{"id":697712,"date":"2026-05-27T11:02:28","date_gmt":"2026-05-27T11:02:28","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/697712\/"},"modified":"2026-05-27T11:02:28","modified_gmt":"2026-05-27T11:02:28","slug":"the-housing-market-is-slowing-but-the-panic-is-overblown-2","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/697712\/","title":{"rendered":"The housing market is slowing, but the panic is overblown"},"content":{"rendered":"

May 27, 2026 \u2014 5:00am<\/p>\n

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When people face a threat \u2013 real or perceived \u2013 the common responses are \u201cfight\u201d, \u201cflight\u201d and \u201cfreeze\u201d.<\/p>\n

When it comes to the latest property tax changes, all three have been on display: a flurry of people kicking up a fuss<\/a> and warning the housing market will collapse, investors pulling back<\/a> from purchasing homes and some people pausing any decisions until they feel better informed.<\/p>\n

\"InIn the current market, vendors are rolling the dice when they list properties. Simon Letch<\/p>\n

Real estate agents and property investors \u2013 the people who have the most to lose from a slowdown in house prices \u2013 are, unsurprisingly, out in force against the changes.<\/a> But there are also some households understandably worried about what a downturn might mean.<\/p>\n

The share of homes sold at auctions across Australia last weekend was about 53 per cent<\/a>, down about 12 per cent compared to the same time last year. That\u2019s a noticeable drop, tipping the housing market towards what\u2019s called a \u201cbuyer\u2019s market\u201d where the clearance rate is below 60 per cent and buyers hold a bit more bargaining power.<\/p>\n

That\u2019s not necessarily a bad thing, though. The Australian housing market has, for a long time, been a \u201cseller\u2019s market\u201d with prices climbing rapidly.<\/p>\n

Many of the people who have benefited from house prices climbing are now alarmed at the prospect of house prices falling. But imagine what it must have felt like to be on the other side as an aspiring home owner, watching house prices grow at more than double the rate of incomes<\/a> for several decades.<\/p>\n

But wait, some researchers are saying house prices across Sydney and Melbourne could fall as much as 9 per cent<\/a> from the beginning to the end of this year. That has to be bad news, right?<\/p>\n

Well, first, that fall is mostly attributable to temporary factors: tightening of interest rates which we know reduces people\u2019s ability to borrow, incoming cold and rainy weather which dampens enthusiasm to turn up to auctions, and the Iran war putting a dampener on people\u2019s appetite to invest. These factors are likely to fade within years (or, when it comes to the war, even within months, according to Treasury and Reserve Bank assumptions).<\/p>\n

Second, humans are prone to a bit of panic and herd behaviour. It\u2019s why you often see sudden rallies or collapses in the sharemarket (which then resolve once the issue goes away or when people calm down). That\u2019s likely part of the reason why the immediate reaction to the tax changes has seemed significant.<\/p>\n

Related Article\"Budget<\/a><\/p>\n

Third, while the media tends to choose the headlines and emphasise the statistics that are the most shocking, the reality is often quite a bit less exciting.<\/p>\n

Most economists<\/a>, for example, aren\u2019t expecting house prices to fall, but simply to grow more slowly than they otherwise would have.<\/p>\n

Treasury\u2019s estimates in the most recent federal budget suggest house price growth will slow by 2 per cent over two years compared to a situation in which tax settings stayed the same.<\/p>\n

And remember: the point of these tax changes is to temper Australia\u2019s house price growth so that we don\u2019t end up with a lottery system where only high-income earners, or those with a generous inheritance, have a shot at affording a home.<\/p>\n

Would a downturn in the housing market be fun? For those who already have a property (and who want to see the value of their properties grow), no. And if the worries become so huge and widespread that people are paralysed with fear, that could be a drag on the economy because they might pull back on investing and spending, which we know slows down the economy.<\/p>\n

But would it be the end of the world? Also, no. We\u2019ve been through downturns in the housing market before. Some people inevitably lose out, but the majority will be OK (and some will benefit from increased housing affordability). And given the stubborn imbalance between demand and supply which we\u2019ve struggled to fix for decades, Australia\u2019s house prices will continue to climb over the longer term, especially once interest rates come down.<\/p>\n

If we saw a substantial spike in Australians listing their homes for sale (especially because they became unemployed, fell too far behind on their interest repayments and were forced to sell their home) that would be a worrying signal.<\/p>\n

Banks would potentially be left unable to recoup the value of those loans, and they might tighten lending standards which would further dampen demand and lead to lower house prices. And developers might lose funding for their projects, leading to unfinished projects, the business going under, and leaving contractors unpaid.<\/p>\n

But none of this is likely to happen at any significant scale \u2013 largely because the effect of the new taxes on property prices is likely to be relatively subdued.<\/p>\n

Related Article\"Some<\/a><\/p>\n

In the Reserve Bank\u2019s latest financial stability review<\/a> published in March, for example, the bank noted that only about 1 per cent of variable-rate owner-occupier borrowers were estimated to be raking in less than they were spending at the end of 2025, and that households and businesses were \u201cgenerally well-placed to weather higher interest payments and cost pressures.\u201d By comparison, the share of borrowers facing a cash flow shortfall peaked at more than 4 per cent back in 2023.<\/p>\n

The war in Iran, higher interest rates, and inflation are undoubtedly causing pain for many Australians, with the unemployment rate last month ticking up to 4.5\u00a0per cent<\/a>. But the latest tax changes will not be the straw that breaks the camel\u2019s back.<\/p>\n

Tax changes will always come at a cost \u2013 and upset those who stand to lose from them \u2013 but consequences such as a slowdown in house price growth are unlikely to be significant, and more likely to be an inconvenience rather than a life-altering financial problem for most of those with something to lose.<\/p>\n

Meanwhile, all of us will benefit from the social cohesion and renewed incentive to work hard when more Australians feel like they are not locked out of success or home ownership.<\/p>\n

People naturally scan for \u2013 and fixate on \u2013 anything they think might be a threat. But if a full-blown collapse of the housing market and the economy are a tiger in the trees, the latest property tax changes are more like a speed bump. No need to fight, flee or freeze: just ride out the inconvenience and know it\u2019s ultimately for our benefit.<\/p>\n

Millie Muroi is the economics writer at The Sydney Morning Herald and The Age.<\/p>\n

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\"MillieMillie Muroi<\/a> is the economics writer at The Sydney Morning Herald and The Age. She was formerly an economics correspondent based in Canberra\u2019s Press Gallery and the banking writer based in Sydney.Connect via X<\/a> or email<\/a>.From our partners<\/p>\n","protected":false},"excerpt":{"rendered":"May 27, 2026 \u2014 5:00am Save You have reached your maximum number of saved items. Remove items from…\n","protected":false},"author":2,"featured_media":696505,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-697712","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/697712","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=697712"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/697712\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/696505"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=697712"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=697712"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=697712"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}