Real Estate Expert Calls Australian Housing Market Worst Since 1990s Recession

Real estate expert Tom Panos has stated that Australia's current housing market conditions are more severe than those experienced during the 1990s recession, citing a drastic drop in auction activity.

Panos reported conducting only one auction over a recent weekend, a figure he described as the lowest level of auction activity he has personally experienced, potentially dating back to 1991. This single auction failed to attract any registered bidders, a situation he noted was worse than the two or three auctions he would typically conduct during the 1990s recessionary period. The preceding week also saw multiple auctions fail to draw registered buyers.

These observations align with broader trends in Australia's auction market. Sydney's auction clearance rate for the week ending August 1 was 55.2 percent, down from 59.5 percent the previous week and significantly lower than the 77.5 percent recorded during the same period last year. Nationally, the average clearance rate stood at 48.4 percent, a stark contrast to the 71 percent observed a year ago. Preliminary figures for New South Wales showed a clearance rate of just 40 percent.

Panos attributed the market slowdown to recent changes in housing policy introduced in the May budget. He argued that these measures have deterred property investors without effectively stimulating demand for new homes. Specifically, the government limited negative gearing to new builds and altered the capital gains tax discount from 50 percent to a flat 30 percent indexed to inflation.

He described the outcome as a "gridlock," where investors, first-home buyers, vendors, and developers are all in a holding pattern. Investors are reportedly not responding to incentives to purchase new homes, while first-home buyers remain hesitant due to affordability issues, borrowing restrictions, and concerns about potential price drops.

If transaction volumes continue to decline, Panos warned of wider economic repercussions. Anecdotal evidence and property data suggest a potential 40 percent drop in transactions. This could lead to reduced stamp duty revenue for state governments and negatively impact ancillary industries such as mortgage broking, conveyancing, building inspections, and removal services.

A decrease in investor activity also risks exacerbating rental shortages, as fewer landlords may enter the market. The warning comes amidst data highlighting Australia's housing supply challenges. Housing approvals in June 2026 were slightly below levels seen a decade prior, and total approvals for the 2026 financial year declined by approximately 14 percent compared to 2016. The cumulative housing shortfall against the National Housing Accord's minimum target has now reached at least 86,574 homes.