{"id":519600,"date":"2026-07-01T08:06:46","date_gmt":"2026-07-01T08:06:46","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/519600\/"},"modified":"2026-07-01T08:06:46","modified_gmt":"2026-07-01T08:06:46","slug":"saying-theres-an-upside-to-falling-house-prices-is-sacrilege-but-labor-needs-to-admit-it","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/519600\/","title":{"rendered":"Saying there\u2019s an upside to falling house prices is sacrilege. But Labor needs to admit it"},"content":{"rendered":"

\"Shane<\/p>\n

Updated July 1, 2026 \u2014 3:31pm,first published 3:14pm<\/p>\n

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Politics and Australia\u2019s real estate market are not the place to look for consistency.<\/p>\n

In October last year, as the Albanese government expanded its 5 per cent deposit scheme for first-time buyers, the fear \u2013 from the Coalition, from property experts, from the media \u2013 was that it would drive up house prices.<\/p>\n

\"AttitudesAttitudes to the property market need to change before we can truly address the housing affordability crisis.Marija Ercegovac<\/p>\n

\u201cYou\u2019ve got everyone basically besides Treasury saying this is going to whack prices up, so people will be at a disadvantage,\u201d Housing Minister Clare O\u2019Neil was told by a Channel Seven interlocutor on the morning of October 1.<\/p>\n

Fast forward to June 30, and Treasurer Jim Chalmers was asked by Channel Nine about the \u201cfairness\u201d of falling house prices.<\/p>\n

\u201cWhat about the 10 million people that own homes in Australia, because that would suggest this isn\u2019t fair for them,\u201d he was asked.<\/p>\n

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

No matter in which direction house prices move \u2013 and they do move in either direction \u2013 everyone has an opinion on whether it\u2019s \u201cbad\u201d or \u201cgood\u201d. Facts, sadly, are few and far between.<\/p>\n

This is where 30 to 40 years of Australian tax, banking, financial services, migration and urban planning policy has got this nation. Collectively, we\u2019ve spent decades turning our shelter into an investment opportunity or tax opportunity.<\/p>\n

National house values, as measured by Cotality, have fallen.<\/a> Those trying to ascribe that fall solely to the government\u2019s tax policy – which were only made public seven weeks ago – are delirious.<\/p>\n

Melbourne\u2019s property market has been subsiding since late last year. Sydney\u2019s market slide began in February.<\/p>\n

Across other markets, such as Perth and Brisbane, values are still climbing albeit at a slower rate.<\/p>\n

That\u2019s exactly what you would expect when the Reserve Bank increases interest rates by a collective 0.75 percentage points in two-and-a-half months. On an average NSW mortgage of $860,000, that rate increase is worth $400 in extra monthly repayments.<\/p>\n

The fact that the NSW mortgage is now $860,000 (up $400,000 over the past decade) should be enough of a signal that the market has reached an affordability tipping point, which is another big issue in the price correction story.<\/p>\n

Just hours before Cotality released its data, the Housing Industry Association reported that affordability has collapsed in all key markets, falling to its lowest level since the association started tracking it in 1994.<\/p>\n

In Sydney and now Brisbane, to buy a typical home you need 2.1 times average income. In other words, a couple where each person earns the average income can\u2019t afford a home.<\/p>\n

The issue of our crazy house prices is one thing. Now with prices edging down, the concern has become \u201call\u201d the people facing negative equity.<\/p>\n

Earlier this year, the Reserve Bank – which keeps an eye on the risks to the nation\u2019s banks – noted that about 0.4 per cent of all mortgage holders were in negative equity. Last month, governor Michele Bullock told a Senate hearing that \u201cpractically no-one is in negative equity\u201d.<\/p>\n

Before the pandemic, about 2 per cent of borrowers were in negative equity.<\/p>\n

Nationally, median dwelling values had fallen by more than 4 per cent in the 12 months up to May 2019, with much larger falls in Sydney and Melbourne.<\/p>\n

Sydney\u2019s dwelling values fell by 15 per cent between mid-2017 and mid-2019 while in Melbourne they fell by more than 11 per cent.<\/p>\n

But if you can\u2019t remember the fears about tumbling prices or negative equity from that period, don\u2019t worry. Apart from consternation about Perth\u2019s property market (where prices had fallen by 25 per cent), there was not one question to the then government about negative equity.<\/p>\n

It certainly wasn\u2019t a concern of morning television or radio shock jocks masquerading as real estate experts.<\/p>\n

The then head of NAB, Phil Chronican, said in 2019 he was relaxed about the level of negative equity given the jobless rate was \u201clow\u201d. Unemployment was half a percentage point higher and the proportion of the people in work lower at the time he made his comments than it is today.<\/p>\n

The government cannot deny its tax changes aren\u2019t affecting the property market. Reducing the incentive for investors to buy into the market is a feature of the budget \u2013 not a bug.<\/p>\n

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

Fewer investors, of whom at least 80 per cent purchase existing housing stock, has to mean less demand. Demand ultimately pushes up prices.<\/p>\n

But the government is scared to admit that a slowdown in prices, or even a short-term drop, would actually be an economic positive. The Reserve Bank certainly wouldn\u2019t be displeased (given the way high house prices encourage people to use their properties as a bankcard).<\/p>\n

Saying there is some upside to lower prices is effectively sacrilege at the altar of Australian property bulls.<\/p>\n

But prices do fall, even without government intervention.<\/p>\n

Apart from the 2017-2019 period (which clearly ended when the Reserve Bank started cutting interest rates), prices dropped in 2008, 2010, early 2020 and then through 2022.<\/p>\n

Even with those corrections, Australia has still ended up with arguably the least affordable property market in the developed world.<\/p>\n

That\u2019s the true crisis facing this country.<\/p>\n

Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter<\/a>.<\/p>\n

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\"ShaneShane Wright<\/a> is a senior economics correspondent for The Sydney Morning Herald and The Age.Connect via X<\/a> or email<\/a>.From our partners<\/p>\n","protected":false},"excerpt":{"rendered":"Updated July 1, 2026 \u2014 3:31pm,first published 3:14pm Save You have reached your maximum number of saved items.…\n","protected":false},"author":2,"featured_media":519601,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[114,184,85,46],"class_list":["post-519600","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-il","tag-israel"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/519600","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=519600"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/519600\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/519601"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=519600"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=519600"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=519600"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}