When our marketing team asked me to write this article, my first reaction was one of discomfort. That discomfort is still lingering as I write, although I can also see there is a genuine appetite among many of our clients for this topic to be discussed. To be fair, it doesn’t seem to matter whether I’m in a social setting or a business meeting – the question invariably comes up. Since the Federal Budget changes affecting property investors were announced, people want to know what impact they are having on the market and, more importantly, what might happen next. The best way I can offer an opinion is by talking about what we have observed since that night.

If you have followed my previous writing, you’ll know I suggested that removing tax incentives for investors purchasing established properties could reduce overall demand by around 19.1%, based on data from a variety of sources. We are now almost eight weeks into the post-budget period and, taking an average across that timeframe, sales transactions are down 24.65%. It is not an unreasonable conclusion to suggest that much of this reduction reflects softer demand rather than simply fewer transactions. Given that more stock is now coming to market than is transacting week by week, it is also reasonable to conclude that supply is currently outpacing demand. The full impact of these figures is not yet visible. Many of the transactions occurring today have not settled, and settlement data provides a more reliable basis for making broader calls about market direction. As a result, there is still a degree of caution required when interpreting the numbers.

What we can see from our limited visibility is that comparable properties are often achieving prices approximately 10% lower than they were prior to the budget announcement. This trend is most evident in the sub-$1 million segment, where investor demand has historically played a significant role. The impact on properties above $1 million may take longer to emerge. Sellers from the lower end of the market typically become buyers further up the chain, so any changes are likely to filter through gradually. We are noticing a clear shift in this segment as well, but we are still building the sample size required to draw meaningful conclusions with confidence. Based on what we are observing today, there is evidence that values in some areas of the market may have adjusted by around 10%. However, additional settlement data and a larger sample size will be needed before making broader market-wide conclusions.