Property investors are pulling back sharply from Australia's housing market, while Australians buying homes to live in are proving more resilient.
New lending to property investors fell 32.3% in the September quarter, the largest quarterly decline since records began in 2002, data released by the Australian Bureau of Statistics shows.
The number of new investor loans also fell 30.6%, reinforcing the scale of the retreat.
By comparison, the value of new lending to owner occupiers excluding first home buyers fell 5.3% over the quarter, while lending to first home buyers declined 8.0%.
The figures reveal a widening gap between investors and people buying a home to live in, with the latter holding up considerably better despite higher interest rates and weaker housing market conditions.
Investors lead the housing slowdown
Commonwealth Bank Senior Economist Ashwin Clarke said the latest figures showed investors were playing a central role in the housing market downturn.
The difference between investor and owner occupier borrowing suggests the investor pullback is “a key driver of the weaker conditions in the housing market”, Clarke said.
He compared the trend with the housing downturn of the late 2010s, when investors also drove weaker market conditions following tighter lending rules.
The investor retreat helped push the total value of new housing lending down 15.5% in the September quarter, the largest quarterly fall since records began.
That was considerably weaker than economists had expected, with CommBank forecasting a 6.8% decline ahead of the release.
Owner occupiers show greater resilience
The relative strength of owner occupier borrowing was evident across the country, even as lending declined in every state and territory.
Tasmania and Queensland recorded the biggest overall falls in new lending, down 22.7% and 20.7% respectively.
Western Australia and the Northern Territory recorded smaller declines of 11.4% and 8.2%, supported by more resilient owner occupier lending.
In both markets, the value of owner occupier lending excluding first home buyers was slightly higher over the quarter.
Household savings provide a buffer
The relative resilience of owner occupier lending comes as separate CommBank research suggests many Australian households are better placed to withstand higher interest rates than in previous tightening cycles.
Clarke said household savings have grown significantly, while mortgage debt has fallen relative to household income.
Housing debt excluding offset account balances is now equivalent to 115% of household income, around nine percentage points below its level when the Reserve Bank began raising interest rates in 2022.
Many borrowers have also maintained higher mortgage repayments following last year's interest rate cuts.
CommBank data shows around 85% of its mortgage customers did not request a reduction in scheduled repayments when rates fell in 2025, potentially cushioning the immediate impact of subsequent increases.
Clarke said these factors meant the direct impact of higher interest rates on household finances is likely to be slightly smaller than in previous cycles.
However, the research also highlights that savings buffers vary considerably between households.
New homes attract a larger share of investor lending
While investor borrowing fell sharply overall in the September quarter, lending for the construction and purchase of newly built homes held up relatively well.
The value of new lending in these categories declined 10.4% in the September quarter and remained slightly higher than a year earlier.
As a result, their share of investor lending increased from 17.3% in the March quarter to 27.6% in September.
Clarke said the shift was “consistent with the design of the government’s tax policy changes, which favour investors’ purchases of new builds”.
What's next for the housing market?
CommBank expects investor lending to remain weak as Australia's housing market adjusts to higher interest rates and falling property prices.
The bank has forecast a 14% peak-to-trough decline in national home prices, with prices expected to continue falling into 2027.
Clarke expects weaker investor borrowing to weigh on overall housing credit growth in the coming quarters.
CommBank forecasts annual housing credit growth will slow to 2.0% by the end of 2027 before recovering to 3.0% by the end of 2028.
The Reserve Bank is unlikely to change its assessment of the economy significantly in response to the latest lending figures, Clarke said, because it had already seen much of the weakness through monthly data supplied by the banking regulator.
