🎙️In this episode of The Property Trio, Cate, Dave and Mike revisit the May Budget reforms and ask a simple question: will limiting negative gearing to new builds fix Australia’s housing supply problem? To find out, the trio looks past the policy promise to a country that has already run the experiment.

🇫🇷 Dave unpacks France’s Pinel scheme, launched in 2014, which offered investors a tax reduction of up to 21% for buying a new build and renting it out. Its goals will sound familiar: boost new supply and free up rental stock. It also came with stricter conditions than Australia’s reforms, including rental commitments of six or nine years, rents capped by zone and income limits for tenants. A decade on, the results were sobering. A French government review found roughly one in two Pinel investments would not be profitable if sold after nine years. Investors paid around 40% more than they would have for an equivalent established home, and in Paris, modelled returns were around 33% lower than for established property.

Mike explains the broader cost. The scheme cost €7.3 billion in foregone tax revenue, and homes went up where developers found it easiest to build rather than where demand was. It also proved almost impossible to measure whether supply improved at all. France ended the scheme on 31 December 2024.

So where did it go wrong? Dave argues that the incentive sat entirely on the buyer’s side and did nothing about construction costs, labour shortages, land scarcity or financing gaps. Mike points to the same constraints here, from planning delays and red tape to infrastructure bottlenecks and taxes on new dwellings. Construction productivity has gone backwards by 12% over three decades, so can a tax tweak on the investor side change the outcome?

🏡 The Trio also looks at the risk to investors: lower land-to-asset ratios, the risk of oversupply, and a “new” premium that disappears the day you settle.

From the lessons of Pinel to Australia’s supply bottlenecks, this episode asks whether history is about to rhyme, and what that means for anyone choosing between new and established property.

This is a considered episode on rents, financial stress, household formation and construction feasibility. It’s a reminder that a rental market can look healthier on paper while the people living in it are quietly making harder compromises.

And our gold nuggets……..

Mike Mortlock’s gold nugget: “We’ve got to stop confusing investment in housing with the production of housing.”

Cate Bakos’s gold nugget: Focusing on areas where supply activity is strong, be very mindful of the Land to Asset ratio. Cate explains why the better-value options are often the older style, lower density options. Not to mention that established, older options are easier to value.

Dave Johnston’s gold nugget: Buying poor quality assets for the wrong reasons can become a regretful purchase. “If you wouldn’t have bought the property without the tax break, then the tax break is probably not a good reason to buy it.”

Related episodes:

#58: Off the plan purchases – Everything you need to know. Part 1: purchase through to settlement

#59: Off the plan purchases – Everything you need to know. Part 2: The financial drivers

#60: Why established properties outperform

#119: How supply and demand dictates market movements – Part #1 Macro-economic forces – state of the economy, government assistance, tax, super, the wealth effect, availability of finance, market sentiment and more!

#120: How supply and demand dictate market movements – Part #2 Locational drivers – Streetscapes, schools, transport, prestige, shops, CBD access, recreation, entertainment and more!

#121: How supply and demand dictate market movements – Part #3 Locational drivers – Superstar cities, population paradox, NIMBYism, zoning, development, yields, vacancy rates, heritage overlays, regionals and more!

#352: The Housing Supply Challenge – Why Australia Can’t Build Homes Fast Enough

Upcoming ep: #388: October 2026 Market update