The Federal Budget’s push to shift investor demand from established housing to new builds may have unintended consequences – not for prices, but for the number of homes changing hands.
That’s the warning from Ray White Group Chief Economist Nerida Conisbee, who argues that transaction volumes matter more to the broader economy than most people realise.
“A home sale is not just a transfer of ownership; it is the start of a chain of economic activity,” Ms Conisbee said.
Every property transaction triggers borrowing, renovations, moving costs, retail spending and professional services.
When fewer homes sell, that activity contracts – regardless of what’s happening to prices.
Ms Conisbee points to historical patterns showing transaction volumes are far more volatile than prices.
Over the past 25 years, Australian residential sales have swung between fewer than 380,000 and more than 580,000 annually.
The sharpest falls have come when the ability or willingness to move has been disrupted – through tighter credit, higher interest rates, weaker confidence or policy change.
The Budget, Ms Conisbee argues, adds another disruption; buyers may pause while they assess how the changes will affect prices, rents and investor demand.
Sellers may delay if they’re unsure how deep the future buyer pool will be.
Investors have even clearer reasons to hold.
Existing investors may avoid selling to preserve grandfathered treatment, while new-build investors may hold longer if resale narrows their future buyer pool.
“When policy change creates uncertainty and rewards waiting, fewer homes come to market – even if prices hold up,” Ms Conisbee said.
The Budget also does little to encourage downsizing, leaving another source of established housing stock constrained.
For state governments, fewer transactions mean direct budget pain.
Stamp duty is collected when properties change hands, not when values rise on paper.
In 2024–25, stamp duties on conveyances accounted for 20.9 per cent of total state and local government taxation revenue nationally.
Queensland and New South Wales were most exposed at 22.5 per cent and 22.4 per cent respectively. Victoria sat at 20.4 per cent.
The ACT, which has been shifting from stamp duty to land tax, is least exposed.
“A high-price market with fewer sales can still weaken the revenue outlook because there are fewer taxable events,” Ms Conisbee said.
This creates a difficult contradiction for state governments; they need housing affordability to improve, but their budgets benefit from high-value homes changing hands.
They want more efficient use of existing stock, but stamp duty makes moving more expensive.