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Reuters

Just a short ⁠stroll from Sydney’s famous Bondi Beach, auctioneer Clarence White struggles to drum up bids for an ⁠airy three-storey home that boasts five bedrooms and an alfresco lounge – price tag, A$5.2 million (US$3.64 million).
“We know everyone’s cagey at the moment, but that’s OK … all power to those who are registered and those who take action,” the veteran auctioneer tells a small group of prospective buyers and onlookers, none of whom bids.
Failed auctions like this were once the exception in Sydney’s red-hot property market. Now, clearance rates across the country have plunged, squeezed by an end to property investment tax breaks.
The policy shift unveiled last month is the biggest in decades and seen by some as ending Australia’s obsession with property, for ‌generations the primary way to build wealth, making Sydney and Melbourne among the world’s least affordable markets.
Already, weekend auction clearance rates nationally have fallen to below 50 per cent in the month since the government announced its change, to the lowest point since the pandemic, data from property research firm Cotality showed.
“Our viewer numbers are halved, the number of bidders for properties has halved, clearance rates have gone down to about 30, 35 per cent,” said Ray White’s Avi Khan, an agent in Brisbane.
In a bid to address an imbalance in intergenerational wealth, Australia’s centre-left Labor government will scrap the capital gains tax (CGT) discount from July 2027. Negative gearing, which allows investment losses to be offset against taxable income, will be banned on existing housing.
Property investors, the target of the tax reforms to help first homebuyers compete in the market, are bracing for price falls of up to 10 per cent, which experts say risk unintended consequences because ⁠of how heavily tied housing is to household wealth in Australia.
Around 70 per cent of wealth is linked to the value of homes, which is made up of land and dwellings, and moves closely in line with home prices, according to AMP.
More than ‌2 million people, or roughly 10 per cent of working-age Australians, own an investment property. The central bank estimates around 70 per cent of them own one investment property, while the remainder own several.

Auctioneer White said he had seen fewer investors bid at auctions than before the tax changes were announced. “It’s a tougher market that we’re working in,” he said. “It is mainly owner-occupiers that we’re dealing with.”
Kellie Adamson, an ‌investor who owns two residential properties in Sydney, including one that is negatively geared, worth a combined A$3 million, said she had “completely backflipped” on her buying strategy.
“I would want to be moving actually outside ⁠of Sydney altogether whereas before, I would never have considered ⁠that,” she said. “I would even consider commercial [properties] as well.”
Queensland-based investor Shaun Craike estimates the budget changes wiped around A$500,000 from the value of his A$6 million portfolio of 10 properties.
Although he has seen some signs of recovery, he said the changes would disproportionately impact investors with less established portfolios.
While the tax reforms will ‌not affect investors who owned before the changes were announced in May, they have significantly changed the game going forward.
“It’s those people that are wanting to get into the property market and wanting to grow a portfolio that it really starts to affect,” Craike said.
Veronica Morgan from Good Deeds Property Buyers estimates 6,500 “rentvestors” enter ‌Australia’s property ‌market each year.
Such people are typically first-homebuyers who purchase a property but rent or return to living with their parents and claim the negative gearing tax concessions.
“They needed negative gearing to be able to do that. And they now ‌no longer can do that,” Morgan said.
AJ Clores, a 27-year-old Sydney rentvestor, said he did not expect to expand his A$3.2 million portfolio for a few years.
“I would start looking again probably in 2028,” he said. “But I wouldn’t be in ⁠a rush.”

Collapsing auctions combined with recent interest rate rises mean economists now expect prices could drop between 5 per cent and 10 per cent in the year ahead and have raised questions about whether such a dip would be temporary or mark a ⁠deeper market shift.
“There is definitely a market correction and it’s probably the largest I’ve seen,” said Nick Gill, an agent at Sotheby’s International Realty in Byron Bay.
Louis Christopher, managing director at SQM Research, said the housing market downturn was now likely to extend into 2027. The firm predicts Sydney prices will drop by as much as 9 per cent in 2026, while Melbourne is expected to decline by as much as 7 per cent.
“This is now ‌becoming an extended period which would signify that this downturn is ‌being consolidated, it is a deep downturn and the indications are that it’s going to be with us for quite some time,” he said.
That should improve affordability for first homebuyers, but he said buying now was like “trying to catch a falling knife”.
“The problem is you buy now but the market could very well fall further,” Christopher added.
For Devin Familton, a 28-year-old accounts manager in Melbourne, reduced competition from investors would give him hope he could find his first home after searching for the past six months.
“The investors that have cash and can just go in and buy things without worrying about mortgages or first homebuyer grants and just get them as investment properties – I think if you scare them off, it’ll make things a little bit easier,” he said.


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Asia

Australasia

The decision to scrap the capital gains tax discount from next year targets investors and creates opportunities for first-time homebuyers


The decision to scrap the capital gains tax discount from next year targets investors and creates opportunities for first-time homebuyers.


Asia housing and property

International Property

Property investment

Property was Australia’s favourite wealth builder. A tax overhaul aims to end that

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The decision to scrap the capital gains tax discount from next year targets investors and creates opportunities for first-time homebuyers

The decision to scrap the capital gains tax discount from next year targets investors and creates opportunities for first-time homebuyers