Treasurer Jim Chalmers has pushed back against criticism over cooling house prices, defending government forecasts that Sydney and Melbourne values could drop by more than $100,000. Declining auction clearance rates in those cities have fueled public pressure on the government.
Chalmers framed the softening as predating recent budget announcements, noting softer conditions in Sydney and Melbourne emerged earlier. He argued against replacing what he called a "big distortion" introduced by the Howard-Costello government in 1999 with another distortion.
The government's revised capital gains tax discount aims to reflect real gains neutrally, avoiding what Chalmers called a repeat of past policy mistakes. Auction clearance rates rose in Brisbane and Adelaide but weakened in the two largest markets.
Critics, however, say the forecasts themselves could accelerate a downturn by spooking buyers and sellers. The debate underscores broader anxiety over housing affordability, particularly for younger Australians struggling to enter the market.
Opposition figures have seized on the data to question the government's broader economic management, though Chalmers insists the policy changes are fair and necessary.