Record drop in home loans as tax changes and rate hikes cool property market
Consensus Summary
The outlook remains uncertain, with economists and policymakers divided over the next steps. The Guardian suggests investors expect two rate cuts in the next 18 months, driven by rising unemployment, while the SMH’s JP Morgan economist warns the tax changes will remain a ‘structural drag’ on the market. The ABC notes private recognition within the government that the price decline is deeper than Treasury’s initial two percentage-point forecast. Housing Minister O’Neil’s framing of the changes as a success for first home buyers is challenged by opposition claims that fewer loans overall signal economic harm. The 7NEWS reports that Commonwealth Bank shares fell nearly 2 per cent on the data release, reflecting market concerns about mortgage stress and reduced lending activity. As the property sector braces for further challenges, the articles agree that the current environment will likely persist well into next year, with no clear consensus on whether the downturn will deepen or stabilize.
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Key details reported by multiple sources:
- Investor home loans fell by 31 per cent in the September quarter, compared to a 5 per cent fall for owner-occupiers.
- Investor loans fell 38 per cent in the year to September, while owner-occupier loans dropped 4.6 per cent in the same period.
- Investor loans dropped by 30.6 per cent in the three months to September, with a 38.6 per cent decline over the past 12 months.
- Investor home loans fell from 50,000 to 35,301 in the first full quarter after the May budget tax changes.
- The May budget introduced changes to negative gearing and capital gains tax, with new rules set to take effect from July 1 next year.
- Five rate hikes this year have raised interest rates to their highest level since 2008.
- Overall new home loans fell by 15.5 per cent in the September quarter, with first home buyer loans down 8.6 per cent in the quarter and 12.3 per cent over the year.
- The Reserve Bank’s five rate hikes have contributed to the fall in home loans, with borrowing capacity reduced.
- Housing Minister Clare O’Neil welcomed the shift away from investors toward owner-occupiers, citing the tax changes as intentional policy.
- The drop in investor loans is concentrated among those purchasing existing homes, with new builds less affected.
Points of Difference
Details reported by only one source:
- House prices have fallen 6.7 per cent from their peak in March, the fastest decline in the past 40 years.
- Treasury predicted a modest decline of two percentage points in house price growth, described as a 'structural' forecast.
- First homebuyers experienced an 8 per cent fall in loans, compared to a 3.5 per cent fall for non-first homebuyers.
- The rate of auction clearances has also fallen, indicating weakened housing market conditions.
- Investor loans spiked 18 per cent in the September quarter last year due to investors rushing to buy before a 5 per cent deposit guarantee for first home buyers took effect.
- The average size of a home loan in Western Australia grew by 53 per cent in the past three years, while wages increased by just 11.6 per cent.
- The cost of housing construction has risen well above other production costs, with copper pipes up 33 per cent and electrical cabling up 26 per cent in nine months.
- Investors expect two rate cuts in the next 18 months, driven by rising unemployment concerns.
- Loans for new builds by investors fell by 18.4 per cent in NSW, while loans for existing dwellings collapsed by almost 50 per cent.
- Business loans for apartment blocks and data centres soared in value by 27.6 per cent in the quarter, with loans for dwellings up 56 per cent over the year to a record $8.4 billion.
- Loans for other buildings, including data centres, surged 84 per cent on an annual basis to more than $5 billion.
- Mortgage stress is rising, with home loan arrears of 90 days or more rising to a 14-year high of 0.8 per cent in the September quarter.
- The share of lending to first home buyers remains significant, accounting for more than one-third of owner-occupier lending.
- Investors are increasingly taking out loans for new builds, with the value of such loans rising from 17 per cent in the March quarter to 28 per cent in September.
Where the reporting differs
Details that conflict, or appear in only some outlets:
- The ABC states investor loans fell 31 per cent in the September quarter, while the Guardian reports a 38 per cent fall in the year to September, and SMH reports a 30.6 per cent quarterly drop.
- The Guardian claims the average home loan in Western Australia grew by 53 per cent in the past three years, while the SMH does not mention this specific figure.
- The ABC notes a 6.7 per cent fall in house prices from their March peak, but the Guardian suggests house prices may remain flat or fall slightly over the next six months without specifying a percentage.
Source Articles
Sharpest home loan drop on record as property investors exit market
Investor loans fell by 31 per cent in the three months to September, a fact welcomed by Housing Minister Clare O'Neil despite more modest falls for homebuyer loans.
An end to RBA rate hikes will be good news finally for homebuyers – but maybe less so for workers | Greg Jericho
Capital gains tax changes seem to be working as intended on investors, though a fall in owner-occupier loans has more to do with interest rates Get our breaking news email , free app or daily news podcast The combination of capital gains tax changes and interest rate rises and a time of rising unemployment and falling real wages have sent the number of new housing loans in the September quarter tumbling. Turns out to reduce house prices all you need to do is finally have a taxation system that d
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Behind the biggest quarterly drop in investor home loans on record
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