Perth property investors haven’t disappeared—but they are becoming more selective.

Across Australia, the number of new investor home loans fell 8.6% in the June 2026 quarter, while the value of investor lending dropped 10.2%. That was a significantly sharper fall than the decline in owner-occupier lending, according to the Australian Bureau of Statistics.

Higher interest rates are part of the explanation. However, investors are also adjusting to major tax changes announced in the 2026 Federal Budget.

From 1 July 2027, investors who purchase established residential property after 12 May 2026 will no longer be able to deduct rental losses against non-property income such as wages.

However, those losses won’t simply disappear. Investors will still be able to:

• offset them against income and capital gains from residential property;
• carry unused losses forward to future income years; and
• claim eligible losses against other income when investing in qualifying new residential property.

Properties held before the Government’s announcement on 12 May 2026 are expected to be grandfathered under the existing negative-gearing rules. The Australian Treasury’s summary of the reforms explains how the new treatment will apply.

The existing 50% capital gains tax discount will also be replaced by cost-base indexation, together with a 30% minimum tax on capital gains. PwC’s Federal Budget analysis provides further detail on the announced CGT changes.

These changes don’t mean property investment no longer works. They do mean that cash flow, rental yield and property selection will carry more weight—particularly for investors buying established homes.

So, what are Perth investors doing differently?

1. Paying much closer attention to rental yield

Rental yield has always mattered, but it becomes even more important when interest costs are high and losses from newly purchased established properties can no longer be deducted against wages or other non-property income.

Some investors are therefore looking beyond the traditional detached house. REIWA reported that Perth villas and home units delivered gross rental yields of 5.7% and 5.5% respectively in the year to December 2025. These property types also benefited from strong tenant demand and relatively quick leasing times.

That doesn’t automatically make every villa or unit a good investment. Strata levies, maintenance, insurance, vacancy periods and property-management fees can quickly eat into an attractive headline yield.

The number that matters isn’t just the advertised gross yield. It is what remains after the real costs of owning the property are taken into account.

2. Looking more seriously at new builds

The forthcoming negative-gearing changes give investors another reason to consider new housing.

Nationally, the June-quarter lending figures already showed a noticeable change in behaviour: investor lending for new construction increased while lending for established properties fell sharply.

In Perth, that may direct more attention towards developing areas where new homes are available, including corridors around Yanchep, Alkimos, Byford, Baldivis and parts of the Rockingham region.

New builds can offer advantages such as lower initial maintenance, potential depreciation benefits and access to negative gearing under the new rules. But they also come with risks:

• inflated house-and-land package prices;
• construction delays and variations;
• small blocks or compromised locations;
• uncertain valuations at completion; and
• large amounts of similar rental stock entering the market together.

Buying new purely for a tax benefit is a poor strategy. The property still needs to make sense on its location, price, tenant demand and long-term prospects.

3. Considering units, villas and lower-priced properties

Perth’s strong price growth has made detached houses less affordable in many established suburbs. That is pushing some investors towards villas, townhouses and units, where the entry price may be lower and the rental yield stronger.

REIWA’s figures show why these property types are getting attention. However, investors need to look well beyond the median yield.

Before purchasing a strata property, it is worth checking:

• current and proposed strata levies;
• the scheme’s financial position;
• recent AGM minutes;
• planned building works;
• insurance arrangements;
• building defects; and
• restrictions that could affect tenants or future resale.

A cheap unit with a high advertised yield can become expensive very quickly if the building has problems.

4. Widening the search to regional WA

Some investors are also looking beyond Perth, particularly towards regional centres supported by mining, infrastructure and major employment projects.

Regional WA can offer stronger yields and lower purchase prices, but the risks are different. A market that depends heavily on one employer, industry or project can turn quickly when economic conditions change.

Cotality has found that regional mining markets account for many of Australia’s remaining positive-cash-flow locations, while also warning that their higher yields can come with a history of sharp price movements.

A high yield is useful. A high yield caused by weak resale demand, volatile employment or limited population growth is another matter entirely.

Perth’s rental market remains tight

Even with investor activity softening, Perth still has a shortage of rental accommodation.

REIWA reported Perth’s vacancy rate at approximately 1.9%, with the median time to lease a property remaining around two weeks. A balanced rental market is generally considered to have a vacancy rate of around 2.5% to 3.5%.

That supports rental demand, but investors shouldn’t assume rents will rise indefinitely. Tenants still have affordability limits, while additional housing supply and changing migration or employment conditions can alter the market.

Finance strategy matters more than ever

The right property is only half the decision. The loan structure can have a major effect on cash flow, borrowing capacity and flexibility.

Before purchasing, investors should consider:

• whether principal-and-interest or interest-only repayments are appropriate;
• the impact of higher assessment rates on borrowing capacity;
• how much cash buffer will remain after settlement;
• whether to use cash or equity for the deposit;
• whether loans should be split to keep investment debt clearly identifiable;
• the risk of cross-collateralising multiple properties; and
• how the proposed debt may affect the next purchase.

Rental income is also rarely accepted dollar-for-dollar by lenders. Most apply a discount and assess the application using repayment rates above the actual interest rate.

So, are Perth investors still buying?

Yes—but the market has changed.

Investor demand is softer overall, and the old approach of accepting weak cash flow because ‘property always goes up’ is harder to justify. Buyers are paying closer attention to yield, considering new builds and lower-priced property types, and being more cautious about how their loans are structured.

The strongest investment isn’t necessarily the suburb with the loudest growth forecast or the property with the highest advertised yield. It is one that remains manageable after interest, vacancies, maintenance, tax changes and unexpected expenses are properly allowed for.

If you’re considering your first investment property, refinancing an existing one or using equity to expand your portfolio, contact Fox Mortgage Services to understand the lending options and model the repayments before you commit.

Important: Tax rules are complex and individual circumstances differ. Investors should obtain independent tax and financial advice before making a purchase decision.