Federal ministers have insisted that recent price falls are moderate, even as fresh data shows some markets significantly turning.
Prime Minister Anthony Albanese and senior ministers have moved to reassure Australians after new figures showed the sharpest fall in national home values in almost four years, saying Labor’s housing tax changes were working as intended.
Cotality’s latest Home Value Index recorded a 0.4 per cent drop in national dwelling values in June, with Sydney down 1.2 per cent and Melbourne dipping 1 per cent, while previously stronger markets like Perth and Brisbane posted slower monthly gains of 0.7 per cent and 0.3 per cent.
The decline follows budget changes to negative gearing and capital gains tax aimed at pushing investors towards new housing and easing competition for first home buyers (FHBs).
Asked about the combination of falling values and weaker clearance rates, Albanese said he was not alarmed and framed the downward trend as evidence the reforms were working as intended.
“The great news is that this Saturday, like last Saturday, first home buyers would have rocked up to auctions and not be competing with investors who want to negatively gear their properties and have taxpayers backing in those investments,” he said on Wednesday.
Pressed on modelling that said prices could fall by up to 10 per cent, the Prime Minister pushed back against the idea that the tax package was overshooting Treasury’s expectations.
“No, it’s not. Treasury forecasts aren’t week by week, they’re serious forecasts done based upon modelling and a range of other economic modelling, showing exactly the same thing,” he said.
“As a result of these changes, there’ll be increases in the value of houses. It’ll be slightly less 2 per cent, to be precise, than it would have been otherwise.”
Housing Minister Clare O’Neil echoed that message, saying that the broader rate cycle remained the main driver of month‑to‑month price movements.
“This is a cyclical market, and the main thing that drives movement in house prices from month to month and year to year is what goes on with interest rates,” she said.
“The Treasury modelling, which spoke to the effect of the housing tax changes in the budget, showed that there would be a modest affordability impact of those changes, so about a 2 per cent slower growth rate than we would otherwise have seen in a housing market that grew something like 8.6 per cent in the last year.”
She also situated the reforms within a much wider structural problem, saying that some near‑term softening was a price worth paying.
“We’ve got a broken housing market in this country, which is causing pain to millions of Australians. We’ve got home ownership rates for young people around this nation falling through the floor, and it’s not just about young people,” she said.
Health Minister Mark Butler said that values often moved around in response to multiple forces at once.
“House prices will jump around a bit. There’s obviously a lot of things that impact that,” Butler said.
Market voices question policy mix
Cotality research director Tim Lawless, reflecting on the timing of recent policy moves, said that it was “in some ways counterintuitive” to simultaneously expand the 5 per cent Deposit Scheme to bring more FHBs into the market and then introduce tax changes that put “some downwards pressure on prices shortly after”.
Meanwhile shadow treasurer Tim Wilson linked the June price falls and patchy clearance rates to a broader pullback in risk appetite.
He accused Treasurer Jim Chalmers of “undermining the economy” and said that the government’s approach was “crashing the confidence of the Australian economy”.
He further said that the uncertainty in the property market meant banks were not lending to FHBs despite the various formal safeguards around loan serviceability.
[Related: Investor reset, steep price falls expected in FY27]
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