Jim Chalmers says budget changes allowing first home buyers to ‘have a crack’

The treasurer, Jim Chalmers, has suggested falling auction clearance rates may be a “good thing” for first home buyers if it means they aren’t competing against as many property investors.

After data was released showing home prices in Australia’s capital cities had begun to fall and buyers were abandoning auctions, Chalmers on Monday said Labor’s proposed property tax reforms weren’t the only thing slowing the housing market.

The Albanese government plans to wind back generous concessions for property investors by replacing the 50% capital gains tax (CGT) discount with an indexation model and restricting negative gearing to new builds only.

Chalmers downplayed the effect of the budget on declining auction clearances, saying the recent string of interest rate rises and “broader economic conditions” were also at play.

“Some of those clearance rates were coming down already and the budget is not the only factor when people are thinking about participating in those auctions,” he said.

“But if we are making it easier for first home buyers to get a fair crack at auctions, then that’s a good thing.”

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Auction success hit a new low for the year on the last Saturday in May, with just 54.5% of homes sold after being listed for auction, according to Cotality’s preliminary national clearance data released on Monday.

With the finalised rate of successful auction sales typically even lower, the number of clearances was anticipated to have fallen to a low not seen since 2020’s lockdowns.

Australia’s largest real estate group, Ray White, said it recorded a slightly better preliminary clearance rate of 57.6% for the 509 properties it auctioned on Saturday.

The company, which had railed against Labor’s tax changes before the federal budget, claimed its clearance rate as a win and that it showed the market was “becoming increasingly resilient to uncertainty”.

Ray White also acknowledged the removal of the 50% CGT discount was not necessarily a tax increase, saying that replacing it with indexation meant it depended on the gap between property price growth and inflation.

“The policy may be defensible if the aim is to tax real gains rather than inflation,” Ray White’s chief economist, Nerida Conisbee, said.

The opposition, which has been dealing with an internal clash of philosophies regarding the tax concessions as it tries to stem the loss of voters to One Nation, was mixed in its response to the Cotality data on Monday.

The federal Liberal MP Andrew Hastie said the stalling housing market might be a “glimmer of hope” for someone who’d just saved up enough for a deposit.