Prime Minister Anthony Albanese has defended his government's proposed property tax changes, asserting that Treasury forecasts predict an increase in house values, albeit at a slightly slower rate than previously expected. This defense comes as new data reveals that home prices fell across every major Australian capital city in June.
According to REA Group data released on Wednesday, Sydney and Perth recorded the steepest declines, each down 0.5 percent for the month. Darwin was the only capital to see a slight increase, up 0.2 percent. The report indicated that buyers and investors are adopting a more cautious approach, potentially influenced by the Federal Budget.
The government's tax reform plan includes replacing the existing 50 percent capital gains tax discount with a new system featuring a 30 percent flat tax and an inflation discount. Negative gearing rules will be limited to newly built properties, with existing arrangements grandfathered.
Albanese dismissed suggestions that Treasury's projections were inaccurate. "Treasury forecasts aren't week by week, they're serious forecasts done based upon modelling and a range of other economic modelling, showing exactly the same thing," he told ABC News Breakfast. He added that the reforms would lead to increased house values and would prevent first-home buyers from competing with investors utilizing negative gearing.
Health Minister Mark Butler echoed the Prime Minister's confidence, stating that fluctuations in house prices are normal. "The history of house prices in Australia is one of growth," Butler said, expressing strong belief in Treasury's forecasts that house values will continue to grow, "just a little bit more softly for a period than otherwise would have happened."
However, experts caution that the market faces multiple challenges. Tim Lawless, research director at CoreLogic, described a "property taxation changes announced in the federal budget are all contributing to weaker housing conditions." He noted that buyer demand has been affected by affordability hurdles, rising cost-of-living pressures, and negative sentiment. Lawless also pointed to a market slowdown, with auction clearance rates consistently below 50 percent since late May and increased time for homes to remain unsold.
AMP chief economist Shane Oliver warned that the downturn could deepen, forecasting a potential further five percent fall in property prices as investors adjust to the new tax measures. He also highlighted uncertainty regarding investor and buyer reactions, along with the potential impact of a sharp rise in unemployment. 
