Labor downplays budget’s impact on house price decline
Proposed tax changes to make it easier for first home buyers to buy property are not the only reason the housing market is softening, the treasurer says.
On Tuesday, the Federal parliament is set to debate changes that will limit the negative impact on new properties from July 2027 and replace the 50 per cent capital gains tax relief with a rate based on inflation.
Finance Minister Jim Chalmers said the market was already experiencing a decline in prices after the first data released since the May budget showed property prices falling in major capital cities.
“We had seen the housing market soften a little bit before the budget. Budget decisions, tax reforms in the budget are not the only factor when it comes to the housing market,” he told ABC Radio.
“What we want to see is first home buyers have a fair chance at auctions, and we’re seeing that more and more.”
House values fell 0.9 per cent in Sydney and 0.8 per cent in Melbourne in May, according to data from research agency Cotality.
This suggests that auction approval rates also experience a decline on the weekends following the budget; Dr Chalmers said this was also softer ahead of the May budget.
The Finance Minister said the Treasury forecast house prices would continue to rise but at a slower rate than previous rates.
“Our job here is not to target a specific price outcome; our job here is to make sure there are more affordable options for first home buyers to keep up with what has been a really difficult market historically,” he said.
“The intersection of the tax system and the housing market has left too many Australians, particularly young Australians, out of housing for too long, and that’s why we’re making some of these difficult decisions to address this problem.”
This comes as parliament is expected to meet late at night to debate tax changes in the House of Representatives.
The debate in the Senate is not expected to begin until the end of June.
Labor still needs the support of the Greens or the coalition to pass the legislation through the upper house.
While the coalition has vowed to vote against the changes, the Greens have yet to state their final stance on the issue.
The government will also find out whether its housing targets are on track after the latest building approval figures are released on Tuesday.
Figures from the previous month showed the overall housing approval rate fell by 10.5 per cent in March.
The 26 percent decrease in private residences excluding houses was effective in these figures.
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