The 2026 Federal Budget has now confirmed significant changes to negative gearing and capital gains tax treatment for future property purchases.
In simple terms:
- Existing investment properties are grandfathered, meaning current negative gearing and capital gains tax arrangements remain unchanged for current owners.
- Future investment into newly constructed homes will continue to retain the more favourable tax treatment.
- Investment in established residential properties purchased after the changes take effect will move to a more limited tax framework over time.
Unsurprisingly, much of the public discussion has focused on investors, housing affordability and the future direction of the property market.
But for many Perth homeowners, particularly those already established in premium suburbs, the more practical question may be:
What do these changes mean when deciding whether to move, invest elsewhere, or improve the home you already own?
At Addstyle, most of our clients are owner occupiers, renovating their primary residence. They are families and professionals renovating homes they intend to remain in long term. Many are also active investors, business owners or professionals with broader investment portfolios.
For that demographic, the changes may influence how and where long-term property investment decisions are made over the coming years.
And for some Perth homeowners, that may further reinforce a trend already underway: staying put and investing more thoughtfully into the family home.
The “Move Versus Renovate” Equation Is Already Changing
For many Perth families, the decision to renovate is no longer simply about wanting more space.
It is about weighing up whether it still makes sense to leave a home and suburb that already delivers most of what they value.
In established suburbs such as Dalkeith, Floreat, Mount Lawley, City Beach and Applecross, homeowners are often deeply connected to:
- School communities
- Lifestyle and amenity
- Established streetscapes
- Larger land holdings
- Proximity to the river, coast or city
At the same time, replacing a quality home in these suburbs has become increasingly expensive and competitive.
The true cost of moving is also far broader than many initially expect. It includes:
- Stamp duty
- Agent selling fees
- Removalist and relocation costs
- Renovation or upgrade costs on the next property
- Compromising on location, land or character
For many homeowners, the question is no longer:
“Should we move?”
But rather:
“Can we realistically buy better than what we already have in the same suburb?”
That is one of the key reasons renovation and extension activity has remained so resilient in Perth’s established areas.
Why the Budget Changes May Reinforce the “Stay and Improve” Trend
The changes announced in the budget are likely to influence investor behaviour over time, particularly around established properties.
While the long-term market impacts will take years to fully unfold, one likely outcome is that many affluent homeowners will reassess where they choose to invest capital moving forward.
For some, that may mean:
- Holding existing investments longer
- Focusing more heavily on newly built property opportunities
- Redirecting capital into improving the family home rather than upgrading through another purchase
This is particularly relevant for owner occupiers already living in tightly held suburbs where land and location are increasingly difficult to replace.
Rather than entering another competitive buying cycle, many families may instead choose to:
- Add a ground-floor extension
- Reconfigure existing living areas
- Add a second storey
- Modernise an ageing home with a cosmetic renovation
- Improve functionality and long-term liveability
In practical terms, investing into the home you already own can often deliver greater lifestyle benefit with significantly less disruption than moving altogether.
Established Homes Still Hold Significant Appeal
One thing unlikely to change is the enduring appeal of well-located homes in established suburbs.
Character homes in areas such as Mount Lawley, Subiaco, North Perth and Nedlands continue to attract strong demand because they offer qualities that are increasingly difficult to recreate:
- Architectural charm
- Generous room proportions
- Mature streetscapes
- Established community connection
Similarly, homes in coastal and riverside suburbs such as City Beach, Mosman Park and Attadale continue to benefit from location advantages that remain tightly held.
For many families, renovating allows them to preserve these qualities while adapting the home to better suit modern living.
Second Storey Additions Continue to Make Strategic Sense
As land values strengthen in premium suburbs, building upward often becomes increasingly attractive.
A well-designed second storey addition can:
- Significantly increase living space
- Preserve valuable outdoor entertaining and garden areas
- Capture views and natural light
- Create separation between living and sleeping zones
- Future-proof the home for growing children or changing family needs
For many homeowners, particularly on smaller inner suburban lots, expanding upward can be more practical than extending outward.
Importantly, it also allows families to remain connected to the suburb and lifestyle they already enjoy.
Renovating Is About More Than Resale
While market conditions always influence decision-making, most quality renovations are not driven purely by short-term financial return.
The majority of our clients renovate because they want:
- Better flow and functionality
- More space for growing families
- Improved entertaining areas
- Modern kitchens and bathrooms
- Better connection between indoor and outdoor living
- A home that better reflects the way they live today
Long-term value matters, of course, but so does everyday liveability.
And increasingly, many Perth homeowners are recognising that improving a home in the right suburb can deliver both.
A More Measured Approach to Property Decisions
Property markets are influenced by many factors, and the full impact of the 2026 Budget changes will take time to emerge.
But for established Perth homeowners, the underlying fundamentals behind renovation remain largely unchanged:
- Quality suburbs remain tightly held
- New construction and securing temporary accommodation during building remains expensive and challenging.
- Lifestyle and location continue to matter enormously
- Thoughtful renovations can significantly improve both functionality and long-term appeal
For some homeowners, the latest budget changes may simply reinforce a decision they were already leaning toward:
investing more confidently into the home they already own.
Thinking About Renovating?
If you are considering a home renovation, extension or second storey addition in Perth, our team can help you explore what is possible for your home, lifestyle and long-term plans.
👉 Arrange your complimentary consultation:
https://www.addstyle.net/contact/
