Budget Tax Changes Give First Home Buyers a Window to Act

Auction clearance rates fell to 50.4% after the federal budget's negative gearing changes, opening a rare window for buyers priced out of the market.

The federal budget handed down on May 12 has had an immediate and measurable effect on property market sentiment. According to [ABC News](https://www.abc.net.au/news/2026-05-24/auction-clears-rates-drop-to-50-per-cent/106714340), preliminary data from Cotality shows national auction clearance rates fell to 50.4 per cent for the week ending May 17 — a notable softening — before partially recovering to a preliminary 58.2 per cent for the week ended May 24.

Cotality research director Tim Lawless put the shift in context: "I think this is probably just amplifying what was already a weakening trend in the market before budget night." Clearance rates had been trending lower nationally in the weeks leading up to the budget, consistent with seasonal patterns. But the announcement of changes to negative gearing and capital gains tax appears to have accelerated that drift, particularly in investor-heavy markets.

Brisbane has seen some of the sharpest moves. In the week of May 10 — just before the budget — Brisbane's weekly clearance rate climbed from 46.6 per cent to 54.4 per cent. This week, preliminary data shows it fell back to 45.7 per cent: a sharp reversal reflecting investor uncertainty in a city that had been among Australia's strongest performers. "In November or October last year, values [were] rising at nearly 2 per cent month on month," Mr Lawless noted, underscoring how significantly the pace of growth has slowed as clearance rates have come down. Melbourne, Sydney and Perth all saw slight clearance increases this weekend, so the national picture remains mixed rather than uniformly negative.

What the Budget Changes Mean for Investors — and Renters

The budget reforms are already affecting investor borrowing behaviour on the ground. Auctioneer Tom Gunness described current conditions as "a hat-trick of interest rate rises" layered on top of a budget announcement that "certainly didn't add too much confidence to the buyers that we are already meeting." The combination is making it "far less appealing for most investors to get out there and purchase now."

The impact runs deeper than sentiment alone. The budget changes are affecting investor borrowing capacity — meaning some investors who would previously have been comfortable purchasing are now finding themselves capped at lower loan amounts. "We're seeing investors be capped at levels where previously they would have thought that was an absolutely amazing buy," Mr Gunness said.

This changing calculus for investors has a logical flow-on: if fewer investors are active — or if some begin offloading properties — rental supply could tighten further. "Our fear is that we will see the investment pool start to shrink, that we'll see rental properties become more scarce, less readily available," Mr Gunness warned. For renters already navigating a critically tight market, any further contraction in available stock could push rents higher and make finding a home even harder.

Why First Home Buyers May Have Their Best Window in Years

The silver lining of reduced investor competition is real, and agents are flagging it plainly. Sales agent Umair Khan was direct: "There [were] people who were planning their strategy on negative gearing and buying properties because of the negative gearing strategies. Now they need to sit back and give a chance to first-home buyers."

In markets like Brisbane, where values are still rising but now in the "low 1 per cent range" monthly — rather than the nearly 2 per cent monthly gains of late 2025 — buyer sentiment has softened just enough to open a narrow window. Clearance rates sitting below 55 per cent nationally signal that sellers are not always achieving their reserves, which typically means buyers have more room to negotiate.

If you have been sitting on the sidelines waiting for conditions to ease, now is the time to revisit your position. Use our [borrowing power calculator](/calculators/borrowing-power) to get a current read on your maximum loan amount — the lending environment has shifted meaningfully over the past six months, and many buyers find they are in a stronger position than they assumed.

For first home buyers specifically, our [first home buyer hub](/home-loans/first-home-buyer) covers the full range of government schemes, grants, and low-deposit lending options available to you right now.

Markets move faster than sentiment, and today's window may not last long. If you are actively looking, compare rates at our [cheapest home loans page](/home-loans/cheapest) and speak to a broker about locking in a competitive deal before investor demand returns. For existing owners weighing up [refinancing](/home-loans/refinance), the current market softness is equally worth exploring — a better rate now can save thousands regardless of what clearance rates do next quarter.