New home loans have fallen at a record pace, and property investors are driving the drop. Fresh figures from the Australian Bureau of Statistics (ABS) show the number of new loans fell 15 per cent across the September quarter, the biggest decline on the official record.
The numbers land at a sensitive moment for Perth. Interest rates are at their highest level since 2008, the federal budget changes to investor tax breaks are being felt, and the spring selling season has started more slowly than many sellers hoped.
This guide explains what the ABS data shows, how the political debate around it is playing out, and what REIWA’s latest November update means for Perth buyers, sellers, investors and tenants. Where opinions differ, we set out each side so you can judge for yourself.
What the ABS Figures Show About New Home Loans
The ABS data covers the movement from June to September 2026. Over that period, the total number of new loans dropped 15 per cent, while their combined value fell 16 per cent.
Both the overall decline and the investor decline broke official records. The ABS reports that investor home loans were hit far harder than loans to people buying a home to live in.
| ABS measure (June to September 2026) | Change |
|---|---|
| Number of new loans, all borrowers | Down 15% (record fall) |
| Total value of new loans | Down 16% |
| New loans to investors | Down 31% (record fall) |
| New loans to owner-occupiers | Down 5% |
| First home buyers | Down 8% |
| Non-first home buyers | Down 3.5% |
In plain terms, fewer Australians are taking out home loans to buy property. The mix of borrowers has shifted sharply away from investors.
Investors vs Owner-Occupiers: Why Home Loans Fell Unevenly
An investor drop of 31 per cent sits next to an owner-occupier drop of just 5 per cent. That gap is the headline of the release, and it is the reason the figures have attracted so much attention.
Mish Tan, the ABS head of finance statistics, said the data suggested investors were being deterred by more than high interest rates alone. She pointed to tax changes and expectations of lower house prices as additional factors.
Economists say five rate rises this year have contributed to the fall. Those increases have lifted repayments and reduced how much people can borrow.
Reserve Bank governor Michele Bullock has drawn a similar conclusion. She said investor demand had fallen “so much further” than in earlier rate-hiking cycles, which suggests something else is happening, and that something else is the tax changes.
First Home Buyers Fell Further Than Other Owner-Occupiers
First home buyers sit between the two groups. Their loans fell 8 per cent, compared with 3.5 per cent for other buyers, but that is still far smaller than the investor decline.
This matters because first home buyers are the group the government says its policy is designed to help. The data shows they are borrowing less, even if they are doing better than investors.
The Wider Market: Prices, Auctions and Confidence
Conditions were already soft before the May budget, when the federal government announced plans to curb investor tax breaks. Since then they have weakened further, and the softness has spread beyond Sydney and Melbourne to other capital cities.
Property data company Cotality reports that national house prices have fallen 6.7 per cent from their March peak. It describes this as the fastest decline in 40 years, and auction clearance rates have also dropped.
| Market indicator | Latest reading |
|---|---|
| Interest rates | Highest since 2008 after five rises this year |
| National house prices | Down 6.7% from the March peak (Cotality) |
| Pace of price decline | Fastest in the past 40 years (Cotality) |
| Auction clearance rates | Falling |
Perth looks different from the national picture in some respects, which we cover below. But the same pressures on home loans and borrowers apply here.
Two Sides of the Debate Over Falling Home Loans
The figures have prompted a strong political response, and reasonable people read them differently. It is worth understanding each position, because the debate shapes where policy goes next.
| Voice | Position |
|---|---|
| Housing Minister Clare O’Neil | Welcomes the shift from investors towards owner-occupiers, saying this is what the changes were meant to achieve |
| Opposition housing spokesperson Andrew Bragg | Says confidence has tanked, that loans to everyone are down, and that fewer loans means fewer new houses |
| Master Builders Australia (Denita Wawn) | Says the results vindicate the sector’s campaign against the changes and expects the trend to worsen |
| Reserve Bank (Michele Bullock) | Says investor demand has fallen much further than in past cycles and links this to the tax changes |
The Government’s View
Ms O’Neil acknowledged that volumes are down, as expected when prices soften. She said the figures also show a clear shift away from investors and towards Australians buying a home to live in.
She argued that the housing market has been geared towards investors for a generation, and that the outcome has been falling home ownership and rapid price increases. In her words, the balance is shifting back towards people buying a home to live in, particularly first home buyers.
The government has said it is not targeting a particular price outcome. Treasury analysis behind the changes predicted a modest two percentage point reduction in house price growth, which it describes as a structural estimate rather than a short-term forecast that accounts for rate rises.
The Opposition and Industry View
Mr Bragg said the results reflect poorly on the government. He argued that fewer loans is not a good outcome, because more lending leads to more homes being built.
Master Builders Australia chief executive Denita Wawn said the industry had warned about a decline in housing investment at a time when the country can least afford it. She said she believes this is only the start of the downturn.
Both views carry weight. Supporters of the changes point to the shift towards owner-occupiers, while critics point to the overall fall in lending and the risk to supply.
Perth Spring Market: What REIWA’s November Update Says
REIWA’s latest update shows Perth has not been immune. The typical spring increase in new listings has arrived, but sales have dropped to levels last seen in 2019.
REIWA President Rob Mandanici said buyer demand has fallen significantly over the past year. He linked this to repeated rate rises, the cost of living and the federal tax changes introduced in May.
| Perth sales indicator (October 2026) | Latest REIWA figure |
|---|---|
| Annual median house price | $970,000 (up 0.5% for the month, up 16.4% on the year) |
| Annual median unit price | $700,000 (up 0.7% for the month, up 20.7% on the year) |
| Median days to sell a house | 27 days (19 days slower than a year ago) |
| Median days to sell a unit | 28 days (20 days slower than a year ago) |
| Active listings for sale | 9,129 (up 15.9% on September and up 217% on a year ago) |
REIWA notes that its annual median is still showing small growth, even though median prices declined across both the June and September quarters. The annual figure lags behind current conditions.
Sellers Are Negotiating More
The change for sellers has been dramatic. Earlier this year, only around 10 per cent of Perth houses sold below the asking price. REIWA now puts that figure at around 50 per cent, with an average discount of 7.5 per cent.
Mr Mandanici stressed the bigger picture. Perth has seen extremely strong growth over the past five years, and most sellers are still achieving substantial capital gains, even if they have had to revise their expectations.
He also noted that conditions a year ago were unusual. Active listings were just 2,880 and homes were selling in a median of eight days, which he described as frenzied.
Who Is Still Buying?
REIWA members say upgraders and downsizers are currently the most active buyers. With more stock and less competition, they are taking their time and often viewing homes several times before making an offer.
Investors, by contrast, are reluctant to buy new or established homes, according to REIWA. With negative gearing removed and rates higher, Mr Mandanici said the numbers do not stack up for many.
First home buyers are hesitant as well. Their capacity for home loans has been eroded by rate rises, and they are worried about further increases.
Where Perth Homes Are Still Selling Fast
Not every suburb has slowed. REIWA’s data shows pockets of the market where homes continue to sell quickly, and several of them are inner and middle-ring suburbs.
| Fastest-selling Perth houses (October) | Median days |
|---|---|
| Wembley Downs and Kingsley | 9 |
| Floreat | 11 |
| Clarkson | 13 |
| Roleystone, Craigie and Westminster | 14 |
| Yokine, Hilton and Coolbellup | 15 |
The fastest-selling units tell a similar story. East Perth led at seven days, followed by Subiaco at 12 days and Rivervale at 16 days. Wembley sold in 17 days and Yokine in 18 days.
The lesson is that headline medians hide a lot of variation. A suburb-level view is far more useful than a citywide average when you are deciding when to buy or sell.
What Falling Home Loans Mean for Perth Renters
Fewer investor loans can feed through to the rental market. REIWA says it is already seeing fewer investors enter the market, and that investor demand for new builds has also declined.
Perth’s median weekly rent was unchanged in October, at $750 for houses and $700 for units. Mr Mandanici warned that stable rents should not be mistaken for an easing market.
| Perth rental indicator (October 2026) | Latest REIWA figure |
|---|---|
| Median weekly house rent | $750 (up 7.1% on a year ago) |
| Median weekly unit rent | $700 (up 4.5% on a year ago) |
| Vacancy rate | Below 2% |
| Median time to lease | 15 days |
| Properties available to rent | 2,144 |
REIWA says rents are at record highs and affordability is at record lows. It also reports that more tenants are sharing homes to spread the cost, which shows that demand is changing shape rather than easing.
The institute has called for a legislative environment that encourages investment, and it has flagged that proposed tenancy law amendments could deter investors further. That is REIWA’s position, and others may weigh the trade-offs between tenant protections and supply differently.
Negative Equity and First Home Buyers: Keeping Perspective
Media coverage of negative equity is worrying some first home buyers. Mr Mandanici acknowledged that it is uncomfortable to think a recent purchase may have dropped in value.
He said that when it comes to home loans, Australian banks are generally more concerned about your ability to meet repayments than short-term movements in your property’s value. For most buyers who plan to stay in their home for several years, he described falling values as an annoying statistic rather than a crisis.
He accepted that a small number of recent buyers who need to sell urgently could be affected. If you are in that position, speaking to your lender and a local agent early is sensible.
What Falling Home Loans Mean for Your Next Move
The right strategy depends on your situation. Here is a practical summary for each group.
If You Are Buying
You have more choice and more time than buyers had a year ago. Active listings have more than tripled, and many homes are taking longer to sell, so you can inspect, compare and negotiate.
At the same time, higher rates have cut borrowing power. Check your home loans pre-approval against current rates before you commit to a budget.
If You Are Selling
Price your home to the market that exists today, not the one from last year. With around half of houses selling below asking price, realistic pricing is the best way to attract serious buyers early.
Listen to buyer feedback and expect several open homes before an offer. Well-presented homes in popular suburbs are still selling quickly.
If You Are an Investor
The tax changes mainly affect purchases of established homes, so your decision depends on whether you already own or are thinking of buying. Rents remain at record highs and vacancies are very low, which supports rental demand.
Speak with your accountant and a local agent before you hold, sell or buy. Tax treatment is specific to your circumstances, and this article is general information only.
Frequently Asked Questions
How far did new home loans fall in the September quarter?
ABS figures show the number of new loans fell 15 per cent from June to September, and their total value fell 16 per cent. Both the overall and investor falls were records.
Did investors or owner-occupiers see the bigger drop?
Investors did. New loans to investors fell 31 per cent, compared with 5 per cent for people buying a home to live in.
Why are investor home loans falling so fast?
The ABS points to high interest rates, tax changes and expectations of lower house prices. The Reserve Bank governor has also said the tax changes are a likely reason investors have pulled back further than in earlier cycles.
Are Perth house prices falling?
REIWA’s annual median house price was $970,000 in October, still 16.4 per cent higher than a year ago. However, quarterly medians for June and September declined, and around half of houses are now selling below asking price.
Should I wait for prices to fall before buying?
That is a personal decision that depends on your finances, your plans and your suburb. A local agent and a qualified finance professional can help you weigh up timing for your situation.
Making Sense of the Market With Holdsworth Real Estate
If the latest home loans data has you rethinking your plans, the team at Holdsworth Real Estate can help you read what it means for your suburb. Whether you are considering selling, weighing up a purchase or reviewing an investment property, we can provide a current appraisal based on recent local sales.
Contact Holdsworth Real Estate today for a no-obligation chat about your property and the Perth market.
