Labor has reached a deal with the Greens to scrap future negative gearing for existing builds and implement a minimum 30 per cent tax on capital gains.\u00a0<\/p>\n
But despite these changes, which will have an impact on the housing market, Ms O’Neil said falling house prices were a correction, not a result of the tax reforms.\u00a0<\/p>\n
The comments come amid plunging auction clearance rates and warnings that the government\u2019s negative gearing and capital gains tax changes will weigh on values.<\/p>\n
Speaking to ABC Radio National on Wednesday, Ms O\u2019Neil claimed the market was undergoing a \u201ccorrection\u201d after years of growth.<\/p>\n
\u201cLook, I think the housing market is cyclical in Australia, a very uncontroversial comment,\u201d Ms O\u2019Neil said.<\/p>\n
\u201cWe see periods of very significant house price growth, and then we see the market make a correction. And that’s what we’re seeing at the moment.\u201d<\/p>\n
Asked directly whether the country was in a market correction, Ms O\u2019Neil said: \u201cThat’s correct. I don’t think that’s controversial at all.\u201d<\/p>\n
\u201cWe’ve just been through what has been extremely high house price growth in the period from Covid basically before Covid to today.<\/p>\n
\u201cHouse prices have gone up just in that time by more than 50 per cent. And we are seeing a correction on that.\u201d<\/p>\n
The government\u2019s own modelling in the federal budget said house prices would reduce property price growth by two per cent.<\/p>\n
However, so far, the latest data<\/a> showed Sydney house prices fell by 1.1 per cent in the last month, and by 0.8 per cent in Melbourne.<\/p>\n Prices were still rising in Perth by 0.9 per cent, Brisbane by 0.5 per cent and Adelaide by 0.3 per cent in the last four weeks.<\/p>\n Property prices have been forecast to decline by up to 10 per cent due to the tax changes and rate hikes, according to Morgan Stanley\u2019s chief economist Chris Read<\/a>.<\/p>\n \u201cHouse prices were already declining in Sydney and Melbourne before the budget, so let’s not pretend this is all to do with the taxes,\u201d Ms O\u2019Neil said.<\/p>\n The comments come after Australia\u2019s auction market suffered its weakest conditions since the pandemic.<\/p>\n