Proposed tax changes to make it easier for first-home buyers to purchase a property are not the only reason the housing market is softening, Treasurer Jim Chalmers says.

On Tuesday, parliament will begin debating changes unveiled in last month’s federal budget that would limit negative gearing to new properties from July 2027, while replacing the 50 per cent capital gains tax discount with a rate based on inflation.

After the first data released since the May budget showed property prices falling in major capital cities, Chalmers said the market was already experiencing a downturn.

“We had seen the housing market already softening a bit before the budget. The budget decisions, the tax reforms in the budget are not the only factor when it comes to the housing market,” he told ABC Radio.

“What we want to see is we want to see first-home buyers getting a fair chance at auctions, and so we’re seeing that increasingly.”

Dwelling values fell 0.9 per cent in Sydney and 0.8 per cent in Melbourne during May, according to data from research agency Cotality.

Auction clearance rates have fallen in the weekends following the budget. Chalmers said they had also been softer before the May budget.

He said Treasury had forecast house prices would continue to increase but more slowly.

“Our job here is not to target a particular price outcome, our job here is to make sure that there are more affordable options for first-home buyers to get a toehold in at what has been historically a really difficult market,” he said.

“For too long, the intersection of the tax system and the housing market has locked too many Australians, particularly young Australians, out of housing, and that’s why we’re taking some of these difficult decisions to address that problem.”

Late-night sittings are expected in the House of Representatives this week as it debates the tax changes. Debate in the Senate is not expected to begin until later in June.

Labor still needs the support of the Greens or the Coalition to get its changes through the upper house.

The Coalition has promised to vote against the changes, while the Greens have yet to outline their final stance on the issue.

The government will also find out on Tuesday if its housing targets are on track when the latest building approval figures are released.

The previous month’s figures showed the total dwelling approval rate fell by 10.5 per cent in March. Those figures were driven by a 26 per cent fall in private dwellings excluding houses.

-AAP