It feels like confidence levels have hit an all-time low and if you think the market STILL feels VERY weird right now, you are certainly not alone. We are seeing a distinct freeze on the ground, with both buyer and vendor confidence levels the worst they’ve been in a very long time – and yes, that includes the 2020 COVID lockdown periods. Back then, people actually wanted to transact but physically couldn't; right now, the doors are open, but everyone is simply standing still.
The media is totally seeing what we're seeing
And reporting on it a LOT. A prominent piece from Domain this week highlighted exactly where the pain is being felt. While headlines like “The type of home that is getting 'hit harder' as house values fall” might sound dramatic, the underlying Cotality data confirms a very specific reality: house values have fallen across almost all price points in Melbourne, but the biggest losses are heavily concentrated in the top end of the market.
Specifically, the upper quartile – which is the classic "family home" market – has taken the brunt of the correction, dropping about 4% over the three months leading into winter.
We don’t place any real emphasis or reliance upon median data, because one or two results can skew things wildly (particularly in inner and middle ring suburbs – Hawthorn, for example, has houses that sell for $1.3m and for $40m, and everywhere in between… the $40m sales happen once every blue moon but that month’s and quarter’s figures get bumped accordingly).
But it’s definitely reflective of what everyone is seeing.
Why is the top end feeling the pinch?
As Cotality’s head of research pointed out in the article above, it comes down to a higher buy-in cost restricting demand. We’ve had a brutal succession of interest rate hikes this year (three in the three months to May, then thankfully a pause this week), combined with global uncertainty and the major tax policy bombs dropped in the Federal Budget.
When borrowing capacities shrink, the pool of buyers who can access that top echelon of properties dries up fast.
The lower tiers of the market are vastly outperforming the top end because government incentives (like the 5% deposit scheme) are keeping first-home buyers active, and squeezed middle-market buyers are being forced to compromise and bid on cheaper homes.
But let's be real: we are already seeing a lot of properties being passed in, listings being completely pulled off the market, and transactions shifting heavily into the quiet, off-market space.
And so, about "off-market" listings...
You’ve likely seen others banging the drum about "exclusive off-market listings" as if they are a secret vault of real estate gold. Short version: nah, and definitely not in this market.
Let’s look at that through a cold, clinical lens. In a frozen winter market where confidence has completely tanked, listings aren’t going off-market because they are ultra-exclusive luxury assets – they are hiding. Sellers are terrified of a public failure, terrified of a low turnout at open inspections, and trying to avoid spending thousands on staging and marketing campaigns that might result in a passed-in property and a long period afterwards languishing.
While an off-market deal can offer a brilliant, low-competition opportunity to buy a quality home, it can also be a trap where opportunistic vendors demand inflated "wish prices" because they don't have the public market keeping them honest.
Remember: a property’s value isn’t determined by how quiet the transaction is; it’s determined by the dirt and the data. We are active in the off-market space right now because that's where the volume has shifted, but we approach those unadvertised listings with the exact same ruthless due diligence and price cynicism that we bring to a public auction or EOI.
The ATO is changing the holiday home dream
If you or your clients have been using a family beach house as a convenient tax shelter, the game has officially changed. The AFR recently covered a massive policy reversal by the ATO regarding holiday home deductions.
Historically, if your holiday home was simply available for rent – even if it sat empty – you could claim deductions for mortgage interest, council rates, and maintenance. And of course everyone became very good at pretending (no judgement here).
No longer.
Under the strict new qualitative test, if you block out peak periods like Christmas, Easter, and school holidays for family use, the ATO will deem the property a "leisure asset" rather than an income-producing one. From July 1, those hefty holding deductions can be denied entirely.
Between the budget's negative gearing axing for new purchases and this holiday home crackdown, the government is making it abundantly clear: the era of "gaming the system" via property tax perks is drawing to a close.
Let’s talk strategy if you’re thinking of buying, or if you’re wondering whether it’s worth holding. There’s a link at the bottom of this update to book an initial chat with us.
The advice for June: Focus on what you can control
With the 2026–27 financial year acting as a literal line in the sand for these new tax rulings, now is the time for a clinical review of your portfolio. If you or your clients own a residential property that has transitioned from a primary residence to an investment (or vice versa), or if you're navigating capital gains liabilities amidst a correcting market, getting an accurate, independent and ATO-compliant Capital Gains Tax Valuation is no longer optional – it is your best line of defence against an aggressive ATO algorithm and/or a painful discussion with them down the track.
As professional property valuers and advocates, we look at the market through a cold, objective lens. Property values only matter on two days: the day you buy, and the day you sell. Everything else in between is just noise.
Partnering with trustees and executors
For legal practitioners managing deceased estates or asset liquidation, appointing an independent Vendor Advocate mitigates risk and ensures fiduciary duties are met.
We handle everything: assessing the property's true value, vetting and appointing the best-performing local selling agents, managing the marketing strategy, and overseeing the entire sale process to ensure a transparent, optimal result.
We act purely in your client’s best interests, and keep you updated while taking away the heavy lifting. Reach out to see how we can assist your firm with your next estate matter via advocates@axtonfinance.com.au.
That's it for June
It is a tough, frozen winter market out there, but as always, fortune favours the prepared. The best time to have bought a new home was ten years ago, and the second-best time is when you’re ready.
If you’re ready now or getting ready, please get in touch by emailing advocates@axtonfinance.com.au.
