Finding the New Clearing Price for Australian Property

A note before we begin. There is a great deal of noise about property right now - across the press, across social media - and very little of it is arithmetic. The aim of this issue was simple: to map out the numbers, and to be honest about what we think the maths actually implies.

A word on how it came together, because it matters. I have followed property closely, and traded the markets it moves, for the better part of three decades - it shapes how I read Australian financial markets more than almost anything else. But I have never owned an investment property myself, and I wasn’t going to write as though I had. My first draft showed it. So I leaned on a colleague who lives in that world to make sure this thought about the problem the way an investor actually does, not the way a market-watcher assumes they do. The piece is far better for it - and, I hope, a genuinely useful read for anyone whose focus is property.

A word on length. This issue is long, and deliberately so: there is a tax change with several moving parts, a model we would rather show than assert, and a market moving underneath both. We would sooner cover it properly than leave the arithmetic half-explained. Take it in one sitting or several.

The markets we have traded for over thirty years have always had a clearing mechanism. Bonds clear on yield. Equities clear on the appropriate multiple of their earnings. Currencies clear, eventually, on rate differentials and purchasing power. The question this issue asks is one that almost nobody in Australian property has needed to ask for a generation, because the answer never mattered: what does residential property clear on?

The textbook says rental yield. Prices fall, rents rise, yields expand until the income on offer draws capital back, feasibilities stack, supply responds, and the market finds equilibrium. Australian housing has not been asked to perform that exercise in twenty years, because a rising-price, falling-rate, tax-advantaged environment let the capital growth story carry the entire return. Buyers paid whatever multiple of income the banks would fund, and the “massive multiple of income” critique was answered, year after year, by prices going up anyway. That environment has now ended - not softened, ended - and participants are asking openly whether the multiple itself is starting to unwind.

The short version: it is, and that is the clearing mechanism starting to work. Prices are falling where the growth thesis was most extended. Rents are rising where supply cannot respond. Gross yields are expanding for the first time this cycle, and our modelling below shows the new tax regime’s cost scales with the growth assumption - modest at low growth, severe at the doubling-era rates the market was built on - while the negative carry must now be funded from the investor’s own pocket. The adjustment therefore has an implied destination, at least under our central assumptions: a clearing yield at which established stock earns its keep in rent and new supply becomes feasible again. The two questions that matter are how weak prices get on the way there, and how much extra income the market now demands. We work through both - and why the market overshoots before it clears.

That it has begun is already visible in the tape. The July index fell 0.7 per cent nationally, the steepest monthly fall since December 2022 and an acceleration on June, with Sydney down 1.4 per cent in the month and Melbourne 1.2. Beneath the headline sits the number that matters more: the national upper quartile fell 3.2 per cent over three months while the lowest tier rose 0.3. High-multiple, low-yield stock is leading the market down - which is what a repricing of the growth thesis looks like, as distinct from a broad decline in housing.

What the Budget Actually Did to the Return Stack

The changes are now law, and precision matters, because most commentary has not been precise. From 1 July 2027, the 50 per cent CGT discount for individuals, trusts and partnerships is replaced by cost base indexation plus a minimum 30 per cent tax rate on net capital gains - across all asset classes, not just property. Rental losses on established residential property purchased after 7.30pm on 12 May 2026 are quarantined from the same date: deductible against rental income and property capital gains only, never against wages. Existing holdings are grandfathered. New builds are exempt from both changes, and investors in new stock can elect either CGT regime at disposal.

We modelled what this does to the leveraged investor who has driven the established market for two decades: top marginal rate, a $1 million established dwelling, 70 per cent gearing at 6.4 per cent interest-only, a 3.2 per cent gross yield, a quarter of rent absorbed by costs, $8,750 a year of capital works depreciation, ten-year hold, quarantined losses carried forward and applied at sale. The 3.2 per cent yield is deliberate: it represents the low-yield, high-multiple Sydney and Melbourne stock at the centre of this adjustment, below the roughly 3.5 per cent national average, and it is precisely that stock the model shows is most exposed. And we centre the growth assumptions where the market’s beliefs actually lived - around the rate at which a property doubles every decade. The question: what gross yield does the new regime require to deliver the same after-tax return the old regime delivered at that yield?

Centre on the row the market was built on. At 7 per cent growth - a property doubling in roughly a decade - the old regime delivered a 10.0 per cent after-tax return on equity; the new regime delivers 8.3, and the investor needs about 166 basis points of additional gross yield, over half as much rent again, to be made whole. Now ask the question the way clients actually ask it: if I double my money, what tax do I pay? The answer is disarming at first. On our numbers the cheque written at sale is similar under both regimes - roughly $224,000 against $193,000 - because indexation and the accumulated losses offset a good part of the gain. The difference is that the new regime collects during the journey instead. A decade of deductions the old system refunded against wages every July - depreciation included - is now denied or deferred, and that forgone cash is worth more than the difference at the exit. At this growth rate the exit tax barely moved; the weight shifted instead into the middle of the hold, where the investor is weakest.

One line worth isolating: the reform even neutralises the depreciation - and this is the part most investors have not yet worked through.

Depreciation on an established dwelling was never compensation for a real cost. Nothing leaves your account when a building ages; the deduction is a paper one. What made it valuable was that the paper ran through two different tax rates. Our investor claims $87,500 of capital-works deductions over the decade, and the tax office refunds them at 47 cents in the dollar - roughly $41,000 of actual cash, arriving every July. Those same claims then reduce the cost base, so the identical $87,500 returns as extra capital gain at sale, taxed under the old rules at the discounted 23.5 cents: about $20,500. Claim at 47, repay at 23.5, keep the difference - roughly $20,500 on an expense never actually incurred.

That was the arbitrage, and the new regime closes it from both ends. The deduction is locked away until sale rather than refunded each year, and the gain it creates is taxed at the full 47 cents instead of 23.5. Claimed at 47, repaid at 47. Indexation does not rescue it - indexation lifts the purchase-price base, while the depreciation clawback is a reduction against that base, so the two sit on opposite sides of the calculation and the deduction and its clawback cancel out. Every other figure in this issue moves with the growth assumption; this one does not - the benefit is $20,562 whether the property compounds at 3 per cent or at 9. It was the one component of the return that did not require the growth story to be true, and it is now precisely zero.

This is the elegant, uncomfortable core of it. The reform converts Australian residential from a growth trade into an income trade. The 50 per cent discount was a subsidy that scaled with capital appreciation, so it was worth most to precisely the strategy - buy negative-carry established property, wear the losses against wages, harvest a lightly taxed gain - that carried prices to their current multiples of income. Remove it, and the marginal buyer must be paid in rent instead. That single shift explains both the speed of the sentiment turn and why this is a repricing rather than a rout - the asset has not changed; the return investors require from it has, and price is the adjustment mechanism.

Funding the carry is now the investor’s problem, up front and in cash. Be concrete about this, because it is the change that will shake out the marginal investor. Under the old regime, our modelled investor’s first-year shortfall after the tax refund was about $6,900 - an amount a salaried professional barely notices. Under the new regime the same property, the same rent and the same loan require roughly $20,800 of after-tax income in year one, and about $94,000 over the first five years against $29,000 before - roughly $160,000 against $44,000 over the full decade, before a dollar of the sale. Negative gearing did not just reduce tax; it financed the carry. That financing has been withdrawn, and the strategy now demands something it never previously required: genuine free cash flow.

And the deductions themselves can die. The quarantined losses are only worth something if there is eventually enough residential income, or a large enough capital gain, to absorb them - and there may not be. Run the same model at 3 per cent growth and close to $200,000 of accumulated deductions expire unused at sale, with no other property income to soak them up. This is what the word “quarantine” politely obscures: the losses are not merely deferred to a kinder year, they can be destroyed outright - a tax shield the investor funded in cash, year after year, and then never gets to use. And the lower the growth, the more of it is lost - which is precisely the growth environment the reform is helping to create.

And the growth assumption itself is the second casualty. It is worth separating two conversations that are easily blurred. The first is the tax change holding the world constant - that is the table above, and at modest growth the gap is modest. The second is that the world does not hold constant: the growth assumption is repricing precisely because the marginal buyer now runs this arithmetic. The investor’s actual move is diagonal - from the old regime at doubling-era growth to the new regime at whatever growth survives the repricing. On our numbers that is a move from a 10 per cent after-tax return to something in the mid-single digits. The larger share of the damage is done by the growth downgrade, not the tax line itself. The reform’s first-order effect is the table; its second-order effect is that it lowers the growth rate the first-order effect is applied to. That compounding is what Australian property investors have never had to price.

And be clear what those higher rows are: not a forecast, but the assumption the market was built on. Seven per cent a year is the belief that set today’s multiples, not a rate we expect to see again - and the reform makes it less likely still, because it strips out the very reward that made buyers chase growth. Which is the reflexive twist: even if supply tightens hard enough to justify higher values, a post-reform buyer is far more hesitant to bid prices up, so the pressure that once expressed itself as capital growth now has nowhere to go but rent. A supply squeeze that a decade ago would have produced a price boom now produces a rent shock instead - which is exactly the bind we come to later, and the reason the rental crisis likely worsens before the price adjustment is done.

The discount is gone, so every gain now faces the full marginal rate - but indexation quietly hands back the part of the gain that is only inflation. What is left in the net is the real gain, the appreciation that beat CPI, and that is taxed at close to 47 cents in the dollar with nothing to soften it. A gain that merely keeps pace with inflation is almost entirely sheltered; a fast, large run-up is hit near the full rate - an effective rate approaching 40 per cent against the old flat 23.5. The capital gains tax has quietly become a levy on being right about growth - the same bet the whole market was built on, taxed once more at the exit.

So the question clients should be asking is not whether established residential is worse off - it is - but where it now sits in the after-tax queue, because the CGT changes hit every asset class and the comparison is relative. The ordering has genuinely changed. Established residential loses the discount, loses the gearing against wages, and must fund its carry in cash. Listed equities lose the discount too, but keep interest deductibility on investment lending, keep franking, and pay a larger share of their long-run high-single-digit total return as income - which the reform does not touch. Income-heavy assets generally - commercial property on 6 to 7 per cent yields, infrastructure - are the quiet winners of an indexation regime, because indexation shields the inflation component of the gain while income keeps its existing treatment: the less of your return you take as growth, the less the reform costs you. And new residential dwellings lose nothing at all, holding an option on the better of the two regimes. At any doubling-era growth assumption the post-reform ranking is new dwellings, then income-heavy alternatives and equities, then established dwellings - a full reversal of two decades of revealed preference. The tax system is now explicitly paying investors to fund the marginal new home. Which brings us to the problem.

The Supply Side Cannot Answer the Signal

A subsidy aimed at new construction only works if new construction is feasible, and the feasibility wedge we detailed in Issue 2 - tender prices up 40 per cent since 2020 and still rising, completion times blown out, a record year of construction insolvencies - has not closed. In the first eighteen months of the Housing Accord, to December 2025, the country completed about 262,000 dwellings against the roughly 360,000 needed to stay on pace for 1.2 million by 2029 - already close to 100,000 homes behind, with the Council’s own projection now landing the program some 260,000 short. Approvals have lifted, particularly in higher-density product, but approvals are not completions, and the pipeline is leaking projects for the reason every developer we advise can recite: the numbers do not stack at current land prices, current costs, and an end-buyer whose borrowing capacity the tax changes have independently cut.

Queensland is the sharpest version of the cost problem. Escalation is re-accelerating across the south-east as defence, health and Olympics-decade infrastructure programs tighten trade availability and pull Tier 1 capacity out of residential work. A residential developer in Brisbane or on the Gold Coast is now bidding for the same formworkers and the same concrete as a government balance sheet that does not run feasibilities. Labour and materials are not getting cheaper here on any horizon that matters, whatever the cash rate does. So the sequence we sketched last month is fully in motion: construction falls, population growth keeps arriving, vacancy stays pinned near record lows, and rents do the adjusting - national rents already compounding at 5.9 per cent a year, the fastest pace since late 2024. That is not an anomaly to be regulated away. It is the market screaming for supply that the cost structure will not permit.

Layered on top is residual stock: product completed into the recent market that developers are still carrying. It must eventually clear, and every clearance print marks the comparables for an entire building. Hold that thought, because it belongs to the next question.

How Low Can Prices Go - and Why Thin Markets Overshoot

This is the question every client asks, and it deserves mechanics rather than a guess. Housing is not marked to market by consensus; it is marked at the margin. Only 4 to 5 per cent of the stock trades in a given year, and the handful that trade set the price of every home in the suburb. Four consequences follow, and in the near term all of them point down before they point up.

The marginal buyer of established stock has been structurally repriced. Grandfathering travels with the owner, not the asset. The moment an established dwelling changes hands, its tax treatment converts to the new regime - so while existing investors keep their concessions, every price from here is set by buyers who do not have them, and who, per the table above, will not pay a 6-per-cent-growth multiple for a 3-per-cent-growth world. Grandfathering supports holders and abandons prices. It also thins the market from both sides: locked-in investors have a powerful incentive never to sell, which keeps listings scarce - but thin markets are not stable markets. They are markets that gap on small volumes the moment motivated sellers appear.

The credit channel is the same carry, seen from the bank’s side of the desk. A lender does not price a purchase off its headline yield; it models the property’s net shortfall at a buffered interest rate - about three percentage points above the 6.4 per cent actual - and lends against what surplus survives. Under the old regime the roughly $13,900 the tax office handed back each July was real spending power that cushioned that shortfall; quarantine the loss and it is gone, so the same borrower, the same rent and the same loan now model as a larger cash deficit with no refund to offset it. The carry the investor funds from salary - about $20,800 a year against $6,900 before - is the same figure that shrinks what the bank will lend. Servicing models differ in how explicitly they ever counted the tax benefit, so the size varies by lender, but the direction does not: borrowing capacity for established investment stock falls, independently of the cash rate, and it is falling now, in anticipation, before a dollar of the tax is paid. With roughly 40 cents in every mortgage dollar going to investors, that is not a niche adjustment - it is a haircut to the marginal bid across a large slice of the market. The reform cuts the bid and the hold at once: less to buy with, more to carry it.

Expectations are adaptive, and momentum runs both ways. Every buyer’s bid embeds a growth assumption formed by recent experience. Two decades of appreciation made that input self-reinforcing on the way up; three consecutive monthly declines, reported monthly and amplified daily, start the identical process in reverse. This is where residual stock matters: developers clearing completed product at whatever print the market absorbs are not just solving their own balance sheets - they are marking down the reference price for every comparable sale around them.

There is no mechanism to bring the bottom forward. Housing cannot be shorted, so it does not crash to fair value and bounce - it grinds through fair value in slow motion, because the only participants who can express a negative view are sellers who leave and buyers who wait. A queue of buyers waiting for someone else to catch the knife is the definition of a market that overshoots.

A note on who this is about. This is an analysis of the investor market - the leveraged, negatively-geared owner of established stock, whom the reform hits directly. The owner-occupier is a different creature: a family home is exempt from CGT and carries no negative gearing, so the tax change does not touch its economics at all, and on fundamentals - income, rates, jobs, the scarcity of housing - the owner-occupied market can and should hold up better. But it does not sit outside the repricing. Price is set at the margin, and every investor who steps back removes a bid owner-occupiers were competing against and pricing themselves off. And owner-occupiers read the same headlines - falling prices, auctions passed in, “wait and see” - and do exactly that. A buyer who is not taxed but who postpones is still a buyer removed from the market. So the reform lands on investors, but the caution spreads: the owner-occupier, though spared the tax, becomes a fellow-traveller in the fall, contributing to it by waiting even though the thing that spooked the market never applied to them.

It is worth holding the official estimate up against all of this. Treasury’s own modelling of the reforms projects prices growing around 2 per cent less over a couple of years, and rents rising by less than $2 a week for the median household. Sydney is already 3.7 per cent below its January peak. The short book against the major banks - the largest on record, as we covered last month - is a wager that lending volumes and asset prices move well beyond a rounding error. And our clearing-yield arithmetic below implies something closer to 8 to 13 per cent in the low-yield established stock at the centre of this adjustment - with the risk skewed deeper still. The gap between the static estimate and the market’s behaviour is not a curiosity - it is the thesis. Tax models capture the mechanical change in after-tax returns. They do not capture the repricing that runs through expectations and credit, and that is where the first two years of this adjustment live.

Now the counterweights, because they are equally structural and they are why this is a grind and not a collapse. Australian mortgages are full recourse. Unemployment at 4.4 per cent means the forced-seller cascade that defines genuine crashes has no fuel - people in jobs absorb price falls; only people without jobs must sell into them. The grandfathered majority has no tax reason to transact. Listings remain below average, vacancy has no buffer, and beneath the whole market sits a rising floor: rents compounding at near 6 per cent lift the yield on every dollar of price decline. The overshoot risk is therefore not national. It is concentrated exactly where the growth thesis was most extended - low-yield, high-multiple established stock in Sydney and Melbourne - and in whatever the residual-stock clearance touches.

The Market Has Already Stopped

The clearest evidence that this repricing is underway is not in the index, which moves slowly and with a lag. It is in the auction room, which moves now. The national clearance rate is running well below the 70-plus per cent of a year ago - even as scheduled volumes thin, one in five auctions is withdrawn before it happens, and new-listing flows deteriorate fastest in Sydney. Agents are reporting the tell a spreadsheet never captures - auctions at which not a single registered bidder appears, some attended only by the agent who called them.

Two things need saying precisely, because the temptation is to over-claim. First, the reform’s operative provisions do not begin until 1 July 2027. What is freezing the market today is not the tax; it is the anticipation of the tax, layered on a confidence and interest-rate cycle that the mainstream - Cotality among them - blames first. That is the correct primary attribution and we do not dispute it - though Cotality’s own July commentary now lists the Budget tax changes among the forces denting buyer confidence, which is precisely our point. Second, and this is our overlay: anticipation is not noise, it is the mechanism. A known future change can affect today’s bid well before the legislation becomes operative, and a buyer running the arithmetic in this issue does not need the legislation to be in force to refuse the old price today. The credit-servicing change is already live, the wage-funded carry is already being stripped from every new buyer’s model, and the result is a market where sellers will not meet the new price and buyers will not pay the old one.

That standoff is what the low volumes are, and it is why the risk is asymmetric: when almost nothing trades, the handful of forced sales - a deceased estate, a divorce, a developer clearing residual stock - set the comparables for everyone else. A market that has simply stopped is not a stable market resting; it is a market with no price discovery, waiting for the trade that reveals the new level. Whether you read a seized-up market as the reform working - repricing efficiently toward a clearing yield - or failing - freezing the very liquidity and transactions the policy said it wanted - depends on where you sit. For a Treasury that wanted more building and more mobility, a market this quiet is not the outcome that was drawn up.

Finding the Clearing Yield

So the clearing-price question becomes concrete: what gross yield brings capital back, and how does the market get there? The arithmetic has two moving parts - prices and rents - and time is the shock absorber between them. At current rental growth, rents repair roughly 20 basis points of yield a year on their own. The faster the market demands its yield, the more of the adjustment prices must do; the longer it will wait, the more rents do the work.

This table is the whole cycle in nine cells. If the market demands a 4.25 to 4.5 per cent gross yield on established stock within two years - broadly what our return-matching analysis implies once the growth assumption is marked down and the negative carry is priced without its tax subsidy - prices in that stock fall 8 to 13 per cent from here. Our 8 to 10 per cent call for Sydney and Melbourne now sits at the shallow end of that band, not the middle: with the upper quartile already down 3.2 per cent in a quarter, the falls accelerating, and an illiquid market with a structural tendency to overshoot, a mid-teens decline is a live scenario rather than a tail risk. Push that demand inside two years and the arithmetic above reaches 15 per cent and beyond - a risk we would rather name than round away. Stretch the adjustment to three years and rents carry more of the load, moderating the price decline toward mid single digits. Either way the destination is the same; only the split between price pain and rent pain differs. To be clear, this is a model-implied central case, not a mechanical certainty - it is what the arithmetic requires if the market demands that yield in that window, which rents, jobs, credit and the politics of the reform will ultimately decide.

And then the mechanism completes. Somewhere in the mid-4s on gross yield - with rents 15 to 20 per cent higher than today and land marked down - we expect a growing share of development feasibilities to begin stacking again, helped by the one part of the tax system now working in supply’s favour: new builds retain negative gearing, retain the 50 per cent discount, and carry an option on the better of the two CGT regimes. Some capital leaving established property should migrate toward new construction, where the tax system now offers a materially better relative return; some will go to equities, commercial property, infrastructure or cash. One design detail sharpens the point: the new-build concessions attach to the first owner only - a subsequent purchaser of the same dwelling gets neither the discount nor the gearing. The advantage cannot capitalise into resale values, which makes it a subsidy to funding construction rather than to owning new stock. That is precisely the shape of incentive that favours development capital over speculation. Supply responds with its usual two-to-three-year lag, rental growth decelerates, and yields stabilise. That is what a market clearing on yield actually looks like - capital migrating to where the after-tax return is now highest - and it is slower and uglier than the textbook version, because the adjustment must first travel through sentiment, credit, and the residual stock of a development industry that cannot build at current prices.

The Reflexive Risk: What Changes If Rents Break

The reform’s central bet is that capital, pushed out of established stock, migrates to new supply. We have already shown why supply cannot answer in the near term - the feasibility wedge is open and widening. So the adjustment falls where it always falls when construction cannot respond: on rents. They are already compounding at 5.9 per cent a year, the fastest since late 2024, with vacancy at 1.5 per cent, a record low, and the pressure is demographic - net overseas migration added roughly 1.3 million people over the past three years, and even as it now eases from its post-pandemic peak, the intake the Budget still pencils in - around 245,000 a year - runs well ahead of what the country is building. Renters, on the research, are approaching the ceiling of what they can pay.

Put those two facts together - investors exiting established stock, rents accelerating into a supply vacuum - and the political economy becomes the live variable, because it can rewrite the rules again. The levers most likely to be reached for, in rough order of probability: rent caps or freezes at the state level, which poll well and which the economic literature is near-unanimous will worsen the shortage by suppressing supply further; accelerated build-to-rent and new-build concessions, the one response actually aligned with the reform’s intent; and a migration throttle, for which the Commonwealth has so far shown little appetite. But the tail risk that matters most to a holder of established stock is political: if rents blow up and the blame attaches to a reform that chased investors out of the very housing people rent, the pressure to soften, delay or grandfather more generously before 1 July 2027 becomes real. A reform with a long lead time is a reform with time to be amended.

This is the reflexive bind at the centre of the whole design. The reform needs rents to rise - that is the yield-repair mechanism that eventually makes new supply feasible and draws capital back. But rising rents are the single least tolerable political outcome, and the tolerated response to them - caps - would strangle the supply the reform is trying to summon. The policy requires the pain the politics cannot permit. That is not a stable equilibrium, and it is the thing we will be watching most closely over the next twelve months.

The Revised Picture

The structural read from Issues 2 and 3 is intact and this month’s data has reinforced it. A bifurcated market: Sydney and Melbourne mid-decline on the 8 to 10 per cent path with overshoot risk beneath it; the mid-sized capitals beginning to roll over as repricing catches their prior momentum, with Perth the remaining holdout; rents doing the economy-wide adjusting that construction cannot; and the labour market - holding at 4.4 per cent, June employment up 76,000 but part-time led and underemployment drifting to 6.5 per cent - still the variable that decides whether the leveraged cohort exits in an orderly way or a forced one. Inflation, the third variable, has passed its peak without yet easing: the Q2 trimmed mean printed 0.8 per cent for the quarter and 3.6 per cent annually, below expectations and below the RBA’s May profile, enough to take an August hike off the table but still above band, with a Middle East-driven reacceleration the live risk. What Issue 4 adds is the destination: this is not a market breaking, it is a market clearing, on yield, for the first time in a generation.

The Long Game is published by Northcliffe Advisory. This issue reflects analysis as at 3 August 2026 and develops the outlook set out in Issues 2 and 3 (10 June 2026). Home-value, clearance, rent, vacancy and yield data are drawn from Cotality (Home Value Index, July 2026; Rental Review, Q2 2026; and weekly auction results to 1 August 2026). Labour force data are from the ABS Labour Force release of 23 July 2026; inflation data from the ABS Consumer Price Index release of 29 July 2026; population and net-overseas-migration figures from the ABS and the 2026-27 Federal Budget. Dwelling-completion and housing-supply figures are from the National Housing Accord progress data and the National Housing Supply and Affordability Council, State of the Housing System 2026. Construction-cost escalation draws on Rider Levett Bucknall market intelligence, Q1 2026. Tax measures are as enacted in the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 and as described by the Australian Taxation Office; commentary on unresolved technical aspects of the measures draws on PwC Australia’s tax alert on the 2026-27 Federal Budget CGT and housing tax reform. Our modelling treats the Division 43 capital-works clawback as reducing the indexed cost base in nominal terms. The legislation does not yet resolve whether that clawback is itself indexed; under the alternative reading, depreciation would be worth roughly negative $11,500 to the new-regime investor rather than zero, so the treatment adopted here is the conservative one. Stamp duty reflects a blend of the NSW and Victorian transfer-duty schedules. After-tax return, depreciation and clearing-yield modelling is Northcliffe Advisory analysis - illustrative only and based on the stated assumptions (a $1 million dwelling, 70 per cent interest-only gearing at 6.4 per cent, a 3.2 per cent gross yield, top marginal tax rate, and CPI of 2.5 per cent); actual outcomes will differ. This is general commentary, not financial, tax, or investment advice. Readers should consider its appropriateness to their own objectives, financial situation and needs, and seek advice, before acting.