Property investors are pulling out of weekend auction plans after this week’s budget curbed tax breaks, while first home buyers are moving in to ask about homes for sale. With 1,874 auctions scheduled around the country this weekend, agents say the market is already showing a clear split between nervous investors and buyers looking for a first home.

Elise Nemer said one investor who had been preparing to bid on a property at auction on Saturday “got cold feet” after the budget. She said the mix of buyers has shifted quickly. “What we are getting now is first home buyers or upsizers, and less investors,” Nemer said. “From buyers’ agents’ perspectives, investors are getting cold feet until they get used to [the budget],” and “Some are looking for brand new builds … but the next two weeks will be tough in trying to get around what’s happening with the budget.”

James Annett said the change has already affected deals in motion. “I had a situation where a buyer made an offer on a property prior to the budget, but since the budget they can no longer negatively gear it so they pulled out,” he said. “There is an argument to say it’s grandfathered as they bought it prior to the budget, but as the contract was signed but not unconditional, their solicitor advised them to pull out.”

The budget landed on top of an auction market that was already struggling. The source says three interest rate rises this year had left selling conditions sluggish, and several vendors are now planning to sell prior to auction or delay their campaigns. In Melbourne and Sydney, agents say investors are reassessing what they buy and are likely to be more selective about investment properties.

Norman Tran said it was still too early to tell how the budget would affect first home buyers, but he said Tuesday’s announcement was clearly making investors pause. “Understandably investors are using it as an opportunity to reassess their plans,” Tran said. “It’s whether investment properties can offer benefits, if the capital growth is still strong enough to outweigh the inability to claim losses through negative gearing.”

Luke Lombardi said he had already seen more first home buyer interest this week, including on stock that had been sitting for some time. “I have had a few properties on the market for an extended time and I have received multiple offers this week,” he said. Lombardi is marketing two one-bedroom units at Cronulla and another two-bedroom unit at Caringbah, with the Cronulla properties listed with price guides of $650,000 and $760,000.

For now, the budget has not frozen the market so much as changed who is doing the bidding. Investors are stepping back while first home buyers and upsizers move forward, and the next test comes this weekend, when thousands of scheduled auctions will show whether the shift is temporary or the start of a new pattern.