Auction sales in the ACT have reached a seven-year low as uncertainty continues to discourage buyers.
Alex Wang from Archer Canberra said there had been significantly fewer buyers attending auctions in the territory after multiple rate rises, growing uncertainty in the Middle East and last month's federal budget.
"A lot of people are choosing to wait and see what's happened, what's going to happen," Mr Wang said.
Of the 75 houses that went to auction last week, only 39.1 per cent sold, according to Cotality's latest preliminary auction clearance data.
That is the lowest clearance rate since June 2019.
House prices in the ACT fell for the first time in one year, falling 0.2 per cent in May. Apartments, which have been underperforming for months, also dropped 0.2 per cent.
Mr Wang said investors in particular had become hesitant to buy existing houses after Treasurer Jim Chalmers announced negative gearing would be restricted to new builds.
"I don't think any investors are going to buy residential properties at the current stage," Mr Wang said.
"Investors are very sensitive. They're looking into all the policies."
The budget changes were intended to "level the playing field" for first home buyers and support investment in the construction of new homes.
"At the end of the day, the price will be decided by the supply and the demand," Mr Wang said.
"In Canberra, we don't have enough houses."
Cotality's head of research, Gerard Burg said Canberra was turning into a "bit more" of a buyers' market as fewer people were able to commit to buying.
"With the obvious caveat of the challenges that buyers have right now in terms of the higher costs associated with mortgages following the rate rises and also the reduced borrowing capacity that they have," Mr Burg said.
"There's greater supply overall and buyers have a bit more time to consider purchases, but those conditions are partly due to the challenges in actually making the purchase."
Mr Burg said it was too early to tell if last month's budget changes to the capital gains tax discount and negative gearing scheme were responsible for the downturn.
However, he said the three consecutive rate rises had already had an effect on buyer sentiment. After the most recent rate rise in May, The Canberra Times calculated the average home owner in the ACT would be paying an additional $131 on their monthly mortgage payments.
The ACT's clearance rate could be volatile due to the small number of houses on the market compared to Sydney or Melbourne, Mr Burg said .
However, any clearance rate under 40 per cent was considered to be weak.
"It might be just simply some of these sellers have tried to go into the market with a little bit of an unrealistic expectation of where the market is right now, given the shifts in demand," Mr Burg said.
Mr Burg said buyers who were looking at the value of properties as little as six months ago could have an unrealistic view of what was happening in the market today.
"There are fewer buyers. They have to appreciate that," he said.
