Australia\u2019s housing market is sending a warning the Albanese Labor government cannot afford to ignore.<\/p>\n
Across the capital cities, more homes are now failing at auction than selling, pushing clearance rates below 50 per cent for the first time in six years.<\/p>\n
That is not merely a statistic for property analysts, it is an early warning that buyers are retreating, vendors are losing confidence and the housing market is entering a weaker phase.<\/p>\n
Auction clearance rates are among the most reliable, real-time measures of housing market sentiment.<\/p>\n
Strong rates signal competition and rising prices. Weak rates point to softer demand and downward pressure on values.<\/p>\n
When clearance rates fall below 50 per cent, markets are typically losing momentum.<\/p>\n
That is the new reality for Australia\u2019s housing market.<\/p>\n
Cotality\u2019s latest data showed a combined capital city clearance rate of just 49 per cent for the week ending May 31, 2026.<\/p>\n
Sydney recorded 46.5 per cent, Brisbane 39.9 per cent, Canberra 38.7 per cent, Melbourne 51.9 per cent, and Perth 54.6 per cent.<\/p>\n
While Perth\u2019s clearance rate remains higher than eastern capitals, it is still below levels associated with strong price growth and reflects a broader softening in buyer sentiment.<\/p>\n
More than 1,350 auctions went uncleared across the capitals, with almost 1,000 properties passed in and hundreds more withdrawn.<\/p>\n
Behind those figures are thousands of Australians making decisions about their financial future.<\/p>\n
Buyers are becoming more cautious, vendors are adjusting expectations and many sellers are choosing not to list.<\/p>\n
Agents report fewer bidders, lower attendance at inspections and a widening gap between seller expectations and buyer willingness to pay.<\/p>\n
Perth\u2019s position is particularly noteworthy because it is one of the few capital cities still recording strong price growth despite softer auction conditions.<\/p>\n
A clearance rate of 54.6 per cent would normally suggest a flat or weakening market, yet prices continue to rise because Western Australia remains constrained by an acute housing shortage, strong population growth and exceptionally tight rental conditions.<\/p>\n
That divergence highlights the fundamental problem confronting the Albanese government \u2013 demand-side tax changes cannot solve a supply-side housing shortage.<\/p>\n
In Sydney and Melbourne, values are already declining.<\/p>\n
Cotality reported dwelling values declined by 0.9 per cent in Sydney and 0.8 per cent in Melbourne during May, while Canberra also recorded a fall.<\/p>\n
Nationally, home values were flat, ending a period of slowing growth.<\/p>\n
This is not yet a housing crash, but it is clearly a loss of momentum.<\/p>\n
The reasons are straightforward.<\/p>\n
Higher interest rates have reduced borrowing capacity, household budgets remain under pressure, consumer confidence has weakened and housing affordability is increasingly stretched, particularly in Sydney and Melbourne.<\/p>\n
Into this already fragile environment, the Albanese government is proposing major changes to negative gearing and capital gains tax.<\/p>\n
The timing could hardly be worse.<\/p>\n
Housing markets run on confidence.<\/p>\n
When buyers delay decisions, investors retreat and vendors hold back listings, the result is a self-reinforcing slowdown that weakens activity across the market.<\/p>\n
Treasury estimates the proposed tax changes could reduce house prices by around 2 per cent over two years compared with a scenario where no changes occur.<\/p>\n
Other economists suggest prices could be between 1 and 4 per cent lower than otherwise expected.<\/p>\n
Morgan Stanley has warned prices could fall by 5 to 10 per cent fall if investor demand contracts sharply, while Westpac forecasts new investor demand could decline by 34 per cent and property turnover by 20 per cent.<\/p>\n
Even if the most moderate estimates prove correct, the policy risks targeting the wrong part of the problem.<\/p>\n
The central flaw in Labor\u2019s policy is the assumption that investors are the cause of Australia\u2019s housing affordability crisis.<\/p>\n
Investors certainly contribute to demand, but they also provide most of the rental housing.<\/p>\n
Discouraging investment without increasing supply simply shifts pressure elsewhere in the housing market.<\/p>\n
In practice that means renters.<\/p>\n
This is particularly concerning given rental markets are exceptionally tight and new housing supply continues to lag demand.<\/p>\n
The government argues that investors will shift towards newly built homes.<\/p>\n
In theory, that sounds appealing \u2013 in practice, it is far more complicated.<\/p>\n
Elevated construction costs, persistent labour shortages, slow planning approvals, and difficult project economics continue to make new housing expensive and challenging to deliver across much of Australia.<\/p>\n
Australia\u2019s housing shortage will not be solved by pushing investors out of one part of the market and hoping supply appears somewhere else.<\/p>\n
The Labor government may succeed in its objective of discouraging investors but fail in achieving the objective of making housing more affordable.<\/p>\n
That would leave Australia with the worst possible outcome- fewer investors, fewer rental properties, and little improvement in affordability.<\/p>\n
For first homebuyers, lower prices may initially sound attractive, yet affordability is not simply about the purchase price of a home.<\/p>\n
A property is not more affordable if credit is harder to obtain, mortgage repayments remain elevated and economic confidence continues to weaken.<\/p>\n
For recent purchasers there is also the risk of negative equity.<\/p>\n
Households that entered the market with small deposits could find themselves owing more than their property is worth if prices fall materially.<\/p>\n
That has implications for refinancing, mobility and household confidence.<\/p>\n
Renters face an even more immediate risk.<\/p>\n
If fewer investors enter the market and existing investors sell, rental supply tightens further.<\/p>\n
In a country already struggling to house a growing population, that means higher rents, fewer available properties and increased pressure on families already facing cost-of-living pressures.<\/p>\n
Housing policy should ultimately be judged by outcomes, not intentions.<\/p>\n
Australia undeniably has a housing affordability problem.<\/p>\n
Young Australians are increasingly locked out of home ownership and renters face unprecedented pressure.<\/p>\n
Yet policies that undermine confidence, discourage investment and ignore supply constraints risk making those problems worse rather than better.<\/p>\n
Australia needs more homes,<\/p>\n
It needs faster planning approvals, lower barriers to development, investment in enabling infrastructure and policies that encourage construction.<\/p>\n
It needs reforms that increase supply rather than simply reshuffle demand.<\/p>\n
The danger is that the Albanese government is confusing affordability with weakness.<\/p>\n
A weaker housing market is not necessarily a fairer housing market.<\/p>\n
If declining prices are driven by uncertainty, falling confidence and reduced investment rather than increased supply, the result can be worse outcomes for buyers, renters and investors alike.<\/p>\n
That is why the current market signals matter.<\/p>\n
Clearance rates are falling, prices are weakening in the largest cities, investors are reassessing their position, vendors are withdrawing from the market, and buyers are waiting.<\/p>\n
This is precisely the wrong time to inject another layer of uncertainty into the housing market.<\/p>\n
Labor\u2019s proposed changes to negative gearing and capital gains tax may be presented as a fairness measure, but their practical effect will be less investment, fewer rental properties, lower market turnover and increased pressure on an already strained housing system<\/p>\n
Australia does not need housing policies designed for headlines, it needs policies that recognise a simple truth \u2013 the housing crisis is fundamentally a supply problem.<\/p>\n
When the auction room goes quiet, governments should listen carefully.<\/p>\n
The market is already signalling weaker confidence; the question is whether policy makers are prepared to hear it.<\/p>\n
Dean Smith is a Liberal Senator for WA<\/p>\n","protected":false},"excerpt":{"rendered":"Australia\u2019s housing market is sending a warning the Albanese Labor government cannot afford to ignore. Across the capital…\n","protected":false},"author":2,"featured_media":737172,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[64,63,9616,44],"class_list":["post-737171","post","type-post","status-publish","format-standard","has-post-thumbnail","category-australia","tag-au","tag-australia","tag-flat-white","tag-news"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/737171","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=737171"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/737171\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/737172"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=737171"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=737171"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=737171"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}