The federal budget's housing measures have been framed around improving supply and affordability. But Ray White chief economist Nerida Conisbee (pictured) argues they carry an under-examined cost: by discouraging investor activity in established housing and adding uncertainty for buyers and sellers, the budget is likely to reduce the number of homes changing hands — and that matters far more broadly than headline house prices suggest.
Transaction volumes have always been the most volatile variable in the housing market. Over the past 25 years, Australian residential sales have swung from fewer than 380,000 a year to more than 580,000, responding to shifts in credit availability, interest rates, confidence, and policy. The pattern is consistent: volumes fall when households or investors have a reason to wait. The budget, Conisbee argues, gives both groups multiple reasons to do exactly that.
The evidence is already showing up in real-time auction data — Cotality's combined capitals clearance rate has held below 60% for six of the past eight weeks, with Sydney hitting a post-budget low of 43.1% on final numbers in the week of 17 May. Ray White's own national clearance rate fell to 51.7% in the same week, down from 67.4% a year earlier, suggesting buyer hesitation had set in well before the Budget's policy changes take full effect.
Conisbee sees several reinforcing reasons why that hesitation is likely to persist.
"Buyers may pause while they work out whether the changes will affect prices, rents, and investor demand,” Conisbee said. “Sellers may delay if they are unsure how deep the future buyer pool will be. Investors have even clearer reasons to sit tight: existing investors may avoid selling if it means giving up grandfathered treatment, while new-build investors may hold longer if resale narrows the future investor buyer pool. The budget also does little to encourage downsizing, leaving another source of established housing stock constrained."
The economic weight of a property transaction extends well beyond the purchase price itself. Each sale generates borrowing, insurance, removalist costs, renovations, furnishings, and a cascade of professional services — finance, legal, valuation, inspection, and trades. A market where prices are rising but fewer homes are selling may look healthy on paper while delivering less actual economic activity to the broader economy.
"Price growth creates wealth effects. Transactions create actual spending. For many parts of the economy, the number of homes sold matters more than the headline rate of capital growth," Conisbee said.
For mortgage brokers, the implication is direct: fewer transactions means fewer loan applications, fewer refinancing triggers and a shallower pipeline of new business. The budget's investor changes don't just reshape who buys — they reshape how often anyone buys. A falling price environment would deepen that further — Morgan Stanley has forecast a 5–10% national house price correction following the budget's changes, a scenario in which sellers have even less incentive to transact and buyers have even more reason to wait.
The fiscal consequences of reduced transaction volumes fall most heavily on state governments, which rely on stamp duty as a primary revenue source.
In 2024–25, stamp duties on conveyances accounted for 20.9% of total state and local government taxation revenue nationally. In Queensland and New South Wales the share was even higher — 22.5% and 22.4% respectively — while Victoria sat at 20.4%. The ACT, which has been transitioning from stamp duty to land tax, is the least exposed.
Stamp duty revenue tracks transaction value closely — and transaction value is driven by both prices and volumes. A high-price market with fewer sales can still weaken state revenue because there are simply fewer taxable events. This creates a structural tension that Conisbee puts plainly: state governments need housing affordability to improve, but their budgets depend on expensive homes changing hands frequently.
"If the budget encourages investors to hold for longer, adds uncertainty for buyers and sellers, and does little to free up established housing stock, the impact will not stop at the housing market. It will flow through household spending, business activity, and state government revenue," Conisbee said.
With Australia already facing a housing shortage, a market where fewer properties come to market deepens rather than eases the supply problem — and leaves state budgets more exposed to every future shift in housing activity.
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