Broker Notes – 04 July 2026

Home Values Post Their Steepest Monthly Fall Since 2022

Cotality’s Home Value Index dropped 0.4% nationally in June 2026, the largest monthly fall since December 2022, according to data published on 1 July. Capital city values fell 1.3% over the June quarter, with Sydney leading the decline at 1.2% down in June and 3.2% down over the quarter. Melbourne was not far behind, dropping 1.0% in June and 2.6% over the quarter.

The mid-sized capitals that carried growth earlier this year are slowing sharply. Brisbane rose just 0.3% in June and Perth 0.7%, both a fraction of the 1.9% and 2.5% average monthly pace those cities recorded through the March quarter. Adelaide was flat. Cotality research director Tim Lawless said the market had changed rapidly enough that recent months were being revised lower, with the national index now showing values peaked in March 2026.

Auction activity tells the same story. The combined capital city clearance rate has stayed below 50% since late May and dropped into the low 40s from late June, with Sydney’s preliminary rate easing to 47.3% and Brisbane at just 39.3%, the weakest of any capital. Capital city home sales over the three months to June are running 16.2% below the same period last year, while advertised stock is up almost 11% year on year. “Such low clearance rates indicate a mismatch between buyer and seller pricing expectations,” Lawless said. “Buyers now have more stock to choose from and less urgency in their decision-making.”

Lawless pointed to a combination of factors behind the slowdown: the 75 basis points added to the cash rate across February, March and May, alongside cost-of-living pressure, weak sentiment, and the property tax changes announced in May’s federal budget. Borrowers considering a purchase or sale in this environment face a genuinely mixed picture. Softer prices in Sydney and Melbourne can look like an opening, but slower clearance rates and rising stock levels also mean less urgency and more room to negotiate on the buy side, while sellers are facing longer selling times than they have in years.

Negative Gearing and Capital Gains Tax Reforms Officially Pass Parliament

The Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 passed both houses of Parliament on Thursday 25 June, clearing its final Senate and House votes after a three-week Senate inquiry and months of debate. The bill delivers the biggest change to property tax settings in a generation, and it is now heading to royal assent.

Negative gearing for established homes is removed from 1 July 2026, but only for properties acquired after 7:30pm AEST on 12 May 2026. Investors who bought before that cut-off keep their existing negative gearing arrangements under grandfathering rules. Separately, the 50% capital gains tax discount for established dwellings is being replaced with an inflation-adjusted indexation method from 1 July 2027, alongside a new 30% minimum tax on net capital gains. A start-up-specific Innovative Business CGT Concession will preserve the existing 50% discount for early-stage ventures with low cost bases.

One detail buyers and their advisers are still working through: grandfathering exemptions on jointly owned investment properties can be voided by death or divorce, a consequence independent Senator David Pocock has publicly flagged as an unintended one. Because the tax and structuring implications vary significantly by ownership arrangement and purchase date, this is a case where speaking with an accountant or solicitor about a specific property is far more useful than a general rule of thumb.

MFAA executive of policy Naveen Ahluwalia said certainty was now the priority for brokers and their clients as the reforms move toward implementation, after the association spent months making submissions on the bill’s treatment of capital gains tax, trust taxation and SMSF borrowing.

SMSF Property Lending Thrown Into Chaos as AMP Reverses Course in 24 Hours

Buried inside the same tax bill is a ban on new limited recourse borrowing arrangements, or LRBAs, the mechanism self-managed super funds use to borrow for residential property. The Greens secured the ban in exchange for supporting the government’s wider tax package in the Senate. New LRBA-funded residential loans will be blocked 45 days after the bill receives royal assent, which typically takes 7 to 10 working days, putting the effective cut-off in mid-August 2026. Existing arrangements and loans already in train are grandfathered.

The scramble that followed shows how disruptive the short transition window has been. On Thursday 25 June, AMP Bank told brokers it would immediately stop accepting new SMSF SuperEdge purchase applications and pre-approvals, with any approved loans required to settle by 31 July. Less than 24 hours later, following what the bank described as broker feedback, AMP reversed the decision and reopened all SMSF application types, including new purchases, pre-approvals and refinances, though applications still need an exchanged contract ahead of the legislated cut-off.

Eight non-bank lenders, including Pepper Money, Liberty Financial, Resimac and Firstmac, issued a joint statement condemning the ban on the same day AMP first pulled back. They cited Australian Taxation Office figures showing SMSFs hold around $75 billion in LRBA-backed assets funded by $28.9 billion in debt, gearing of roughly 39%, with LRBA-related residential lending representing under 0.5% of new lending flows each year. Pepper Money CEO Mario Rehayem said the policy “responds to yesterday’s market, not today’s,” and the group proposed an alternative that would allow each SMSF to borrow for a single residential property rather than banning the structure outright.

For trustees with a deal already in progress, timing has become critical. Some non-bank lenders, including Granite, are actively continuing to write SMSF loans ahead of the cut-off, extending rate specials into late August and September to capture pipeline demand before the window closes. Anyone part-way through an SMSF purchase may find it worthwhile confirming settlement timeframes with their lender and broker given how compressed the remaining window now is.

Mortgage Fraud Probe Grows to an Estimated $4 Billion

National Australia Bank called this week for a National Economic Crime Strategy as the scale of Australia’s mortgage fraud problem continues to widen. Over the weekend of 27 to 28 June, The Australian Financial Review reported that the ongoing investigation into fraudulent home loans now covers an estimated $4 billion, up from the roughly $1 billion Commonwealth Bank first self-reported to police and ASIC back in February.

NAB said in a statement it has referred “multiple parties to the appropriate authorities” and has “exited or suspended a number of parties from the bank,” describing the issue as “complex, organised crime that spans industries and borders.” The bank said individual institutions cannot solve the problem alone and is pushing for a coordinated national strategy covering banks, regulators, law enforcement and government, including stronger intelligence sharing and more consistent regulatory settings.

Much of the fraud involves falsified documentation, including AI-generated payslips and forged employment records, often introduced through referrers rather than directly by brokers. AUSTRAC is working with banks and regulators to map the full extent of the problem, and several arrests have already been made, including former bankers, brokers, lawyers and accountants. Industry bodies including the Australian Banking Association and the MFAA have also been pushing to expand the Consumer Data Right to include ATO income data, which the federal budget backed with $62 million in funding over two years from 2026-27 to help lenders verify income and company records directly against government sources rather than relying on documents supplied by applicants.

The MFAA and FBAA moved quickly this week to separate the fraud allegations from the broader broking profession. MFAA executive of policy Naveen Ahluwalia said the reports “should not be seen as reflecting the mortgage and finance broking profession as a whole,” noting that more than 81% of new residential home loans are now settled through a broker. FBAA CEO Leo Gagic said brokers should lean on their professional association membership and insurance cover to reassure clients, while stressing that “the percentage of people who do the wrong thing is tiny” relative to the size of the industry.