Key facts
- New lending to property investors in Australia fell by 8.6% in the three months to June.
- The total number of new home loans decreased by 5.4% in the same period.
New lending to property investors in Australia dropped nearly 9% in the June quarter, with experts calling it a welcome sign that may reduce competition for first-home buyers. Investment in new builds, however, reached a record high.
The decline in investor lending for established homes may ease competition for first-time buyers and potentially stabilize housing prices, while increased investment in new builds could help alleviate rental shortages.
New lending to property investors in Australia has fallen sharply, a development described by experts as a positive, albeit small, step towards a more equitable housing market. Data from the ABS reveals that investor lending slumped by 8.6% in the June quarter, contributing to an overall 5.4% drop in new home loans.
This decline is attributed to a combination of factors, including three official interest rate hikes by the Reserve Bank of Australia and recent federal budget changes impacting investor taxes. Major banks have reported a significant decrease in mortgage applications as a result.
While lending to investors for established homes decreased by 14.8%, there was a notable 4.4% increase in loans for new builds, reaching a record high. This shift is seen as beneficial, as it may increase rental supply without directly competing with first-home buyers for existing properties.
Economist Saul Eslake welcomed the fall in investor lending for established homes, stating it reduces competition for prospective first-home buyers. He noted that increased investment in new builds is preferable as it expands the rental stock. Maiy Azize of Everybody's Home echoed this sentiment, suggesting the government's tax reforms are beginning to rebalance the market and challenging the notion that immigration is the primary driver of housing costs.