The Federal Budget’s proposed tax reforms have cast a shadow over the Australian real estate market, with both investors and buyers exhibiting increased caution. This shift in sentiment is highlighted in the Real Estate Buyers Agents Association of Australia (REBAA) end-of-financial year market update, which points to a significant change in market dynamics across the country.

Zoran Solano, Vice President of REBAA, noted that the 2025/26 financial year ended with a distinct change in behaviour among buyers and sellers, largely influenced by uncertainty surrounding potential changes to negative gearing and Capital Gains Tax. “The policy debate alone had been enough to cool confidence across multiple markets, with many investors pausing acquisitions, reassessing borrowing capacity and re-running the numbers on cash flow, holding costs, and long-term strategy,” Mr Solano explained.

The impact of these proposed reforms has not been uniform across the nation, but a clear pattern has emerged. “Investor enquiry is softer, and days on market are longer in several states,” Mr Solano observed. “Buyers of all types have become more selective and value-driven, plus, we’re seeing a more cautious and segmented market emerge across the country.”

In New South Wales, the market is transitioning into a more selective, price-sensitive phase, according to REBAA New South Wales State Representative Linda Johnson. “Sydney is carrying the clearest signs of fatigue, with Cotality reporting Sydney dwelling values fell 0.9 per cent in May and are now 2.1 per cent below their November peak,” she said. The urgency that characterised earlier market activity has waned, with buyers showing less willingness to compete for properties that are not well-presented, well-located, or accurately priced.

Johnson further elaborated on the regional dynamics, noting that areas like Newcastle, Wollongong, and the Central Coast continue to benefit from commuter, lifestyle, and infrastructure-led demand. “The Federal Budget has had largely a negative effect on market confidence, evidenced by falling auction clearance rates, discounted prices, less buyer activity, and in some areas either a backlog of stock, or continuing limited stock availability in others,” she added.

In Victoria, REBAA State Representative Matt Scafidi reported a stable property market, although conditions vary significantly across different segments. “Quality family homes in established suburbs, particularly throughout Melbourne’s eastern and inner suburbs, continue to attract strong buyer competition,” Mr Scafidi said. However, the proposed changes to negative gearing and Capital Gains Tax have injected uncertainty into the market, prompting many investors to adopt a wait-and-see approach.

Scafidi highlighted that investor participation in Melbourne has been under pressure, with existing challenges such as increased land tax obligations and rental compliance requirements compounding the situation. “The immediate impact has not been an influx of first-home buyers replacing investors, but rather a reduction in overall investor confidence,” he noted.

In Queensland, the property market is undergoing a period of adjustment, as described by REBAA Queensland State Representative Melinda Granzien. “While population growth, interstate migration and housing undersupply continue to support the market, buyer sentiment has become noticeably more cautious throughout 2026,” Ms Granzien said. The uncertainty surrounding proposed budget changes has led many investors to pause or adjust their purchasing decisions, contributing to a more balanced market environment.

Western Australia has experienced strong growth, but REBAA State Representative Peter Gavalas noted a recent slowdown in investor activity post-budget announcement. “Since budget night in May, we have seen a big slowdown in investor activity, with the proposed changes to CGT and negative gearing, it has seen most investors move to the sidelines and reassess their investment strategies and buying entities,” Mr Gavalas said.

In South Australia, the Adelaide property market continues to show strong growth, with REBAA State Representative Matt O’Donoghue highlighting a year characterised by strong buyer demand and limited supply. “Adelaide dwelling values were up 8.2 per cent over the year, with a median dwelling value of $891,004,” he reported.

Meanwhile, in the ACT, the market has reached a more settled position, according to REBAA ACT State Representative Claire Corby. “After an extended standoff between vendor expectations and buyer capacity, the market has finally settled into a more workable equilibrium and transaction activity has returned,” Ms Corby stated.

In Tasmania, the property market has moved through the financial year with renewed confidence, as noted by REBAA Tasmania State Representative Samantha Spilsbury. “While conditions have not returned to the extraordinary pace of 2020 to 2022, buyer demand has strengthened, stock remains relatively constrained in many locations, and quality properties continue to attract competitive interest,” Ms Spilsbury said.

Overall, the Australian property market is navigating a complex landscape shaped by proposed tax reforms, economic uncertainty, and shifting buyer and investor behaviours. As the nation awaits clarity on the final shape of these reforms, market participants are exercising caution and deliberation in their decision-making processes.