Minister Says Housing Market in ‘Correction’ Amid Weak Activity Post-Tax Overhaul

Auction clearance rates have fallen to pandemic-era lows across the country in recent weeks.

Minister for Housing, Homelessness and Cities Clare O’Neil speaks during Question Time in Canberra, Australia, on Nov. 5, 2025. Hilary Wardhaugh/Getty Images

Housing Minister Clare O’Neil has said Australia’s housing market is in a correction phase following the post-COVID-19 surge in house prices, amid low levels of buyer activity.

“I think the housing market is cyclical in Australia. A very uncontroversial comment. We see periods of very significant house price growth, and then we see the market make a correction, and that’s what we’re seeing at the moment,” she told ABC Radio.

“We’ve just been through what has been extremely high house price growth in the period from COVID, basically before COVID, to today.

“House prices have gone up just in that time by more than 50 percent and we are seeing a correction on that.”

O'Neil also stated that some results showing first home buyers being more successful at house auctions were a direct result of Labor’s policies.

The minister’s comments come as auction clearance rates have fallen to pandemic-era lows across the country in recent weeks.

According to recent data from the property marketplace Domain, Sydney’s auction clearance rate stood at 47 percent, down from 69 percent over the same period last year.

Meanwhile, Melbourne’s clearance rate was slightly higher, reaching 52 percent over the weekend.

Domain chief residential economist Nicola Powell said the results showed a misalignment between buyers and sellers, and highlighted the current fragility of the market.

When pressed on whether Labor’s recent tax reforms had also contributed to this, O'Neil said there was “a lot going on in the housing market.”

Following the 2026–27 federal budget, the Labor government has announced major changes to capital gains tax, negative gearing and discretionary trusts, raising significant concerns about their impact on the housing market.

The minister noted that government modelling suggests recent tax changes will have only a modest impact on the housing market, slowing price growth by around 2 per cent. She also said broader factors such as interest rates and housing supply were the main drivers of prices.

House Prices Rising

Earlier this month, Real Estate Institute of Australia (REIA) data showed property prices had increased across most Australian capital cities in the March quarter 2026, while rental vacancy rates had also fallen to new lows.

“The national median house price increased 2.2 percent over the quarter to $1,146,864, representing the highest annual increase of 12.0 percent since March 2022,” REIA President Jacob Caine said.

“Darwin, Perth and Brisbane led quarterly gains, while Sydney, despite a modest quarterly decline of 0.6 percent, remains the most expensive city in the country at a median house price of $1,550,000 (US$1,070,000), which is 35.2 percent above the national median.”

The REIA said addressing Australia’s housing challenge requires more homes, not government initiatives to deter investors.

“Strong dwelling completions and stable tax settings that encourage investment are the foundations of a rental market that works for tenants,” Caine said.