HSBC\u2019s chief economist Paul Bloxham said the downturn would continue as buyers avoided entering a market where property values were sinking.<\/p>\n
\u201cThis is just the beginning,\u201d Mr Bloxham said in a statement.<\/p>\n
\u201cThe recent big shifts in tax policy concerning investment properties, as well as the RBA’s earlier three rate hikes, have rapidly sapped investor demand from the market.<\/p>\n
\u201cAs we see it, first home buyers and other owner-occupiers are unlikely to want to try to ‘catch a falling knife’.\u201d<\/p>\n
The market slump comes as Labor will restrict negative gearing to new builds and properties purchased before budget night from July 1, 2027.<\/p>\n
Labor is also dumping the 50 per cent capital gains tax discount and replacing it with an inflation-adjusted model with a minimum 30 per cent tax rate.<\/p>\n
Australia\u2019s property market has also fallen as the Reserve Bank of Australia was forced to lift the cash rate 75 basis points while inflation remained elevated.<\/p>\n
Mr Bloxham noted that prices could fall about eight per cent by the end of 2027 as there remains no sign of a \u201ccircuit breaker\u201d in the market.<\/p>\n
\u201cWith no rate cuts expected anytime soon (there is still some risk of another hike), we expect no near-term circuit breaker, which means the housing price correction is likely to continue for some time yet,\u201d he said.<\/p>\n
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<\/p>\n
\u201cWe see national prices falling in H2 2026 and by 2-6 per cent over 2027 – implying a correction of up to eight per cent over that period.<\/p>\n
\u201cThe pace of decline in the June figures suggest the risks to this view look tilted to the downside too. Hold onto your hats.\u201d<\/p>\n
Property data provider Cotality revealed last week\u2019s preliminary auction clearance rate was just 49.8 per cent.<\/p>\n
This is well below the decade average of 65 per cent.<\/p>\n