Is Australia’s property market resetting? Budget fallout, SMSF ban and mortgage rates

Pete Wargent opens by putting the week's biggest question straight to his regular co-host, Alcove Group mortgage broker Chris Bates: what just happened to self-managed super funds?

Bates: I think that's just what they're going to do. Everyone feels like they got blindsided, and this was outrageous, that they're planning self-managed super fund lending. But the writing's been on the wall for a long time, I'd say, around that.

The legislation banning limited recourse borrowing arrangements for residential property inside an SMSF has now passed, cutting off one of the last remaining ways to buy residential property with leverage. But before they get into super, Wargent walks through the story that's dominated the property pages for weeks: the government's decision to scrap the capital gains tax discount and limit negative gearing on established housing. He reads from a Reuters piece by Scott Murdoch

Wargent: A policy shift unveiled last month is the biggest in decades, and is seen by some as ending Australia's obsession with property for generations, the primary way to build wealth, making Sydney and Melbourne among the world's least affordable markets.

Wargent has the numbers to match the mood: SQM's asking price data shows Sydney houses down 3.6% over the past quarter, Melbourne down 2%, Brisbane down 3.6%. He asks Bates why the softness isn't landing the same way everywhere.

Bates: There's lots of people banding around a two-speed property market. I mean, that's the first dial down from say a national property market, saying that Adelaide, Perth and Brisbane are beating to their own drum, and Sydney, Melbourne much more tied to interest rates, sentiment, borrowing capacity changes.

It's not just a soft patch, Bates suggests. He goes further.

Bates: We'd also argue that we're probably heading more towards a recession than a sort of stronger growth market.

Wargent doesn't push back so much as add colour: soft jobs figures, a labour market that's gone nowhere over three months once revisions are accounted for, and a rate hike in August that markets are now pricing at under a 20% chance. Then he puts the practical question to Bates directly: what should an ordinary borrower expect to pay right now?

Bates: I think a way to think about it is probably 1.8% above the RBA rate. And so, yes, 4.35 plus 1.7, you're looking at low sixes, right? Like that's a good rate. Under six, probably super sharp.

Bates adds that the gap has narrowed dramatically for existing customers too, the so-called loyalty tax that once punished people for not shopping around.

Bates: [The loyalty tax] was, you know, 50, 60 basis points and now it's basically zero, which means basically existing customers on the same rate as new customers. I wonder if we're going to have to offer refinance war, which they don't want to do because they cannibalised all their loan books a few years ago.

The conversation turns to first home buyers, and here it gets its sharpest edge. Wargent references a pointed exchange in Parliament, where the opposition's housing spokesman pressed the Housing Minister directly, as reported in the Financial Review.

Wargent: Does the housing minister know how many first home buyers owe more money than their house is worth? This was one of the criticisms of the government's 5% deposit scheme for first home buyers, is that if there's a housing market downturn, of course, if you keep making your repayments, that's fine, but you could find yourself in negative equity. And I dare say there would be some people now in that situation.

Bates: Markets that have been driven by investors and owned by investors are at risk.

Bates isn't worried about every first home buyer, he explains, only the ones who bought into markets investors had pushed up hardest, people who got wrapped up in that, peddling the market up, and could be exposed if those same investors decide to sell.

The back half of the episode turns to listener questions. The first comes from Mr. Toast: a 28-year-old couple, an 11-month-old baby, a negatively geared investment property costing roughly $1,400 a month before tax, and a partner nervous about selling and losing their foothold in the market.

Wargent: I think in terms of your partner's concerns, I mean, it's a legitimate concern that people potentially, if you've got more money, you just spend it, you don't invest it for the future... But it doesn't mean you're going to fall behind long term. I mean, the world keeps turning.

Bates: This is one of the challenging questions, right? It depends. There's so many other questions I want to ask you. Where are you living? Are you going to have another kid? Do you think you're going to live there long term?... You probably need to go down a bit of a journey of a life planning chat.

Wargent leans toward selling given the couple's tight cash flow, but frames it as a numbers exercise rather than an instinct.

Wargent: I think that's the real thing, because that way you're making a much more informed choice.

The second listener, signing off as Property or Shares, asks the question of the moment: with tax settings shifting and rates still elevated, when does property still make sense over equities?

Wargent: Property can certainly make sense over or even alongside equities in certain scenarios. But the bar is definitely now higher than it was for new investments in established residential property.

Bates: Superannuation pretty much is shares. Most people have got balanced or growth funds, and in those funds it's 70 to 100% in equity. So basically you've got a share portfolio that is in a low tax environment.

Back to the super fund ban to close things out, Wargent asks Bates who this strategy was ever really built for.

Bates: I think the numbers of people that actually should consider that strategy are actually quite low. I think you need a really big balance. You need to be massively contributing at least a full concession or comfortably every year. And you also still need to be able to be diversified. I've just seen so many bad examples of this. It's okay for a few, but for the masses, I just don't think it's a strategy that many should be considering.

The World Cup creeps in before sign-off, Germany's been knocked out, Bates has a French best mate to needle about it, and there's a 4am alarm set for Saturday's game. Wargent closes the way he always does, thanking listeners, flagging the mortgage broker's contact details for anyone with a question of their own, and promising to do it all again next week.

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Sources referenced: The Australian Property Podcast (Rask), episode recorded 10 July 2026, hosted by Pete Wargent (Allen Wargent Property Buyers) with Chris Bates (Alcove Group). All quotes drawn directly from the episode transcript.

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Want more? You can find Episode 6 of The Australian Property Podcast here.