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

Crownmark Lawyers | Property Law & Conveyancing Division

If you are buying or selling property in Victoria right now, the rules have changed and the market has shifted, often in ways that are not obvious until something goes wrong. This article sets out what has actually changed, what it means for your transaction, and when the choice of who acts for you starts to matter.

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 around 59 per cent (Cotality/CoreLogic, week ending 31 May 2026), 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.

Selling in 2026: Price, Land Tax, and the Section 32

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. For a property with a $10,000 land tax bill, a vendor settling in July has effectively absorbed six months of that liability with no ability to recover it from the purchaser. That figure needs to be in your numbers before you set your reserve.

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. Worth understanding before you commit to a sale timeline.

Buying in 2026: Finance Risk and the New Tax Trap

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 7.30 pm 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 that, once finalised, applies to contracts entered from 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. Before you sign, have your contract reviewed, your finance condition drafted carefully, and if you are an investor, the after-tax numbers modelled. These are not optional steps in this market.

Lawyer or Conveyancer? What the Difference Means Right Now

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, and 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. These 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, that distinction 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 handled by a junior without direct oversight; and the ability to advise on the whole picture, including how the contract interacts with the changes described above.

What This Means for Your Transaction

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.

Harjit Mahindroo

 Managing Partner

| CONTACT US

Phone: 1800 884 751

From Overseas: +61 3 8595 4338

Email: info@crownmarklaw.com.au

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; they are not yet law. For advice on your situation, please contact us or another qualified Victorian practitioner, and your accountant on the tax aspects.