Canberra has its biggest ever number of homes and units on the market, with property observers going back to the 1990s to find any sort of comparison.
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As investors and developers retreat from the market, rental accommodation is disappearing, with the vacancy rate at 0.4 per cent.
The ACT Property Council said the slow market was a wake-up call for the Government to stop depending on stamp duty and higher fees for its budgets.
Osspacc Australia principal Anton Van De Zandt, who collects data for Canberra's real estate industry, said 2143 homes and units - 500 more than the ''happy medium'' - are on the market, while Queanbeyan has 540 for sale, up from the usual 350.
Mr Van De Zandt said the wave of listings was bigger than the traditional spring sales surge.
''I have never entered more than 2000 properties in the 21 years [of collecting data].
''Ten years ago, for instance, there were 11,000 houses sold per year, which has gone down to about 8000 per year. The number of houses selling has gone down 25 per cent over the 10-year period.''
He expected the number of Canberra homes and units on the market to increase to 2400 by Christmas.
Independent Property Group chief executive John Runko said that as predicted, the new lease variation charge was forcing developers out of the market.
Even though the charge was discounted during a phasing-in period, it was still deterring developers.
The new fee and market nervousness have caused a dramatic tightening of the rental vacancy rate. The Independent Property Group has Canberra's biggest rent roll and a vacancy rate of just 0.4 per cent.
''What that means potentially is people who would have been buying are not, people are coming into town and not being able to find places to rent. If we don't have an easing of the rental situation, I'm not quite sure what will happen,'' Mr Runko said.
Property Council ACT executive director Catherine Carter said a recent confidence survey in conjunction with the ANZ Bank found pessimism in most sectors of the ACT market.
''This is a wake-up call. The Government cannot rely so heavily on property for revenue as it has done in recent years.''
ACT Treasurer Andrew Barr said while all taxes were being reviewed, eliminating stamp duty would leave a $300million hole in the ACT budget.
Canberra mortgage professional Michael O'Reilly said compared to previous years, a 7 per cent interest rate may seem low, but coupled with the high cost of living, it was a huge expense, and tougher for home buyers now than many years ago when rates soared to 18 per cent.
Back then house prices were lower and inflation was running at 11 per cent.
