Australia’s housing market downturn deepened in the September quarter of 2026, with new home loans plummeting by a record 15%. The decline was driven by a sharp 30.6% drop in lending to investors, according to official figures released on Wednesday. Over the past year, the number of new loans has fallen by 21.4% overall, with investor loans plummeting by 38.5%. First-home buyers saw a more moderate decline of 8.6% in the September quarter.
The downturn reflects the impact of the Reserve Bank’s five interest rate hikes and stagnant real wages, which have reduced demand across all buyer segments. Tax rule reforms for investors have also contributed to the decline in investor demand for existing homes. Despite the overall drop in lending, the reduced competition from investors may present opportunities for first-home buyers.
The shift in the housing market highlights the volatility of Australia’s property sector. While house prices have surged since 2000, there have been several downturns in both property values and loan issuance. The current decline echoes previous downturns, such as those starting in March 2018 and March 2022, which lasted for at least a year.
Non-bank lenders have seen a significant increase in activity, with lending jumping 67.7% over the year, though from a low base. Major bank lending fell by 7.1%. The Reserve Bank Governor Michele Bullock noted that the current economy may feel “like a recession,” as higher interest rates and declining house prices impact broader economic activity and consumer spending.