Australian housing was already cooling before the budget – but how cold it gets depends on two key factors

Key points

• The government’s property tax changes have become one of the defining political issues of Labor’s second term, drawing fierce criticism from opponents who argue they represent an “assault on aspiration” that will destroy home values.
• In the three weeks after the negative gearing and capital gains tax changes were revealed in the 12 May budget, housing data has begun to show how they may affect Australia’s property market.
• Here’s what the data shows, and what could happen next.
• Impact on house prices ‘comparatively modest’ A lot of the heat was already coming out of the property sector leading into May due to interest rate hikes, constrained household finances and an oil crisis, all of which tempered buying activity.
• This was especially true in the country’s two biggest housing markets, Sydney and Melbourne, which had recorded modest price falls.