Australian Property Market in Free Fall

The Australian property market is facing a broad-based correction due to changes in negative gearing and capital gains tax (CGT) introduced by the federal budget.

The industry has been vocal about its discontent, with backlash still strong ten weeks after the budget was delivered.

A survey of 265 industry professionals found that Labor's budget tax changes were the biggest driver of the decline in home values, ahead of this year's three interest rate increases by the Reserve Bank of Australia (RBA).

Treasury modelling suggested that the negative gearing and CGT changes would only reduce dwelling price growth by around 2% 'over a couple of years relative to no tax policy change', primarily by reducing investor demand for established properties.