The Australian Property Market One Month After Budget Night: What the Numbers Actually Say

The federal budget landed on 12 May with a thud felt across the country. Proposed changes to negative gearing and capital gains tax sent investors scrambling for answers. Now, more than a month on, the data is in, and the picture is far more measured than the headlines suggested.

Osinski Finance, Rockingham's family-owned mortgage brokerage with access to nearly 100 lenders across Australia, has been fielding questions from buyers, investors, and owners trying to make sense of a rapidly shifting landscape. The short answer: values are mostly holding, some markets have actually grown, and the conditions right now may be more favourable for buyers than they have been in years.

Here's what the data tells us, city by city.

Quick Answer: Is the Property Market Crashing Post-Budget?

No. One month after the budget, the Australian property market has not crashed, and research group Cotality is not expecting a "sharp" correction. National home values dipped modestly in some cities and climbed in others. The market has absorbed the policy shock relatively well, driven by chronic housing undersupply, population growth, and a buyer pool of owner-occupiers unaffected by the proposed tax reforms. 

That said, price growth is slowing in some markets, and sellers are willing to negotiate more than they have been in years. That is not a crash. That is an opportunity.

What the Budget Actually Changed for Property

Before diving into the city-by-city data, it's worth understanding what the federal budget proposed for property.

The two reforms that shook the market were changes to negative gearing and capital gains tax. The negative gearing changes Australia investors had feared came in the form of proposed limits on deductibility for established properties, with the changes expected to pass the Senate with Greens’ support. Alongside this, the capital gains tax discount on investment properties was also proposed for reform.

The announcement triggered understandable concern. Investors who had been planning purchases paused to assess. Some simply waited to see whether the legislation would actually pass. That investor hesitation, rather than any fundamental shift in supply or demand, explains much of what we saw in the May data.

The key point, and one that too many commentators have overlooked: owner occupiers make up the majority of buyers in Australia, and they are completely unaffected by either reform. As ABS lending data confirms, home buyers outnumber investors by a significant margin. The reforms dented investor confidence temporarily; they did not change the underlying demand equation for the broader market.

How Values Moved in May: City by City

The latest PropTrack Home Price Index data covers the first full month after the budget was handed down. Here is what it found.

Sydney & Melbourne: Modest Dips, Not a Freefall

Sydney (median value $1.238 million) and Melbourne ($846,000) each recorded a 0.2% decline in May. For two of the most rate-sensitive and affordability-stretched cities in the country, a 0.2% move in a single month after a major policy announcement is, frankly, restrained. It is not the sharp correction that some commentators were predicting.

Canberra ($869,000) saw the steepest fall across the major cities, down 0.4% for the month.

Perth, Adelaide, Brisbane & Darwin: Growth Continues

Perth (median $1.024 million) cooled by just 0.1%. Adelaide (median $950,000) and Darwin ($622,000) led the country, both recording 0.3% growth. Brisbane (median $1.08 million) climbed 0.1%, and Hobart ($735,000) rose 0.2%.

For Perth buyers and investors, this is significant context. The local market has been one of the country's strongest performers, and the post-budget data shows that resilience is holding. If you have been watching the Perth market and waiting for a meaningful pullback, the evidence suggests that pullback is not arriving in a hurry.

Regional Markets Outpaced the Capitals

Regional Australia outperformed the big cities, with home values up 0.2% in May. Regional South Australia led the country with a 0.7% rise, followed by regional Tasmania at 0.5%. This is a pattern worth watching for buyers who are open to locations beyond the major capitals.

Why the Falls Are "Modest": Context Matters

PropTrack describes any price falls as "modest", and the context behind that word matters. Australian home values have grown 7.5% nationally over the past year and 37.7% over the past five years. A 0.2% correction in one month, off the back of gains of that magnitude, is the market catching its breath, not falling over.

The question is not whether values have dipped. Some have. The question is whether those dips represent the start of something larger. The evidence says no, and there are three structural reasons why.

Three Reasons a Major Downturn Is Unlikely

Cotality, one of Australia's leading property research groups, does not expect a "sharp" correction in the current environment. Here is why.

1. Owner Occupiers Drive the Market, Not Investors

Some investors paused their activity after budget night, as you would expect. It is rational to wait for certainty before committing to a major financial decision. But those investors represent a minority of the buyer pool. Owner occupiers, who are unaffected by the proposed negative gearing and capital gains tax reforms, continue to drive the majority of purchase activity in the Australian property market. Their motivations, buying a home to live in, are not policy-sensitive in the same way investor decisions are.

2. Australia's Population Keeps Growing

Australia's population grew by 1.5% last year, adding 412,500 people who all need somewhere to live. This is not a short-term spike. Population growth has been a consistent structural driver of housing demand, and it does not pause because a budget was handed down. Every additional resident is a future renter or buyer, and the demand that creates does not evaporate.

3. The Australian Housing Shortage Is Not Going Away

This is arguably the most important structural factor in the current market. The Australian housing shortage is severe, long-standing, and getting worse, not better.

The Housing Industry Association estimates that Australia needed to build more than 250,000 homes in 2025 just to keep pace with population-driven demand. Instead, construction commenced on just 196,000 dwellings. That 54,000-home annual shortfall is not a rounding error. The HIA believes demand will exceed supply until at least 2030.

In Australia, housing shortage of this magnitude creates a floor under values. When there are not enough homes to go around, prices do not collapse; they hold, or they cool gradually. The post-budget data bears this out.

What This Market Means for Buyers Right Now

Here is where the picture gets genuinely interesting for buyers.

Cotality notes that today's conditions are starting to favour buyers in some markets. Sellers who were holding firm during the peak growth period are showing more flexibility. Negotiation is back on the table in a way it was not 12 or 18 months ago.

For first home buyers, this softer environment is a window. The combination of easing price growth, recent RBA rate movement providing some relief on serviceability, and government support schemes makes this a more accessible entry point than the market presented during the peak. 

For investors, the picture is more nuanced. The proposed changes to negative gearing and capital gains tax are real considerations, and getting the structure of an investment purchase right has never been more important. That is exactly the kind of conversation worth having with a broker who understands the current lending environment.

For existing homeowners, the broader market stability is reassuring. If you are wondering whether now is the time to review your rate or explore refinancing, our interest rate tracker gives you a live view of where rates are sitting across lenders.

Key Takeaways

• The Australian property market recorded mixed results in May, with some capitals dipping and others growing. No city experienced a sharp correction.
• The negative gearing changes Australia investors feared drove temporary hesitation, not a structural market shift. Owner occupiers, the market's majority of buyers, are unaffected by the reforms.
• The Australian housing shortage remains severe, with an estimated 54,000-home annual shortfall that the HIA expects to persist until 2030. This structural deficit continues to support values.
• Australia's population grew by 1.5% last year, adding more than 400,000 people who need housing: a demand driver no budget can switch off.
• Softening conditions and greater seller flexibility in some markets represent a genuine opportunity for buyers who are finance-ready and clear on their goals.
• Perth's market held firm, dipping just 0.1%, consistent with its status as one of the country's most resilient and high-performing property markets.

Osinski Finance Can Help You Take the Next Step

Osinski Finance helps Perth buyers make confident property decisions, whether you're applying for a home loan, investing in a property, buying your first home, or refinancing to a more competitive loan. As a family-owned mortgage brokerage with access to nearly 100 Australian lenders, we work to find finance solutions that suit your goals, without charging fees for our home loan assistance.

Whether you're ready to enter the market or want to understand what the post-budget landscape means for your borrowing power, contact our team today to discuss your options.

Frequently  Asked Questions

Will property prices keep falling after the federal budget? 

Most research groups, including Cotality and PropTrack, do not expect significant ongoing price falls following the May 2026 budget. The modest dips recorded in some capitals reflect investor hesitation in the immediate post-announcement period rather than a structural market shift. Three enduring factors- population growth, the housing supply shortfall, and an owner-occupier-dominated buyer pool- continue to support values. A meaningful or prolonged downturn would require a fundamental change in one or more of these structural conditions, and none is on the immediate horizon.

How do the negative gearing changes affect existing property investors? 

The proposed changes to negative gearing primarily affect new purchases of established properties, not existing investment portfolios. If you already hold an investment property with a negative gearing arrangement in place, the proposed reforms are targeted at future acquisitions rather than retrospective holdings. That said, the legislation is still moving through Parliament and the final detail matters. Speaking with a broker and your accountant before making any new investment decision is strongly advisable. Our explainer on negative gearing covers the background in plain language.

Is it still worth buying an investment property in 2026? 

Yes, but the approach matters more now than it did 12 months ago. The proposed negative gearing and capital gains tax changes have shifted the calculus for some investment strategies, particularly those relying heavily on deductibility as the primary return driver. Investors who focus on strong rental yield, long-term capital growth, and sound loan structure are still finding viable opportunities, particularly in markets like Perth where supply constraints and population growth continue to support values. The key is understanding how the reforms affect your specific situation before you commit.

Why hasn't the housing shortage fixed itself yet? 

Building enough homes to meet Australia's demand is genuinely difficult and slow. Constraints include labour shortages in the construction sector, planning approval delays, rising material costs, and the simple reality that building at scale takes years, not months. The Housing Industry Association estimates that Australia started 196,000 new homes in 2025 against a demand requirement of more than 250,000. That gap cannot be closed quickly. The HIA projects that demand will continue to exceed supply until at least 2030, which means the structural floor under property values is likely to remain in place for some time.

Is Perth a good market to buy in right now? 

Perth has been one of the country's strongest-performing property markets over the past five years, and the May data shows it is holding up well post-budget, with just a 0.1% dip against the national backdrop. The city benefits from strong population growth, a resources-driven economy, and a housing supply situation that, like most of Australia, falls well short of demand. KPMG's latest residential property report projected Perth home prices to grow significantly in 2026, among the strongest forecasts of any capital city. Whether you are buying to live in or invest, Perth's fundamentals remain solid. Our team at Osinski Finance can help you assess what your borrowing power looks like in this market.

Does the budget affect first home buyers? 

The proposed negative gearing and capital gains tax reforms are targeted at investors in established properties and do not directly affect first home buyers. If anything, reduced investor competition in some price brackets creates more room for owner occupiers and first home buyers to compete. Government support schemes including the First Home Guarantee and the Help to Buy shared equity scheme remain in place. First home buyers who are finance-ready and clear on their budget are entering a market where sellers are more willing to negotiate than they have been in several years. See our first home buyer guide for a full overview of available support.

What is borrowing power like in the current market? 

Borrowing capacity is always specific to your income, expenses, existing debts, and the lender you approach. The general picture is that some relief on serviceability has come through with recent rate movements, which means some buyers who were previously at the edge of their borrowing limit now have a little more room. The best way to understand your specific position is to speak with a broker who can model your capacity across multiple lenders rather than a single institution. Osinski Finance works with nearly 100 lenders, which gives us a broad view of where your application is most likely to succeed and at what rate.

Should I wait for prices to fall further before buying? 

Waiting for a perfect entry point is one of the most common and costly mistakes buyers make. The structural conditions supporting property values in Australia, population growth, chronic housing undersupply, and a buyer pool that is overwhelmingly owner-occupiers have not changed. Markets that are currently softening may not fall significantly further, and for buyers who are finance-ready, a period of reduced competition and greater negotiating room is genuinely valuable. The risk of waiting is missing the window when conditions are more favourable to you. A broker can help you understand what your borrowing power looks like today, so you can make an informed decision rather than one based on timing the market.

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