More than tax changes: What’s driving Melbourne and Sydney's softer housing market?

More than tax changes: What’s driving Melbourne and Sydney's softer housing market?

Auction clearance rates have stalled for a third consecutive week, while new quarterly data shows a softening to house prices in Melbourne and Sydney. An RMIT expert explains why these results reflect more than just the recent changes to capital gains tax and negative gearing – with interest rates and broader economic conditions continuing to shape buyer confidence.

Dr Callum Logan, School of Property, Construction and Project Management:

“Auction clearance rates are a gauge of confidence in the property market. Right now, people are exercising caution mainly because of interest rate rises and uncertainty. Higher living costs, a recent war in the Middle East, and recent changes to tax settings for investors are also contributing. 

“Australian capital cities are frequently awarded as overachievers for the most unaffordable property markets. Try as we might, we are also not good at solving the issue by building more supply.  

“Option B, which is to tinker with demand, is what we are seeing right now. This is reflected in changes to investor tax settings.  

“Lower-priced properties with the best investment yields often attract both first home buyers and investors, creating direct competition as the same auctions. The new investor tax settings will go some way to redirect investors toward new housing. 

“Clearance rates were already heading south before the tax changes were announced, so the main uncertainly may still rest with the direction of interest rates.” 

Dr Callum Logan is a senior lecturer in the School of Property, Construction and Project Management.  

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General media enquiries: RMIT External Affairs and Media, 0439 704 077 or news@rmit.edu.au

06 July 2026

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06 July 2026

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