Australia’s housing market is cooling – but a Sydney flat with a broken shower still costs nearly $1m

A Sydney couple, Lena and Linly, purchased their first home at a $950,000 reserve auction in Ashfield’s inner west for $922,000 on Saturday, benefiting from a $28,000 discount after no investor bids. The two-bedroom flat, described as having a broken shower and poorly functioning windows, reflects the strained affordability for first-time buyers despite recent market cooling. The federal government’s tax reforms, including changes to negative gearing and capital gains tax concessions for investors, have discouraged property speculation, pushing prices down slightly. Experts note that while reforms may ease investor activity, decades of rapid price growth mean first-home buyers still need financial support—such as parental help, the federal 5% deposit scheme, and New South Wales’ stamp duty discount—to enter the market. Auction clearance rates have dropped in recent weeks, with fewer homes selling in May and early June as buyers pull back. In Melbourne’s inner north, a two-bedroom unit in Brunswick East sold below its reserve after two first-home buyer couples competed, though the final price was not disclosed. Locals like Vinda, who bought her home with parental assistance, acknowledge the ongoing difficulty for peers without such support. Treasurer Jim Chalmers has avoided stating a goal of lower prices but has welcomed reduced auction activity, framing it as a positive for first-home buyers. Labor MPs, including Senator Michelle Ananda-Rajah, are campaigning on the cooldown, highlighting cases where renters have become homeowners under the new reforms. The government argues the changes are making the market more accessible, though critics say deeper structural issues remain unresolved.