Australia's Property Market Hits Bumps but Remains Resilient
The Australian property market has been hit by a pullback in investor demand following tax changes and interest rate hikes, but experts say it's far from broken.
Commonwealth Bank reported a bumper $11bn full-year cash profit on Wednesday, backed by robust demand for its lending products, especially mortgages. The bank disclosed that investor loan applications were down 28% since the Labor tax changes were announced in May, while owner-occupier applications had dropped 9%.
CBA's chief executive Matt Comyn said the worst had passed by late June and applications were now stabilizing. He believes Australia is at the bottom of its investor decline and expects an improvement into 2027. Even if a 25% fall in investor borrowing became the new norm, some 14,000 new landlords would still take out a loan each month.
The Reserve Bank has lifted interest rates three times, and the federal government amended negative gearing and capital gains tax, making some types of property investment less lucrative. However, RBA governor Michele Bullock believes the slump is going well beyond the interest rate fundamentals thanks to an outsized loss of confidence.