Australian budget tax changes to halve home price impact, bank says

Australia's largest lender predicts that contentious tax changes in the federal budget will have a more significant impact on home prices than the government has forecast. Commonwealth Bank economists Trent Saunders and Ashwin Clarke estimate that winding back negative gearing and the capital gains tax discount for established properties will lead to a 5% drop in home prices, compared to the Treasury's forecast of a 2% drag.

The property market was already slowing due to global uncertainty and rising interest rates. However, the economists noted that the swift response to the tax changes suggests a sharper near-term impact than anticipated. They now forecast national dwelling prices to be flat over 2026, a downward revision from their previous budget forecast of a 3% decrease and a March forecast of a 5% decrease.

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We now expect national dwelling prices to be flat over 2026, down from a forecast of three per cent at budget and five per cent in March.

Despite data showing a slowdown in Australia's economic growth rate for the March quarter, analysts still expect the Reserve Bank to increase interest rates one more time in August. Meanwhile, in a separate development, Australia's youngest convicted murderer, identified as SLD, has been sent back to prison. A judge found the now 39-year-old, who has spent most of his life incarcerated since being convicted at age 13 for murder, showed complete disregard for his release conditions.

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The reality is that … he cannot last long in the community without breaching the terms of his extended supervision order.