Cowra’s housing market is holding firm, with strong investor interest and tight rental supply continuing to shape the local property scene, but proposed tax reforms around capital gains tax and negative gearing could make it harder for renters and discourage future investment. Much of the national discussion around the Federal Budget has centred on housing affordability, investment and whether changes to property tax settings could ease pressure for first home buyers. However, in regional towns such as Cowra, concerns are growing that the proposed reforms may instead reduce investor confidence and place further pressure on rental availability. Director Chris Ryan of Flemings property services said Cowra remained a strong regional market, attracting investors due to its lower entry price point compared with larger cities, steady returns and strong rental demand. “Cowra is a pretty strong investment market," Mr Ryan said. Mr Ryan said regional towns were continuing to attract buyers because they offered affordability and reliable returns, rather than the rapid price growth often seen in city markets. He said Cowra’s market was being supported by consistent demand, both from owner occupiers and investors, while low rental vacancy rates were continuing to place pressure on available housing. “Rental vacancy is around about one per cent, so very tight,” he said. “That’s still making rents pretty expensive.” The comments come as housing remains one of the biggest political and financial issues facing Australians, particularly younger people trying to enter the property market. Debate over the proposed tax reforms has focused heavily on changes to negative gearing and capital gains tax discounts, with supporters arguing they could improve affordability for first home buyers, while critics fear they may reduce investment in housing. According to accounting body CPA Australia, proposed tax changes would increase the effective tax rate faced by many investors, particularly “mum-and-dad” property owners, potentially reducing incentives to invest. The organisation has warned the reforms could make investment less appealing by reducing returns and increasing financial risk, with broader impacts on housing supply and affordability. Mr Ryan believes the effects in regional towns like Cowra may differ from those in metropolitan markets. He said negative gearing changes were unlikely to have as large an impact locally because many regional investors focused on cash flow and rental income, rather than relying on tax benefits tied to short-term losses. “Generally speaking, investors in regional towns are looking for steady growth and a return,” he said. “There’s not a huge amount of negative gearing. “A lot of the properties would be positively geared.” He said city investors often accepted short term rental losses in exchange for the expectation of strong future capital growth, while regional investors tended to take a longer term approach. “In the city, investors are often thinking, ‘I’ll take a hit on the rent because the property will be worth a lot more in a few years’,” he said. “Regional investors are more focused on steady growth over time and good rental income.” Proposed changes to capital gains tax could have a much larger impact. “I think it makes it less attractive,” he said. “The negative gearing, not so much, but the capital gains tax discount, that’s a pretty substantial change.” Mr Ryan said reducing capital gains tax concessions could discourage investment not only in property, but across other areas of the economy. He said many investors owned businesses or shares in addition to property, and higher taxes on future profits could make people more cautious about investing overall. “All those additional taxes are going to make it less attractive for them to buy a property,” he said. “So I think the capital gains tax is a significant one.” In Cowra specifically, investors continue to play a major role in the housing market. Mr Ryan said around 25 per cent of residential property sales in Cowra this year had been to investors, highlighting the importance of investment activity in maintaining housing supply. That level of investor activity is important in regional communities where rental stock is already limited. Mr Ryan warned that if proposed reforms discouraged investors from entering the market, rental availability could tighten even further. “It’ll tighten,” he said. “Availability will be less, and affordability, I imagine, will be higher.” Despite concerns about the possible impact of tax changes, Mr Ryan said he remained optimistic about Cowra’s long term property outlook. He said strong owner occupier demand, land availability and the region’s affordability would continue to support the market. “We’re still confident in the markets where we operate, and we’re optimistic about regional property,” he said. “It’s still a good, strong investment.” Cowra, like many regional centres across inland NSW, has seen ongoing demand for housing as people look beyond major cities for more affordable options. Lower purchase prices compared with metropolitan areas continue to appeal to both local buyers and investors seeking stronger rental returns. Mr Ryan said Cowra’s relative affordability could even attract more city based investors looking for alternatives if policy changes reduce returns in larger markets. “Because of that lower entry price point, it might encourage some of those investors out of Sydney to look to buy down here,” he said. Still, he questioned whether the proposed reforms would achieve their intended goal of improving affordability for first home buyers. “I don’t think it will,” he said. “I don’t see it making it any easier for rentals in towns either.”
