you $80,000 worth of goods and services compared to what it does now. So what inflation is, it’s a two edged sword. Inflation eats away savings, eats away your purchasing power. At the same time, it’s literally your worst enemy. Now this is what’s happening at the moment. The Federal Reserve in America is printing $5 billion every single day. George Markoski They started the quantitative easing cycle because of the war. What does that mean? Well, last time they did that, Australia started doing it as well. So there’s going to be massive inflation in the US. Massive. And we’re probably going to follow the same thing. Now housing FOMO has turned into FOOP, right? What does that mean? Well, FOMO is fear of missing out. And let’s face it, a lot of people had fear of missing out and people were going crazy and overpaying for a lot of blue chip properties. Now FOOP is fear of overpaying and now that’s what’s gripping people. Basically, Sydney and Melbourne are recording outright price falls. So property prices are going down. Buyers are pausing and becoming much pickier. And rising supply in those two markets at least gives buyers more negotiating leverage. George Markoski So fear of overpaying is now starting to take hold. And what’s happening is certain sectors of the market have dropped a little bit. Now this is the thing you need to realise, right? So if you see Sydney or Melbourne and you see like it’s dropped 3%, does that mean everything’s dropped 3%? No. Hell no. What it means is certain overvalued markets have probably dropped 7%. Other markets have gone up and they’ve washed out to minus 3%. So there’s still good buying, especially in Melbourne at the moment, because it’s undervalued, even though prices are dropping in certain sectors. What you need to do is you need to know what to choose, what to pick. That’s what it’s all about. Now developers are exiting entry level apartments. High rise apartment approvals, you can see this, they went right down. George Markoski They started going up again and now they’ve started dropping again everywhere. Nationally they’ve dropped quite significantly and we had a peak of approvals back in 2013. So the average new apartment approval value now is $850,000 for an apartment. Right. So most high rise approvals are concentrated in massive luxury high rise. Entry level one or two bedroom apartments are being abandoned entirely. And first home buyers are locked out of even apartments. Now what does that mean for everyone? Well, the average apartment is $850,000. Let that sink in. That’s the new average in Australia. Because in the old days you’d say, well, I couldn’t afford a house, at least I can buy an apartment. That’s not the case anymore. So $850,000. The average new apartment approval value has gone up sharply over the last 12 to 18 months as affordability collapses. Rental vacancies at a historic low. George Markoski So national vacancy rate 1.6%, well below the 2.5% to 3.3% historical average. And now SQM Research reports a record low of just 1%. Every capital city vacancy rate is sitting at 1.8% or below. And rents are up 5.7% annually, the fastest pace since October 2024. What does this mean? Well, vacancy rates is all about supply and demand. When vacancy rates are low, that means there’s not enough supply and there’s a lot of demand. And we have to look at supply and demand when we’re investing in property. Rental listings down a third from pre-COVID. So even though people have got FOOP or whatever it’s called, capital city rental listings remain near historic lows. Listings declined across every capital city. Net overseas migration is forecast to exceed 300,000 this financial year, up from 260,000 last year. George Markoski So high migration in tight housing supply continues to drive upward pressure on rents. So you look at this. Sydney change versus COVID, right? Rental listings down 35%. Melbourne 31%, Brisbane nearly 40%. Every single capital has got less properties to rent out. This is a major issue that no one is talking about at the moment because the data is hidden. And this is going to wash out to another massive rental crisis, as if we needed another one. So the annual rent growth has been 5.7% in the last year. So that means an extra $38 a week. So this is the two speed market, what I was talking about before. Look at this. Melbourne is leading price declines as buyer caution and FOOP sentiment deepen. Perth, Brisbane, Adelaide continue to outperform due to stronger supply and demand fundamentals. George Markoski Luxury apartment construction is rising while affordability and entry level supply continues to shrink and rental yields are improving. So you look at Melbourne minus 4.2%, Sydney minus 1.8%, Perth plus 5.6%. What does this mean? What it means is that the FOMO that was hitting Melbourne and Sydney is now over and now people have got FOOP instead. Now there’s still good buying to be had in Melbourne and Sydney because smart investors know how to pick a good investment from a bad one. And what’s happening is now with this sort of market that’s tightened up a little bit, all the weaker hands are going to fall out of the market. The strong hands are going to do well. So migration locks in rental demand for 2026. Like I said before, we forecast to exceed 300,000 migrants. George Markoski Every new arrival increases housing demand while every vacancy rate remains nearly 1%. Housing construction is not keeping up and strong migration demand is expected to keep upward pressure on rents for years to come. You look at this graph, this is Australia’s rental demand engine that’s going to keep pushing unless we change governments. Now this is the thing. Australia has got parent visas growing to 157,000. So this is the thing, parent visas is when people immigrate to Australia and then they get their elderly parents to immigrate here with them. And why is this problematic? George Markoski Well, every single person that immigrates, that’s older, because what happens is if you’re born in Australia or you’re working age and you come to Australia, you work and what you do is you pay taxes and you contribute to society and then you get the age pension and then you’re a burden on society because one, you’ve got to go to hospital, you need more health care, you need the pension and there’s a lot of extra costs. Now with an aging population like Australia, what’s happening is the burden of retirement is getting forced on a smaller group of younger people every year because we don’t have the young population anymore that’s ageing. Now importing another 157,000 older people that haven’t contributed anything to Australia is just going to be a big burden and maybe it’s not the right thing. George Markoski I understand there’s a bit of nuance here and it’s not all about money because at the end of the day we need to look at families and different things like that. However, this is going to cost us a lot of money. What it means for investors. Crisis creates opportunity, if you know where to look. So rate cycles always end and you should buy before they do. This is the fact of it, right? Every RBA hiking cycle in history has preceded a cutting cycle. This is 100%. And properties bought near rate peaks deliver outsized long run returns. So what happens is buyers hesitate, disciplined investors act with conviction. If you’ve got the right property, they’re going to deliver. And the fact of it is, what goes up must come down. That is just an act of nature. Now, rents rise while wages fall. Landlords win. George Markoski Look at this. Real wage growth in 2025 was minus 3.3%. Rental growth is 5.7%. Let me look at these two things and explain the difference between being an investor and being a worker. So if you work and save, as we just explained, what’s going to happen is, one, your savings are going to go down and your wages go down. But if you invest, your profit, I should say, cash flow goes up every year. So not only did rents grow by 5.7%, but property prices went up 7, 10, 20% for many investors as well. So then you’ve got a double whammy because as everyone else gets poorer, the investors get richer. And you can complain about it and you can whinge about it and say it’s not fair, but at the end of the day, the game is the game. George Markoski So you can complain about it or you can join and become an investor and reap the rewards. And I know what’s better, right? Whinging is not going to get you anywhere. So the window’s open, buyers are kept on the sidelines, investors are moving in to capture property deals. And this is what I say all the time. You’ve got to stick to the fundamentals and you can’t allow all the scary stuff to actually get you scared. Okay, let’s go through a case study and then we’re going to talk about finance. Hope everyone’s typed in their questions. I’m going to have a quick look. Now let’s talk about Raf. Here’s Rafael. And Rafael joined our program and basically this is his first property that he bought. He bought in Westminster for $700,000. Three bedroom, two bathroom, two car. There’s the property there. George Markoski Let’s have a look at how he did. So he bought it in SMSF, 20% deposit, $139,800. Now, the interesting thing about SMSF is the government is thinking about pulling them out. Now, he settled in January 2025 for $700,000. The market value now is $902,000. So it’s gone up $203,000, and that’s in less than 12 months. The original rent was $680 per week, and now it’s gone up to $758. Like I told you, it’s gone up. So think about this. When the average person’s wages have gone down, when people’s savings, so if he had this $139,000 in the bank, it would have gone down 5% at least. But instead, think about this. You invest $139,000 and make $200,000. That’s over 100% on your money in one year. Pretty amazing. But not only that, it’s giving him nearly $760 a week in rent. Let that sink in. George Markoski So there’s the profit in one year. Now, $203,000. Most people don’t make that in a year. And he’s doing that through property. If you invested $140,000 or whatever it was in, what was the, can you go back to the figure, on a look, if you invested $140,000 in a business, how much would you expect to make? You’re not going to make $200,000 out of it, are you? No. Exactly. Outsized returns. Because capitalism rewards investors that are intelligent and smart, and that is about it. So let’s put on Carmine and let’s go through the Q&A and have a talk about the rates. Carmine, how are you? Welcome. Carmine Alvaro I’m good. How are you? George Markoski Good. I can see an X on your jacket. Are you promoting Elon Musk’s business there? Carmine Alvaro No, no, I’m promoting my business, actually. George Markoski So there you go. Okay. There you go. Okay. Anyway, the rates have gone up. Yep. So let’s talk. What do you think’s happening? What advice can we give to people? Carmine Alvaro Yeah. So this is obviously part of having a home. If you’re on a variable rate, rates are going to go up, rates are going to go down. And obviously we know the benefits of being on a variable rate as opposed to a fixed rate in terms of the investment side of things, with having an offset account and all that type of stuff, the benefits there. But it’s just, again, it’s just part of the game. Now, obviously with the cash rate the way it is, this is pretty much at the point it was in 2024. So it’s been a couple of years since we’ve been at this kind of peak. And obviously the government’s trying to get that inflation rate down, I guess, as much as they can. Carmine Alvaro So it’s one of those things where you have to keep on top of your home loan, your rate. So a lot of people will buy a home, they’ll get their home loan at what they think is a good rate and then two, three, four, five years down the track, they’ll just leave it and forget about it. So I think the most important thing in this climate is to always, I guess, keep on top of your rate and where it’s sitting and always go back to your lender to try and get them to give you as much help as possible. Because a lot of the time, just a simple phone call, they may even reduce your rate just over the phone. Carmine Alvaro So even something as simple as that, and then obviously using someone like myself as the mortgage broker to find those deals as well. And a lot of the time you may be. I spoke to a lot of people in the past week, with all the uncertainty about whether they should switch over to fixed rates compared to what they’re on now. And a lot of the time they’re actually below the market at the moment. So they’re probably better off just staying on that variable rate. Although it is very scary sometimes, it’s just about knowledge being power in, I guess, every facet of life. So the more you know about what’s going on in the market, the more power you’re going to have. George Markoski Yep. What I want to address now is the budget. I was going to address that now. So a lot of people ask about the budget. So I’ve got a few questions here. One question is should I wait until after the budget before making the move? And someone else said, can George comment on what is likely going to happen to negative gearing and capital gains tax? So, great question. I want to try to address that. And if you’ve got any other questions about finance, please type in the chat. So to address that question, the government’s been giving us hints, right? George Markoski They’ve been saying what they’re doing with capital gains, maybe dropping it down to 30% instead of 50%, but also now they’re thinking about another hybrid system where what they’re going to do is each year they’re going to take out the inflation and only pay the extra that you get on top of the inflation. Right. They’re talking about getting rid of negative gearing or giving only two properties to negative gear, or just taking them off used properties but keeping them on new properties because we need new properties for people to live. So I’ll give you my predictions and I’ll give you what you need to do. A lot of people are saying, should I wait till after the election? And I say categorically, no way. Do not wait. Even though, I mean, not the election, sorry, wait till the budget. George Markoski The budget’s happening, I think on the 14th, right? Yeah, the budget’s happening in seven days time. So we haven’t got a lot of time. But this is what I suggest you do. If you’re in the middle of negotiating a deal right now, I suggest you sign the contract before the 14th. This is your number one play. If you’re negotiating a deal and the deal looks favourable, you should be locking in that contract before the 14th. I’ll tell you why. Many times the government changes things, they’ve got a grandfathering aspect to it and what they do is they grandfather people before they change the rules. Because at the moment the rules are the rules. And if you lock that in now, because normally when they grandfather something, what they do is they look at the date of sale, not the date of settlement. George Markoski So even if you haven’t got something that’s not going to settle for a couple of years, if you bought it now on contract, then you could still get grandfathered. Because a lot of people might think, well, it’s not going to settle for another year, what are we going to do? Well, it could get grandfathered. Now this is not a guarantee because I’m not the government. I don’t know exactly what they’re going to do, but I can see what they’ve done in the past. So if you’re in the middle of a deal, you should push to get contracts signed before the 14th. George Markoski Because let’s say, for example, they take out negative gearing and you sign before the 14th and you get grandfathered in, then you’ve got $80,000 in tax deductions that no one else is going to get on a property like that. So you’ve got a massive advantage. I mean, getting $80,000 worth of tax advantage just to sign the contract early. Do you think it’s a good deal? What do you reckon? Yeah, absolutely. Exactly. And also you might get a capital gains concession that’s better because they might grandfather you for that as well. Maybe not. So that’s the deal. And let’s say you’re looking at a property, you do it and you don’t get any advantage. It doesn’t matter. At least you’ve invested in property, which is a good advantage as well. George Markoski Because the fact of it is there’s a lot of people now that have got FOOP right, fear of overpaying and all that sort of thing. And I’ve been through this many times before, so I’ve seen this played out. And the fact of it is, good quality properties in the top 100 suburbs are always going to go up and you don’t have to worry about that. The properties that are going to get a correction are the properties that people have overpaid for in the past, which is usually the blue chip stuff that people outbid everyone else on to get. It’s the ego buying that does that, not the investor that goes through their numbers. If you’ve got your investor hat on when you’re buying, that’s a very different beast to the ego buyer. George Markoski I predict they’re going to cut capital gains and I don’t think it’s going to give the government a lot of money because a lot of people aren’t going to sell. Two, I think with negative gearing, they’re probably just going to allow negative gearing on brand new properties, which is our strategy anyway. Because if they stop negative gearing on brand new property, we’ve already got a massive rental crisis which is getting worse. Listings have already dropped for rentals in every capital city in Australia, right? Imagine now we’ve got all these listings dropping and we’ve got hardly anything to rent. What’s going to happen if they stop negative gearing on investment properties? It’s going to be catastrophic because there’ll be nothing to rent. And look at supply and demand. If there’s nothing to rent, what happens to rents? They’re going to go up. George Markoski Yeah, that’s right, they’re going to go up. And that’s the fact of it. And that’s the thing. So more of a comment, I put in my ITWV from last year and did not receive anything. The accountant was not following up. The ATO equals no results. Felt like the ATO was stalling and now we know the reason why. With negative gearing amendments, quote question, does that mean we will get less tax return for the year? No. If you do an ITWV, that’s an income tax withholding variation. That’s what they’re talking about. That means you get your tax back on a weekly basis, which means you’ve got better cash flow. And if we look at the graph that I did earlier, because if you’ve got $100 now, it’s worth less in a year’s time. George Markoski So if you get your depreciation back at the end of the year and wait a year, you’ve lost 5% of that money. But if you get it on a weekly basis, you’re maintaining the value. That’s the difference. So it’s better to do an ITWV, but it’s not catastrophic. With the increase of interest rates, will the banks increase the percentage they evaluate on your loan? That’s a Carmine question. Carmine Alvaro Yeah, so that’s regulated by APRA in terms of the buffers in the calculator. So as I’ve explained last time on the show and most users will probably know since the discussions I’ve had with you as well, most lenders have a 3% buffer in their calculators which we have to account for. So if the interest rate is 6%, you have to service 9%. There are some other lenders that have a 2% buffer or a 1% buffer depending on the lender. They’re more your smaller specialised lenders which allow you to borrow more money. So you will get charged a higher interest rate most of the time because that’s just the way they work, but they will allow you to borrow more money. So there is some kind of trade off there. Carmine Alvaro But yeah, I don’t foresee them going higher than the 3% mark for the major banks. George Markoski I agree they’re going to keep the same. However, what happens is if the bank puts it up half a percent, then it’s going to be 3% on top of that half percent. So it’s going to go up half a percent. Yeah, yeah, that’s what we’re really saying. And at the end of the day it’s interesting about the buffer because the banks that give you less buffer, they charge more interest and the reason they do that is because it’s riskier if they give you less buffer. And they need to put the risk in because the riskier your loan, the smaller the deposit, the less buffer they’ve got, the less paperwork you’ve got, the riskier it is, therefore they charge more interest. So it makes sense, doesn’t it? Carmine Alvaro Yeah, absolutely. And those kind of lenders that we do use for that, that have those buffers and those kind of, I guess, less stringent rules that allow you to borrow that more money, most of the time those lenders are a means to an end. So it’s more to get you the property, get you in there and you’re never going to set and forget. So after 12 months you’re going to review it and either go somewhere else or review with that lender. So it’s more of a solution base. George Markoski Absolutely. Exactly. And that’s what you’ve got to put in consideration. Because the thing is, at the end of the day, what’s going to happen when you buy a property, you’ve got to do whatever it takes. And if you have to pay a little bit more interest or whatever, do it. Because if it was easy, everyone would be doing it. And if it’s hard, not everyone else can do it. And that’s why you’re going to do well. Because a lot of people are now saying it’s hard to get a property. Yes, it’s a lot harder to get a property. What does that mean? You’ve got less competition and more opportunity to make money. That’s just the fact of it. Right. Because when it was easy, you had more competition and less opportunity to make money. George Markoski Anyway, what I’d like to do is reiterate, at the end of the day, if you follow the principles, you’re going to make money in any market. The rates have gone up and they may look high, but compared to the long term, they’re actually still low. And the other fact we need to realise is rates, when we’ve had all these rate increases, they’re always followed by rate cuts, every single time. So therefore that’s what you need to realise. Because when it’s summer, remember it’s going to be winter. When it’s winter, summer’s going to come. And at the moment in the rates world, it’s winter, it’s cold, but summer’s going to be around the corner. And they may have another one or two rate rises. You never know. I think with what’s happening in the world, they may change to cutting. George Markoski You never know because they’re going to have to do it sooner or later. Because the thing is, they put rates up in order to stop inflation. But the way it stops inflation is it makes it harder for people to buy more things and therefore it slows the economy down and stops inflation. But that’s a consumer driven inflation. Rates work really well to slow down a consumer driven inflation. However, when it’s driven through fundamentals like the cost of oil and cost of goods, putting the rates up doesn’t actually slow down demand. All it does is make people be able to buy less of what they need, which doesn’t make sense. Anyway. We’ve got the budget next week, so next week we’re going to talk about the budget. I’m going to give you a breakdown. Not the election. I keep saying election. George Markoski We’ve got the budget next week, so next week I’m going to go through a breakdown of the budget and what it means for you. If you’re in the middle of a deal, sign the paperwork before the 14th. That’s what you need to do. And make sure you tune in next week. I’m going to show you what’s happening. We’re now going to go into our private chat. Thank you, everyone, for watching. I’ll see you next week.