It’s just over a month since the Federal Government unveiled its tax reforms on budget night. Here’s how property values are responding across the major cities.

The proposed changes to negative gearing and capital gains tax came as a big shock for property investors around the country – both current and prospective.

Despite the understandable concern and frustration that followed, more than a month after the budget night announcement, home values remain fairly steady – with the recent pause in interest rate hikes offering some relief.

In fact, four state/territory capitals recorded price gains in May.

But what we are seeing is some markets where price growth is slowing, and sellers may be more willing to negotiate. That’s potentially good news for home buyers.

With this in mind, let’s see how the market is faring in your neck of the woods.

No sign (yet) of a major downturn across multiple markets     

The latest data from PropTrack shows how markets moved in May, which covers the immediate post-budget period (the budget was handed down on 12 May).

Home values in both Sydney (median value of $1.238 million) and Melbourne ($846,000) dipped by 0.2% for the month.

Values in Perth (median $1.024 million) cooled by 0.1%, while Canberra ($869,000) saw values dip 0.4%, the largest drop across the major cities.

However, plenty of state capitals saw values continue to climb.

Adelaide (median $950,000) and Darwin ($622,000) topped the leaderboard of gains, with both cities seeing a 0.3% rise in home prices for the month.

Home values rose 0.2% in Hobart (median $735,000). Further north, in the Olympic city of Brisbane (median $1.08 million), prices climbed 0.1%.

Regional markets outshone the big cities, with home values up 0.2% in May. Regional South Australia (up 0.7%) and regional Tassie (up 0.5%) notched up stronger gains.

Price growth is cooling off the back of strong gains

It’s clear that, as PropTrack puts it, any price falls have been “modest”.

And they follow an extended period of exceptional growth – 7.5% nationally over the past year, and 37.7% over the last five years.

So it’s important to put the current market conditions in perspective.

Why serious price falls are unlikely

Research group Cotality is not expecting a “sharp” correction. And there are several reasons why they believe significant price falls are unlikely:

1. Home buyers, not investors, make up the majority of buyers

Some investors may, quite sensibly, have been waiting to see how the proposed budget tax reforms would pan out before they became law (it turns out they’ll pass the Senate with support from the Greens).

However, it’s worth remembering that home buyers outnumber investors, and owner occupiers are not impacted by the proposed tax reforms.

2. Our population is growing

Australia’s population grew by 1.5% last year.

That means an additional 412,500 people, who all need somewhere to live.

This population growth will continue to drive demand for homes.

3. Australia faces a serious shortage of homes

We simply aren’t building enough homes to meet demand.

The Housing Industry Association (HIA) estimates that in 2025 Australia needed to build more than 250,000 homes just to keep pace with demand.

Instead, construction started on just 196,000 homes.

The shortfall in new homes isn’t a quick-fix issue.

The HIA believes demand for homes is likely to exceed supply until at least 2030.

Opportunity for home buyers

Despite these factors, there is some softening occurring.

Cotality says today’s conditions are starting to favour buyers in some markets.

This could be your opportunity to buy in a more relaxed market.

Talk to us to calculate your borrowing power and for help finding a home loan that helps you achieve your property goals.

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