Proposed tax changes to make it easier for first homebuyers to purchase a property are not the only reason the housing market is softening, the treasurer says.
Federal parliament on Tuesday is set to debate changes which would limit negative gearing to new properties from July 2027, while replacing the 50 per cent capital gains tax discount with a rate based on inflation.
After the first data released since the May budget showed property prices falling in major capital cities, Treasurer Jim Chalmers said the market had already been experiencing a downturn in price.
“We had seen the housing market already softening a bit before the budget. The budget decisions, the tax reforms in the budget are not the only factor when it comes to the housing market,” he told ABC Radio.
“What we want to see is we want to see first homebuyers getting a fair chance at auctions, and so we’re seeing that increasingly.”
Dwelling values fell 0.9 per cent in Sydney and 0.8 per cent in Melbourne during May, according to data from research agency Cotality.
It comes as auction clearance rates have also experienced a downturn in the weekends following the budget, which Dr Chalmers said had also been softer before the May budget.
The treasurer said Treasury had forecast house prices would continue to increase but slower than previous rates.
“Our job here is not to target a particular price outcome, our job here is to make sure that there are more affordable options for first homebuyers to get a toehold in at what has been historically a really difficult market,” he said.
“For too long, the intersection of the tax system and the housing market has locked too many Australians, particularly young Australians, out of housing, and that’s why we’re taking some of these difficult decisions to address that problem.”
It comes as late-night sittings of parliament are expected for debate on the tax changes in the House of Representatives.
Debate in the Senate is not expected to get under way until later in June.
Labor still needs the support of the Greens or the coalition to get the laws through the upper house.
The coalition have promised to vote against the changes, while the Greens have yet to outline their final stance on the issue.
The government is also set to find out if its housing targets are on track when the latest building approval figures are released on Tuesday.
The previous month’s figures showed the total dwelling approval rate fell by 10.5 per cent in March.
Those figures were driven by a 26 per cent fall in private dwellings excluding houses.
Australian Associated Press is the beating heart of Australian news. AAP is Australia’s only independent national newswire and has been delivering accurate, reliable and fast news content to the media industry, government and corporate sector for 85 years. We keep Australia informed.
