Chalmers Blames Reserve Bank, Not Budget, as Auction Clearance Rates Hit Six-Year Low

On the final weekend of autumn, the combined auction clearance rate across Australia's capital cities fell to 54.5 per cent. According to preliminary Cotality data, that is the lowest figure since the last week of April 2020, when the pandemic was just beginning. In Sydney the number was lower still, at 51.9 per cent for the last weekend of May, also a six-year low.

On Monday in Brisbane, Treasurer Jim Chalmers was asked whether the Budget was to blame. He pointed instead to the Reserve Bank. The independent bank raised rates in February, March and May, taking the cash rate to a 15-month high of 4.35 per cent. Chalmers said several factors were at work: the bank's recent decisions, broader economic conditions and the Budget's policy changes. He added that some clearance rates were already falling before the Budget. "The Budget is not the only factor," he told reporters, and he said that making it easier for first-home buyers to compete at auction was a good thing.

Cotality's head of research, Tim Lawless, told The Nightly that the Budget may carry more weight than the Treasurer allows. The Budget restricts negative gearing to brand new properties from July 2027. It also replaces the 50 per cent capital gains tax discount with a minimum 30 per cent tax on inflation-adjusted gains. Lawless said this could discourage landlords and cut the supply of rental properties for the next two to five years. He called it potentially "the policy change that sees investors becoming much less active across housing as an investment class." Capital gains, he said, have typically been the main game for housing investors, so reducing the chance to maximise them is likely to weaken investor demand.

Investors matter in this market. In Sydney, four in 10 buyers during the March quarter were investors, and that was before the Budget.

The same day brought other political news. Chalmers backed a "substantial" rise in the minimum wage. The Fair Work Commission is due to announce its decision at 10am on Tuesday. The rate is currently $24.95 an hour, or $948 a week. Chalmers said the government, through a submission from him and Employment Minister Amanda Rishworth, had urged the Commission to deliver a substantial real wage increase for millions of workers. He described decent pay and conditions as an important way of helping people with the cost of living.

On the political side, One Nation has moved ahead of Labor in polling. Pauline Hanson wrote on X that she had always said polls were only polls, but that it was clear Australia was asking for a different direction. Liberal MP Garth Hamilton publicly asked her to work with the Coalition against Labor's Budget. His request came as The Australian reported she had missed 88 per cent of Senate estimates hearing days over the past decade. Hamilton said working together starts with showing up. Hanson, who turned 72 days earlier, told 2GB radio she would retire only if her health declined and that she takes no medication. She also said she had told her staff to tap her on the shoulder if she became like Joe Biden.

Elsewhere, the US military said it struck Iranian radar and command and control sites at Goruk and Qeshm Island over Saturday and Sunday. US Central Command called the action self-defense after Iran shot down a US MQ-1 drone over international waters. It said no US personnel were injured.

Tuesday's wage decision comes first. After that, the question is whether the Budget's tax changes keep investors out of the housing market, and whether clearance rates stay near their lowest level in six years.