By Zac de Silva and Lucinda Garbutt-Young in Canberra

Plunging auction clearance rates are not cause for concern, top government ministers are insisting, with one urging anxious home owners to “take a deep breath”.

An overhaul of negative gearing and capital gains tax is expected to pass federal parliament by Thursday after the government and Greens struck a deal on Tuesday.

In a concession to the minor party, Labor has agreed to close a so-called loophole to prevent people from avoiding the changes by borrowing through a self-managed super fund (SMSF) to buy residential property.

Analysts believe the tax overhaul is partly responsible for a downturn in the housing market, but a string of interest rate rises and the regular property price cycle are also playing a significant role.

Combined auction clearance rates in the capital cities fell below 50% on Saturday to the lowest level in more than six years, according to Cotality data.

Dwelling prices are in a market correction but will eventually continue growing, Housing Minister Clare O’Neil said.

“We’ve just been through what has been extremely high house price growth in the period from COVID … and we are seeing a correction to that,” she told ABC Radio on Wednesday.

Pressed on the impact of the tax changes on the property market, Ms O’Neil said there were multiple factors driving lower clearance rates but conceded the tax system played a role.

Asked how Australians would feel watching the value of their home fall, fellow Labor minister Tanya Plibersek said people should ”take a deep breath”.

“Our Treasury estimates are that house prices will continue to grow, they’ll grow more slowly,” she told ABC TV.

“There’s still a lot of buying going on, but it’s first-home buyers who are actually having a shot at the market.”

The government’s deal to pass the changes has riled the finance sector, which argues the decision to clamp down on SMSFs borrowing was unfair and unnecessary.

Recent Australian Taxation Office data showed SMSFs held about $75 billion in assets under limited recourse borrowing arrangements (LRBAs), supported by $28.9 billion in debt.

“Review are after review has found LRBAs pose no material risk to the superannuation system,” Self-Managed Super Fund Association chief executive Peter Burgess said.

“The problem is not the borrowing structure itself, but the conduct of those who aggressively market unsuitable property investments and make unrealistic claims about returns and retirement outcomes.”

Others are frustrated with the likelihood of the bill passing in its entirety.

The capital gains tax would damage business investment, Australian Chamber of Commerce and Industry chief executive Andrew McKellar said.

The changes have been heavily amended since they were first announced to give some exemptions to small business, but Mr McKellar said they would not be enough.

“Last week’s concessions on the changes were an attempt by government to ameliorate some of the damage to the business community, but significant unresolved issues remain,” he said.

Australian Finance Industry Association head Diane Tate said the arrangements were used by Australians seeking to “sensibly diversify their assets” and did not need further government oversight.

Opposition Senator Michaelia Cash slammed the “dirty deal” with the Greens and accused Prime Minister Anthony Albanese of lying to Australians.

“He lied to them that 50 times prior to the last election. There would be no changes to negative gearing. There would be no changes to capital gains tax,” she told Seven’s Sunrise program.

The Greens were also successful in postponing the passage of sweeping NDIS reforms by two months, which disability advocates say will give them welcome time to push for less cuts.

Labor would now negotiate with the coalition to get the overhaul through the Senate in August, Finance Minister Katy Gallagher told reporters.

“In order to protect and safeguard the NDIS into the future, we need to manage some of the growth and costs associated with that scheme, and therefore we’ll be calling on the coalition to work with us to pass it,” she said.

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