Australia’s property market is showing clear signs of slowing, with auction clearance rates falling to levels not seen since the Global Financial Crisis. While rising interest rates have been weighing on buyers for months, experts now believe the Federal Government’s changes to negative gearing and capital gains tax concessions have accelerated the downturn.
Sydney’s auction clearance rate has fallen to just 31.9%, while Melbourne has dropped to 37%, with weakness now spreading into Brisbane, Perth and Adelaide. Many analysts believe this is no longer a Sydney and Melbourne correction, but the beginning of a broader national slowdown.
Negative Gearing and CGT Reforms Continue to Shake Confidence
The Government’s decision to restrict negative gearing to newly built homes and replace the capital gains tax discount with an inflation-based indexation system has created significant uncertainty across the market.
Investor confidence has weakened sharply, with many landlords postponing purchases or exiting the market altogether while they assess the long-term impact of the reforms.
Importantly, first-home buyers have not stepped in to replace retreating investors. Industry data suggests confidence has declined across all buyer groups, with many Australians choosing to wait until market conditions become clearer.
Auction Results Reflect a Changing Market
Auction clearance rates are now sitting at their weakest levels in years, but buyers haven’t disappeared completely.
Industry experts say realistically priced homes continue to attract competition, while properties listed with expectations based on last year’s market are struggling to sell.
Many auctions are now being withdrawn or converted to private treaty sales as vendors adjust to softer conditions and fewer active bidders.
Property Prices Expected to Ease Further
Several major economists now expect Sydney home prices could decline by between 5% and 10% this year if current conditions continue.
Higher interest rates, affordability constraints, slowing consumer confidence and uncertainty surrounding taxation reforms are all combining to reduce borrowing capacity and buyer demand.
Despite the weaker market, Australia still faces a long-term housing shortage, with population growth continuing to outpace new housing supply. That imbalance is expected to provide ongoing support to property values over the longer term.
For buyers and sellers alike, the market is becoming far more selective. Accurate pricing, realistic expectations and local market expertise are proving more important than ever.
Rodney McLoughlin continues to monitor these developments closely, helping clients understand changing market conditions and identify opportunities as Australia’s property market adjusts.
Real Estate Newsletter
This article is a curated summary of various news stories from the past week, offering insights and updates on the real estate market. 26 June 2026.
Rodney McLoughlin is a trusted real estate professional with deep insights into the Australian property market. For personalized advice and market expertise, reach out to Rodney today.
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