Has post-Budget recovery begun?

In a year that seems hell-bent on turning this market around, no change has been as effective as the Budget. So much so that it is an event now worthy of discussion in the context of a “pre” and a "post".

In our case, pre-Budget means the three years from May 2023 to May 2026. Once known as the post-Covid "new normal", this period saw extreme growth powered by mass interstate migration, supply shortages, interest rate cuts and first home buyer-targeted government incentives.

Now, what has happened post-Budget? 

House prices have fallen across the country, from regional areas to major cities, regardless of price level or prior growth. Although investors were the main target of the changes to negative gear and capital gains tax, buyers of all types have pulled back, which means recovery (if it is not too early to mention) depends on how sellers respond.

For simplicity, there are two kinds of markets: those that grew strongly before the Budget, and those that didn't, with the dividing line hovering around 30% growth between May 2023 to May 2026.

In high-growth markets such as Perth and Brisbane, listings continue to rise as sellers take their profits. In low-growth markets such as Sydney, sellers are more patient. With no profits to lock in, they are willing to wait for buyers to recover from the shock, and as a result, new listings among markets that saw less than 20-30% pre-Budget growth have decreased.

And slowly, the tide appears to be turning in these markets. Month-on-month house price growth in Sydney rose for the first time since the Budget. Of the 79 significant urban areas (SUAs), only five other areas saw an increase in September: Byron Bay, Bowral-Mittagong, Canberra, Alice Springs and Ulladulla. Common across all is that they were at the tail end of the pre-Budget boom.

Meanwhile, prices in Perth and Brisbane continue to fall by 1.5% to 2.4% with listings still rising even as buyers retreat.