New home loans dropped by a record 15% as Australia’s housing market downturn deepens

Résumé détaillé

Reduced competition from investors has also created more opportunities for first-home buyers. Here’s what the data revealed.

New mortgage loans dropped by a record 15% in the September quarter as the housing market downturn deepened, led by a 30.6% dive in lending to investors, official figures on Wednesday showed.

The Reserve Bank’s five interest rate hikes and stagnant real wages have hit housing demand from investors, first-home buyers and established home owners. Reforms to tax rules for investors have also contributed to sinking investor demand for existing homes.

Over the year, the number of new loans taken out has dropped by 21.4% overall, with a spectacular 38.5% drop for investors.

However, reduced competition from investors may also create opportunities for first-home buyers. In the September quarter, lending to first-home buyers fell by a more moderate 8.6%.

The current drop in mortgage lending highlights the volatility of Australia’s housing market. While house prices have soared since 2000, we have also seen several marked downturns in both property values and loan issuance.

Before the current downturn, average real prices declined for at least two quarters on four occasions since 2011. The most recent downturns – those starting in March 2018 and March 2022 – lasted for at least a year.

Higher interest rates affect all homebuyers needing a mortgage. As a result, demand across investors, established homeowners and first-home buyers has declined.

However, the drop in housing investment has been steepest for investors. They constitute a large segment of housing demand and are more sensitive to expected house price and interest rate changes.

Over the year to September 2026, both the number and value of new investor mortgages declined spectacularly by 38.5%. This was mainly driven by a near 46.2% drop in the purchase of existing properties.

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