Jim Chalmers says fewer homes selling at auction may be a ‘good thing’ for first-time buyers | Jim Chalmers

Chancellor of the Exchequer Jim Chalmers has suggested falling auction clearance rates could be a “good thing” for first home buyers if it means they are not competing with too many property investors.

Chalmers said on Monday Labor’s proposed property tax reforms were not the only thing slowing the housing market, after data was released showing house prices were falling in Australia’s capital cities and buyers were abandoning auctions.

Albania’s government plans to roll back generous concessions to property investors by replacing the 50% capital gains tax (CGT) deduction with an indexation model and limiting negative impacts to new construction only.

Chalmers downplayed the budget’s impact on declining auction permits, saying recent interest rate rises and “broader economic conditions” also played a role.

“Some of these liquidation rates were already falling, and budget is not the only factor when people are considering participating in these auctions,” he said.

“But if we’re making it easier for first home buyers to get their fair share of the auctions, then that’s a good thing.”

Auction success reached a new low on the last Saturday in May, according to preliminary national clearance data from Cotality published on Monday; Only 54.5% of homes sold after being listed for auction.

The number of permits was expected to fall to a low not seen since the lockdowns of 2020, with the finalized rate of successful auction sales typically even lower.

Australia’s largest property group, Ray White, said it recorded a slightly better pre-clearance rate of 57.6% for the 509 properties it auctioned on Saturday.

The company, which opposed Labour’s tax changes ahead of the federal budget, claimed the liquidation rate was a gain and showed the market was “becoming increasingly resilient to uncertainty”.

Ray White also accepted that the removal of the 50% CGT discount was not necessarily a tax increase, saying it meant replacing it with indexation depended on the gap between property price growth and inflation.

“This policy is defensible if the goal is to tax real earnings rather than inflation,” said Nerida Conisbee, Ray White’s chief economist.

The opposition, grappling with an internal clash of philosophies over tax concessions while trying to prevent voters from being swayed by One Nation, was mixed in its response to the Cotality data on Monday.

Federal Liberal MP Andrew Hastie said the stagnating housing market could be a “ray of hope” for someone saving enough money for a deposit.

“But I don’t think it’s going to be that encouraging for young Australians who have just moved into a new home, who are under pressure up to their eyeballs and staring down the barrel of negative equality,” he told the ABC.

Opposition treasury spokesman Tim Wilson said in an interview with ABC radio that house prices had fallen because “confidence had been shaken”, but suggested the fall could also be good for young Australians looking to buy.