Economists predict Australia's home values are set for their first national slump since 2022, driven by fear and uncertainty following the government's budget curbs on investor tax breaks. However, the persistent housing shortage suggests any decline would be short-term.
Mortgage broker Steph Thomas reported that four homebuyers called to pull out of purchases after the budget, including two owner-occupiers unaffected by the reforms. 'People are a bit scared,' she said, noting a pause in what had been a frenzied market.
More than half of Sydney auction listings failed to sell in budget week, the weakest result since pandemic lockdowns, according to Cotality data. National clearance rates have stayed below 60% for two months, indicating price falls.
The changes target future property investors, removing negative gearing on most purchases and adjusting capital gains tax for inflation. Existing investors retain advantages, and new homes remain eligible for negative gearing. Treasury forecasts minimal impact on rents and a 1% reduction in renters.
Despite reassurances, real estate agents and social media influencers have raised alarms, predicting investor exodus and rent hikes. Treasurer Jim Chalmers blamed 'an unhinged scare campaign' and said the reforms address under-taxation that has locked young Australians out of housing.
Economists warn that slumping buyer sentiment could drag the market from weak growth to a short-term slump. Home lending has already slowed sharply since the start of the year.
