Australia's auction market delivered a stark verdict on the first weekend after the federal budget: Sydney has cracked, the national picture is mixed, and the market's two-speed nature is becoming increasingly pronounced.
Cotality data shows Sydney's preliminary clearance rate fell six percentage points to 49.2% — the weakest result since COVID disrupted auctions in April 2020. Nationally, the preliminary rate edged up 1.1 percentage points to 57.5%.
According to Domain data reported by the SMH, Melbourne moved in the opposite direction, rising four points to 60% — though preliminary rates are typically revised lower once all results are collected, and anything below 60% points to falling prices.
The budget's abolition of negative gearing for established properties purchased after budget night — new builds retain the concession — combined with the removal of the 50% CGT discount, has hit investor sentiment hard.
Open home attendance across roughly 12,000 properties tracked by Ray White fell to 2.1 attendees per property, down from 2.5 the prior week, according to CommBank's post-budget market update.
Ray White chief economist Nerida Conisbee said the budget was one layer of uncertainty on top of an already shaky market.
"We've had three interest rate rises, we've got a Middle East conflict, and then you add the uncertainty of the budget, and it starts to make people not necessarily change their decisions, but definitely question them," Conisbee told AAP.
The Block auctioneer Tom Panos was more direct about what agents were telling him.
"Investor activity is definitely soft, in fact, a lot of agents are saying to me investors have disappeared," Panos told news.com.au, though he noted owner-occupier demand was holding up better than many anticipated.
That owner-occupier resilience was more pronounced in Melbourne than Sydney.
Macrobusiness chief economist Leith van Onselen said the dual pressure of higher mortgage rates and reduced investor tax incentives had created a buyers' market in Sydney, where the 'fear of missing out' had been replaced with a 'fear of overpaying', predicting more downside ahead as rates remain elevated.
Melbourne's resilience reflects a different buyer mix. LJ Hooker head of research Mathew Tiller said that slower price growth over recent years had made Melbourne "a lot more affordable than where Sydney is" — and that first-home buyer cohort is unaffected by the budget changes, he told SMH.
CBA economist Trent Saunders flagged that the budget's impact on prices would be concentrated where investors are most active.
"Apartments, townhouses and lower-priced established dwellings are likely to be more affected than owner-occupier-dominated detached housing markets," he said.
CBA has revised its dwelling price growth forecast down to 3% for the year to December, from a prior estimate of 5%.
For mortgage brokers, the market is now clearly bifurcated. Clients buying owner-occupied homes — particularly first-home buyers in Melbourne — are still finding opportunities. But investor clients face a materially changed environment, with reduced borrowing capacity from higher assessment rates, reduced tax benefits, and a market where vendors are adjusting expectations fast.
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