‘Taxing us to death’: John McGrath slams Albanese government over property changes

OPINION

Well, we can’t say the past 12 months have been dull. Nor has it been business as usual.

In fact, we’ve seen more movement since last year’s McGrath Report than in any period since we started our reporting some 20 years ago.

So let’s unpack some of the key issues I believe matter most right now.

The market hit a wall

There’s no such thing as “one market” in Australian residential property. But it’s fair to say most markets favoured sellers until February/March 2026. Since then, most have swung sharply in favour of buyers.

This is my eighth market correction since I entered the industry more than 40 years ago. And it feels like the fastest fall in values I can remember. The data agrees: Australia’s decline is now on-track to outpace the 2022–23 correction.

MORE:McGrath’s top 10 NSW suburbs to grow in 2027

The data companies are reporting single-digit falls. Sydney is down 8.6 per cent from its February peak, and 97 per cent of capital city suburbs fell over the three months to end of September 2026.

But I can assure you that on the street, most big metropolitan markets are down 10–15 per cent in the past six months. Some are down 20 per cent. A recent $20.25 million mortgagee sale in beachside Tamarama in Sydney came in 30 per cent below its 2022 purchase price.

Strip out the lagging data and the sensational outliers (properties overpaid for by exuberant buyers at the peak), and the big cities are down 10–15 per cent. The regional markets have plateaued, but they’re likely headed for a 7–10 per cent correction over the next 12 months.

The good news for anyone looking for the end of this free fall? History suggests the big cities are close to the bottom.

Australia’s last five corrections lasted an average of 12.2 months; the average price decline was 6 per cent; and seven of the last corrections fell less than 8 per cent.

Taken at face value, the worst should be behind us. But that depends on three things: an end to interest rate rises in the near future, unemployment not blowing out and a resolution of the war in the Middle East.

MORE:McGrath’s 10 Victorian hotspots set to surge

The good news for those who buy now, while others hesitate? Historically, markets have gained an average of 32 per cent over the three years following corrections like this one.

As the great Warren Buffett said: “Be fearful when others are greedy, and greedy when others are fearful.”

The great budget backflip

What an uninspiring, one-dimensional lot our politicians have proven to be. How do they get away with breaking a clear election promise months later with a simple “our position has changed”? This Government seems to have only one tool in its toolbox: tax. Specifically, tax the golden goose called property as much as you can.

Has anyone told them that on a newly built $1 million apartment in Sydney today, around $380,000 (close to 40 per cent) goes to local, state and federal taxes, charges and regulatory costs? That’s according to a 2025 Centre for International Economics report for the Housing Industry Association (HIA).

It covers GST, stamp duty, developer levies and infrastructure contributions, plus regulatory and compliance costs and the cost of approval delays.

The HIA also points out that housing is the second most taxed sector in Australia, behind only alcohol and tobacco. Put simply: on a new apartment, close to 40 cents in every dollar goes to Government. For a new house, it’s nearly half. So when Canberra looks for someone to blame for the cost of new housing, it should start with a mirror.

The plan outlined in the federal budget to end negative gearing on established homes bought from Budget 2026-27 night, and to wind back the capital gains tax discount, won’t fix housing affordability. If anything, it will block the greatest path most Australians have to financial freedom: residential property. How else do they think most Australians have built, or will ever build, wealth for themselves and future generations?

MORE:McGrath’s 10 Qld suburbs to grow in 2027

The solution, if they care to look with eyes wide open, is to increase supply and cut the cost of development:

-Release suitable land for sensible medium-density living

-Tackle the spiralling cost of labour and materials

-Create an express lane so complying developments are approved in weeks, not years.

Over-taxing plus absurdly slow approvals are killing property. Have they ever thought about how to inspire this country? How to incentivise world-class initiatives and attract more of the right type of investment and people? Or is the tax mallet the only tool in their dreary toolbox?

PS: I voted for this Government, so this is not politically motivated. I’m just sick and tired of the lack of creativity and innovation that’s slowly killing our economy. Come on, Albo. Do something to stimulate this great country rather than taxing us all to death!

Beware the Bathla Domino effect

If you live in Sydney or work in the building game, you’ll know about the recent collapse of Bathla Group, one of Sydney’s largest residential developers. It went into voluntary administration in August 2026 with around $3.4 billion in debt and creditor claims across 219 projects.

Those projects carry a preliminary value of around $4.9 billion. But many will now need to be sold quickly, in a soft market, to developers who can take them through to completion.

I believe that number may need to be discounted by 30–50 per cent.

Now imagine the domino effect:

Lenders. At the top of the tree, lenders put up more than $3 billion to get these developments off the ground.

Trades and suppliers. They’ve worked hard to get these projects built, and many are now owed money. Construction on many sites has been halted and staff stood down.

Buyers. Many put down a 10 per cent deposit to secure their Australian dream, only to find its future in jeopardy. The administrators have confirmed that not all deposits were held in trust

Each of these groups has money at serious risk. And the flow-on effect for other developers and landowners could be severe. Nobody has swept this collapse under the carpet. But I suspect the impact will be far greater, and reach far wider, than any of us have yet contemplated.

John McGrath is CEO and founder of McGrath Estate Agents

The annual McGrath Report 2027 is out now.