![\"The](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/06\/0a3b6ec870050e2ccd211d722bea32e7e4b1af3c.jpeg\")
The federal budget has left Kristian Williams hopeful he can buy a home.Simon Schluter<\/p>\nUntil the federal budget, Kristian Williams had given up on ever owning a home. The 35-year-old consultant had tried to save for a deposit before, but was disheartened by the rate at which house price growth outpaced his ability to save.<\/p>\n
\u201cI was trying to save pretty aggressively … and you just read there\u2019s another 7 per cent increase this month, there\u2019s a 2 per cent increase this month, and it\u2019s like my savings haven\u2019t increased much, so it just feels like a runaway dream at that point,\u201d he says.<\/p>\n
The federal budget has left Kristian Williams hopeful he can buy a home.Simon Schluter<\/p>\n
He was 31, and he\u2019d given up almost everything \u2013 to no avail. \u201cIt takes a lot of joy out of your lifestyle when you\u2019ve got to really focus on saving and cutting corners as much as you can,\u201d Williams says.<\/p>\n
He gave up and moved to Korea and Japan, where the cost of living was cheaper, and when he came back to Australia this year he didn\u2019t plan to start looking for a home again \u2013 but the budget reforms changed his mind.<\/p>\n
Related Article Other first home buyers also sense an opportunity. An investor tax overhaul has deepened property price falls. Some investors have shied away from the market, which has tilted the market further in first home buyers\u2019 favour.<\/p>\n Even in Melbourne, where home values have tracked sideways for four years amid an increase to state taxes for investors<\/a> and a lacklustre economy \u2013 and where first home buyer activity has been higher than average<\/a> \u2013 first time buyers have been in the box seat at auctions over the past month.<\/p>\n Of the nation\u2019s eight capitals, Melbourne property is now the third cheapest. According to Cotality, the median Melbourne home is now worth $812,621, down 0.8 per cent in May.<\/p>\n Investors have recently reconsidered their plans \u2013 those investors still left in the market after many already pulled back a few years ago to avoid higher land tax bills.<\/p>\n Meanwhile, home sellers are adjusting their price expectations in light of buyer caution, rate hikes and economic uncertainty.<\/p>\n Williams moved in with his mother in Port Melbourne. \u201cIt\u2019s given me a bit of an edge to save,\u201d he says.<\/p>\n Related Article \u201cThe noise that surrounds it feels like the wind has been taken out of the back of the property market,\u201d Williams says. \u201cIt\u2019s slowing, and it\u2019s not growing any more, which I know sounds horrible \u2026 but it gives me a chance to get in.\u201d<\/p>\n A \u201cre-balance\u201d of the tax system<\/p>\n Labor used its May budget to shepherd in \u201cthe most ambitious budget in a generation<\/a>\u201d, promising to re-balance the tax system in favour of younger, less wealthy Australians, Treasurer Jim Chalmers said.<\/p>\n The biggest changes include restricting tax breaks for negative gearing to new builds while grandfathering existing investors, and scrapping the capital gains tax discount in favour of taxing above-inflation gains. Investors in new builds may choose the old capital gains tax discount. <\/p>\n Economists have long argued that the combination of a capital gains discount and negative gearing has cut young people out of the housing market, fuelling social dislocation.<\/p>\n Independent economist Saul Eslake has been tracking the housing market for decades, and says the shift from housing as a basic human need to a vehicle for wealth accumulation over the last 30 years has skewed the market towards investors.<\/p>\n \u201cWhat the federal government is trying to do is reduce the demand from investors for existing properties, whilst encouraging investors to continue to buy new ones \u2026 so that home buyers have a better chance of succeeding at auctions,\u201d he says.<\/p>\n \u201cSo if what you\u2019re seeing, and the press is reporting, is investors staying away and first-home buyers having a nibble, well, that\u2019s the point.\u201d<\/p>\n Hope for first-home buyers<\/p>\n Williams has been watching the news. \u201cI\u2019m feeling a little bit more confident now, because if people are starting to think about selling investment properties \u2014 that opens up a bit more stock on the market … [and means] I won\u2019t be buying into a crazy hot market,\u201d he says.<\/p>\n A recent consumer trend report from Insights Exchange found that one in three Australians aged 18 to 29 still live with parents or in-laws, and that only 9 per cent of Australians plan to save for a home deposit over the next five years.<\/p>\n \u201cThis really shows that young people are putting off moving out of home and delaying even being able to buy a home,\u201d says founder Nichola Quail. The budget changes, while a good first step, will take time to filter through and help first home buyers enter the market, she adds.<\/p>\n \u201cGiven that much of what the budget came out with [things like] the local infrastructure fund, the impact of the negative gearing \u2013 yes, that\u2019s going to help, but not in the next 10 years, so then these first home buyers will be in their 30s, even in their early 40s,\u201d she says.<\/p>\n House values have fallen across almost all price points in Melbourne over recent months, with the biggest losses for sellers concentrated in the top end of the market.<\/p>\n The upper quartile \u2013 also known as the family home market \u2013 of properties has been hit hardest, falling 4.1 per cent in Melbourne over the three months to the end of May. Domain research this week predicts house prices could fall as much as 8 per cent in Melbourne over the next 12 months<\/a>.<\/p>\n And while the Reserve Bank kept the cash rate on hold at 4.35 per cent this month<\/a>, RBA governor Michele Bullock raised the possibility of further hikes.<\/p>\n Related Article Cotality head of research Gerard Burg is not convinced that the budget is solely responsible for the cooling market. While the changes may have affected investor activity in Melbourne, he points out it is but one of many factors that have been affecting demand.<\/p>\n \u201cWe\u2019ve had three rate rises, existing affordability challenges … the impact of the Middle East conflict on energy prices, and then we\u2019ve had this more recent investor impact from the budget,\u201d he says.<\/p>\n \u201cThey\u2019ve all been pushing in the same direction, so trying to split out how much is down to investors, how much is down to any of these other factors is pretty challenging.\u201d<\/p>\n The decline in clearance rates indicate fewer buyers, Burg says, both from the investor side and potential owner occupiers.<\/p>\n \u201cBut we tend to think the rate rises are probably the big driver, because that\u2019s really impacted on household budgets and the ability to get into the market,\u201d he adds.<\/p>\n Since February, the Reserve\u2019s three interest rate increases have added nearly $300 in total to monthly repayments on an average mortgage of $600,000.<\/p>\n<\/p>\n Rethinking property plans<\/p>\n Tiffany Doan, acquisitions lead at buyers\u2019 agency MECCA Property, is both an investment adviser and an investor.<\/p>\n While her goal before the budget was to buy an entry-level commercial property, she and her husband Joshua Jeffrey have since pivoted to Melbourne\u2019s inner-ring boutique apartment market, buying a two-bedroom, one-bathroom unit in South Yarra for $565,000.<\/p>\n \u201cThe most important thing is ensuring we have sufficient cash buffers and that we\u2019re only taking on assets we can comfortably afford to hold,\u201d she adds.<\/p>\n Jeffrey agrees that while the budget hasn\u2019t impacted the couple\u2019s decision to invest in property, it has reduced their borrowing capacity. \u201cThis has resulted in a shift of location and types of properties we might invest in, such as units with a land component becoming increasingly valuable,\u201d he says.<\/p>\n Doan says while some buyers are adopting a \u201cwait-and-see\u201d approach to the budget, others are shifting towards the more affordable market.<\/p>\n \u201cMany buyers have been priced out of houses and townhouses but still want access to desirable lifestyle locations close to the CBD,\u201d Doan says. \u201cAs a result, we\u2019re seeing increased interest from first-home buyers, owner-occupiers and investors looking at quality boutique apartments under the $600,000 price point.\u201d<\/p>\n Related Article Hobart-based Jake Stalker, 31, and his husband have the same idea. The couple purchased a one-bedroom Richmond unit for $335,000 as an investment two days post budget, despite knowing that negative gearing would likely be restricted.<\/p>\n \u201cWe were actually looking for an investment property that would avoid negative gearing,\u201d he says. \u201cThere are very few markets that we saw across the country where yield is as high compared to the purchase price as in Melbourne.\u201d <\/a><\/p>\n The couple was looking to buy in Brisbane, but realised it was unaffordable.<\/p>\n Stalker and his husband are not looking for extensive capital growth. \u201cWe just want a little property that pays its own way, and is similar to the investment property we have in Hobart,\u201d he says.<\/p>\n Woodards Elsternwick agent Sean Rice, who helped Stalker buy his property, says investors are still around, if acting a little more cautiously.<\/p>\n \u201cThey are still readjusting to the potential expectations \u2013 the new rules to pass Parliament,\u201d he says. \u201cBut once investors do the numbers, Melbourne real estate is still relatively cheap but with high rental yield, so it\u2019s a balancing act of buying the right opportunity.\u201d<\/p>\n Buyers \u201clacking in confidence\u201d<\/p>\n Whether it\u2019s down to the budget or not, buyers are more nervous, says Ray White Southbank agent Tommy-Lee Davies.<\/p>\n \u201cBuyers have been more hesitant and lacking confidence,\u201d he says, adding there are a lot fewer out there. \u201cWe have launched properties and expected them to do better than they have.\u201d<\/p>\n Investors \u2013 many from Sydney \u2013 have been dropping out of auctions, selling more often and also \u201cmaking ridiculous offers, thinking they can buy something half price\u201d, he says.<\/p>\n \u201cInvestors have just lost confidence in their property growing \u2013 they are giving up on Melbourne,\u201d Davies says. First home buyers are still around, if a little more nervous, and owner-occupiers looking to upsize are still selling, even if it\u2019s at a bit of a loss.<\/p>\n \u201cBut they will probably be buying for a bit less in that market as well, so it\u2019s a good time for that,\u201d he says.<\/p>\n Gary and Nicola Klein, represented by Davies, put their two-bedroom, two-bathroom inner-Melbourne apartment up for sale in February, but only recently sold it.<\/p>\n Over the months, they have seen interest in their property wane as rate rises, the cost of living crisis and the price of fuel battered people\u2019s hip pockets.<\/p>\n The budget, Gary says, was the last straw.<\/p>\n \u201cWe were really fortunate to sell our place, because basically over a period of three to four weeks, with all these things considered \u2026 the leads and people coming through our unit basically dried up,\u201d he says.<\/p>\n![\"Melbourne\u2019s](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/02\/b80b436ccd0aadc8d55927a042e9ee9ec39f709c.jpeg\")
<\/a><\/p>\n![\"Jim](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/05\/a959de622d958c60e2f7487ec321390ad09428b63b0372c8316a67fe04793607.jpeg\")
<\/a><\/p>\n![\"Jim](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/06\/6489ee4db3395324d8bab090445a84051b881a75.jpeg\")
Jim Chalmers said the current tax system was \u201cout of whack\u201d with the interests of young people.Alex Ellinghausen<\/p>\n![\"First](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/06\/0b508f1337878419b92ca039109ab62fb1717fa8.jpeg\")
First home buyers have increased after the budget, as investors drop out.Alex Coppel<\/p>\n![\"The](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/06\/1782613529_389_dcb3c7ac8e8e87c2b2a1d27b749533cb464b2b7a.jpeg\")
<\/a><\/p>\n![\"Tiffany](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/06\/bbaf2c45ac368a9e9e47f6996e171c892733b441.jpeg\")
Tiffany Doan with husband Joshua Jeffery and dog Izzy.Ruby Alexander.<\/p>\n![\"The](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/05\/1779515471_685_17a75bb11f4f57fea35903e2898cffdc9938c658.jpeg\")
<\/a><\/p>\n![\"Gary](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/06\/f90a254e7011003cf7b5cd90e5d84876b02e081e.jpeg\")
Gary and Nicola Klein dropped their unit sale 10 per cent after the budget came out.Joe Armao<\/p>\n