Albanese Faces Political Backlash as House Prices Slide Across Australia

Australian house prices have fallen in Brisbane, Adelaide, Perth, Sydney and Melbourne in the first months of 2026, exposing political risk for Prime Minister Anthony Albanese’s government. His former economics adviser Alex Sanchez has publicly attacked Labor’s tax changes and economic policies. The National Australia Bank warns prices could plunge 10 per cent in Sydney and Melbourne, threatening first-home buyers who entered the market with minimal deposits.

Former adviser tears into Labor’s economic record

Alex Sanchez, who previously advised the Albanese government on economics, has condemned Labor’s tax policies and spending habits. Speaking at the Centre for Independent Studies on August 5, Sanchez said the government has abandoned pro-growth strategies used by the Hawke-Keating governments. His criticism marks a rare public break from within Labor’s own economic circle, signalling deep concerns about the government’s direction.

House prices fall across major cities

Property values have recorded their biggest fall since Albanese took office, with declines in Brisbane, Adelaide, Perth, Sydney and Melbourne during the first months of 2026. The National Australia Bank has warned that prices could drop 10 per cent in Sydney and Melbourne. Around 34,000 first-home buyers who entered the market with minimal five per cent deposits are already at risk of falling into negative equity within months of purchasing.

Tax changes add pressure on investors

The government’s negative gearing changes, introduced in the May 12 budget, have created additional strain. Under the new rules, properties purchased or changed ownership after budget night lost the ability to offset losses against personal income. Senator David Pocock is pushing to accelerate amendments after a domestic violence victim reported being unable to refinance her investment property because banks rejected her application due to the negative gearing restrictions. The draft amendments are open for consultation until August 21.

Risk of negative equity traps families

When buyers enter the market with only a five per cent deposit on a $900,000 home, even modest price falls wipe out their equity. Negative equity traps families, limiting their ability to refinance, relocate for work or sell without crystallising substantial losses. The risk is magnified because recent buyers have endured more than a dozen Reserve Bank cash rate increases since Albanese took office, leaving many households paying hundreds or thousands of dollars more each month than when they first borrowed.

Final Thoughts

The combination of falling prices, aggressive rate rises, and controversial tax changes has created a political storm for Albanese. With his own former adviser publicly attacking economic policy and first-home buyers facing negative equity, the government’s housing strategy faces serious credibility questions.

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