Property Values Drop as CGT Debate Reshapes the Market

Australia's property market has hit its sharpest monthly value drop in three years, as a fierce debate over CGT and negative gearing reshapes investor sentiment.

A mortgage broker has made national headlines this week — not for closing deals, but for spending $16,500 at a charity auction to secure a one-on-one tennis match with Prime Minister Anthony Albanese. Joseph Daoud's planned match at the Lodge has captured attention not because of the tennis, but because of what he intends to raise on court: that the government's changes to capital gains tax (CGT) and negative gearing are damaging first home buyers — and the broader property market — far more than the government is willing to acknowledge.

The political theatre lands against a sobering backdrop. MPA Australia reports that Daoud has spent eight years working with first home buyers — including time at Macquarie Bank — giving him credible industry standing to make this argument. But the data surrounding the debate is increasingly hard to set aside.

A Market Under Pressure

Housing affordability has plunged to its lowest point in over 30 years, according to figures that circulated this week. Capital city property values have recorded their largest monthly decline in three years, with forecasts suggesting house prices could fall by more than $100,000 in major markets as affordability pressures shift buyer demand toward units and further fragment the housing market.

The Adviser's weekly property round-up, covering the week of 29 June to 3 July, also noted that COVID-19-era purchasers — those who bought during the rapid price rises of 2020 to 2022 — remain the most exposed cohort to potential resale losses, even as the overall number of loss-making property sales has continued to decline.

Investor activity is also softening. According to the same round-up, the decline in investor participation follows the government's tax settings decisions in the latest federal budget — which have prompted sharper scrutiny from brokers and industry advocates who work across both owner-occupier and [investor](/home-loans/investor) portfolios.

Federal ministers have insisted recent price falls are moderate, but major bank economists have characterised the June Reserve Bank of Australia minutes as "hawkish," pointing to persistently above-target inflation as reason for continued caution. The combination of falling values, deteriorating affordability, and a central bank in no hurry to cut rates is a testing environment for anyone in — or trying to enter — the market.

What the CGT Debate Means for Borrowers

The specific controversy Daoud is pursuing centres on Labor's changes to CGT and negative gearing — changes he has labelled "ambition taxes." The issue reached parliament this week when Liberal MP Ben Small asked Prime Minister Albanese directly whether he intended to explain to Daoud "why his word on negative gearing and capital gains taxes was broken."

Albanese replied: "If it's a choice between someone who's in the sector somewhere and who's got enough money to buy billboards and spend all this, or first-home buyers struggling to get into a home, I'm for the first-home buyers." Daoud had previously spent $17,000 on billboard advertising in and around Canberra Airport to make his case publicly.

That exchange captures the central tension in this debate. The government frames its tax changes as pro-first-home-buyer. Critics — including mortgage brokers who deal with first home buyers daily — argue the opposite: that reducing the tax attractiveness of property investment contracts the rental supply pool, which in turn makes it harder, not easier, for [first home buyers](/home-loans/first-home-buyer) to accumulate a deposit and compete for stock.

Daoud told [MPA Australia](https://www.mpamag.com/au/news/general/no-love-lost-mortgage-broker-to-face-albanese-on-the-tennis-court/581148): "As an individual who has been working with first home buyers for the last eight years, including my time in Macquarie Bank, I'm of the genuine consensus that this does not help first home buyers."

The broader structural tension is real. When investor demand retreats — whether because of tax changes, rate uncertainty, or falling capital growth expectations — rental supply can tighten over time. Tighter rental supply pushes rents higher, which makes saving a deposit even harder for aspiring buyers. Policy and market effects are rarely as clean as political messaging suggests.

Help to Buy: One Piece of Good News

Not all the news for buyers is grim. The federal government's Help to Buy shared equity scheme has had its taxable income limits raised for the 2026-27 financial year, with 10,000 new places now available. This scheme allows eligible buyers to purchase a property with a smaller deposit by having the government take a co-ownership stake.

If you are a [first home buyer](/home-loans/first-home-buyer) who has not yet checked your eligibility against the revised income thresholds, it is worth doing before ruling it out. Our [borrowing power calculator](/calculators/borrowing-power) can help you model what a shared equity arrangement might mean for your purchase capacity under current market conditions.

What to Do in This Environment

Falling property values are a double-edged sword. For buyers who have been priced out, modest falls do improve affordability on the face of it — though if the major banks are right that the RBA is holding a hawkish stance, rate relief may arrive more slowly than many borrowers are hoping.

For existing owners — particularly those who bought during 2020 to 2022 — the resale loss data is a reminder that mortgage structure matters as much as market timing. If you are carrying a rate that no longer reflects today's competitive market, it is worth reviewing your options before conditions shift further. [Compare your refinance options](/home-loans/refinance) to get a clear picture of what you could save.

The political debate over CGT and negative gearing will play out across the next parliamentary cycle. For borrowers making decisions now, the fundamentals remain: understand what the current tax settings mean for your specific situation, compare rates across the full market, and take professional advice before making any major property or investment decision.