Buying or Selling Property in Victoria in 2026: A Shifting Market and New Rules to Watch

The conditions for buying and selling property in Victoria have shifted on two fronts at once, and both change the risks involved in a transaction.

The first is the market. After three interest rate cuts last year, the Reserve Bank has lifted the cash rate three times in 2026, taking it to 4.35 per cent in May as inflation proved stubborn. Borrowing capacity has tightened, and Melbourne has moved into more cautious territory: more properties for sale, longer campaigns, auction clearance rates sitting in the mid-50s, and buyers with more room to negotiate than they have had for some time. It is not a uniform picture, and premium properties have softened more than entry-level homes, but the balance has tilted.

The second is the rules. In the May federal budget the Government announced the most significant change to property investment tax in decades, reshaping negative gearing and capital gains tax from 1 July 2027. Closer to home, Victoria held its stamp duty settings in the state budget, but the rules governing who bears land tax in a sale have already changed, and they catch out vendors and purchasers who are not paying attention.

Here is what that means if you are selling, what it means if you are buying, and how it bears on the choice between a lawyer and a conveyancer.

What Has Actually Changed?

Start with the market. The cash rate sits at 4.35 per cent following three increases in 2026, which have effectively unwound last year's cuts. Higher rates reduce how much buyers can borrow and lift repayments, and the Melbourne market has cooled accordingly, with rising stock and clearance rates below the level that signals a balanced market.

The rules have moved as well on two levels. Federally, the Government announced on budget night, 12 May 2026, that from 1 July 2027 negative gearing will be limited to new builds, and the 50 per cent capital gains tax discount will be replaced with an inflation-based discount and a minimum 30 per cent tax on gains. These measures are not yet law. For anyone transacting now, the timing detail matters properties held at 7:30pm on budget night, including those under contract at that point, are grandfathered and keep the current treatment, while established residential property bought after that moment will lose negative gearing from 1 July 2027.

At the state level, Victoria left land transfer duty rates and the first home buyer concessions unchanged in its May budget. The change that bites is older and quieter. Since 1 January 2024, a vendor can no longer pass land tax to a purchaser in a contract of sale below a threshold, set at $10.7 million for 2026, which covers essentially every ordinary residential sale. The vendor now carries the whole calendar year's land tax, and a clause attempting to shift it is void and an offence to include.

If You Are Selling

Two things deserve particular attention in this market. The first is price. With more stock available and buyers in less of a hurry, an optimistic reserve risks a property sitting unsold, which itself erodes your position with the buyers who remain. Pricing informed by recent comparable sales, rather than by what the market was doing two years ago, matters more when conditions are soft.

The second is land tax. Because you can no longer adjust land tax to the purchaser on an ordinary residential sale, you carry the full calendar year's liability regardless of when settlement occurs. A vendor who lists in January and settles mid-year still pays the whole year. That needs to be built into your pricing and your expected net proceeds, and the contract must not contain a clause that tries to recover it, since doing so carries a penalty.

Beyond those, the usual discipline applies with sharper consequences. The Section 32 vendor statement must be accurate and complete, because errors or omissions can hand a purchaser grounds to walk away, which is the last thing a vendor wants in a slower market. And if you are selling an investment property, the capital gains tax changes from 1 July 2027 may affect what you ultimately net, depending on when your gains accrue, which is worth understanding before you commit to a timeline.

If You Are Buying

Finance and valuation are the live risks. In a higher rate environment, borrowing capacity is lower and lenders are examining applications more closely, so a pre-approval is not a guarantee. If the bank values the property below your contract price, you may have to fund the difference in cash. The finance condition and any other terms in your contract need to reflect that possibility rather than assume it away.

For investors, the date of purchase now carries tax consequences. Established residential property bought after 7:30pm on 12 May 2026 stands to lose access to negative gearing against salary from 1 July 2027, with losses instead quarantined against property income, while new builds are treated differently. That changes the after-tax cost of holding the property, and it is something to model with your accountant before signing rather than after. There is also a narrower trap on land tax: where a contract sits above the threshold and an adjustment is still permitted, a State Revenue Office ruling effective 1 February 2026 treats that adjusted land tax as part of the price for duty purposes, which can add stamp duty on top.

None of this displaces the ordinary due diligence, it raises the stakes on it. The contract and Section 32, building and pest inspections, and your cooling-off rights all matter more when the market is uncertain, and you want the ability to step back if something is wrong.

Lawyer or Conveyancer: Which Suits This Kind of Transaction?

For a clean, straightforward purchase of an established home, a licensed conveyancer is often perfectly adequate. They handle the transfer process competently, and for many buyers and sellers that is all a transaction requires.

The difference between the two is one of scope. A conveyancer's work is confined to the conveyancing transaction itself: the searches, the adjustments, the booking and completion of settlement. A solicitor can do that work too, and can also advise on the questions that sit around it. In the current climate those questions are not hypothetical. How land tax falls under a particular contract, whether an adjustment clause exposes a buyer to additional duty, how the timing of a purchase interacts with the new investment tax rules, and what a party's position is if finance or valuation falls through, are legal questions rather than administrative ones.

The practical difference tends to surface when something goes wrong. If a dispute arises, over a failed settlement, a finance condition or a contested clause, a conveyancer cannot act and must refer the matter to a lawyer. A solicitor who has been across the file from the outset can act on it without the client having to start again with someone unfamiliar with the matter. For a simple transaction that distinction may never come into play. In a market where more deals are running into finance and valuation trouble, and where the rules are unsettled, it comes into play more often.

When deciding who should act for you, a few things are worth looking for regardless of which firm you choose: a clear fixed fee quoted before you engage them, so the cost is known at the outset; genuine involvement from a senior practitioner rather than a file passed down a chain; and the ability to advise on the whole picture, including how the contract interacts with the changes described above.

Where This Leaves Buyers and Sellers?

A shifting market and a changing set of rules have not made property transactions in Victoria harder so much as less forgiving. The cost of a misjudged price, an overlooked clause or a finance condition that does not hold has risen. Having the contract and the Section 32 read properly before you are bound, by someone able to advise on more than the paperwork, remains a modest step that heads off expensive problems.

Crownmark Lawyers acts for buyers and sellers across Victoria in property and conveyancing matters, on a fixed fee with the principal handling each file. If you have a contract in front of you, or are preparing to list, you are welcome to get in touch.

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This article is general information about Victorian property transactions and is current as at June 2026. It is not legal, tax or financial advice and does not take account of your particular circumstances. The negative gearing and capital gains tax changes described were announced in the 2026-27 federal budget and are not yet law. For advice on your situation, please contact us or another qualified Victorian practitioner, and your accountant on the tax aspects.