Property investors are pulling back from borrowing faster than any other buyer group, with new lending data now matching the caution investors flagged in an industry survey in August.
Data from Loan Market Group shows overall demand for new mortgage lending has dropped 24% since January. It links the fall to the federal government’s changes to negative gearing and capital gains tax, and to four interest rate rises.
Investors recorded the steepest decline, with lodgements down by as much as 44% in some markets, led by Queensland and Western Australia.
Property Investment Professionals of Australia (PIPA) chair Cate Bakos (pictured) said the lending figures confirm what investors told the association’s 2026 Annual Investor Sentiment Survey, conducted in August among 626 respondents.
“The Loan Market figures suggest we’re now seeing investor behaviour catch up with investor sentiment,” Bakos said.
The survey found just 14.7% of investors said the tax changes had not affected their plans to buy. More than one in five (21.5%) said they were unlikely to buy again unless the changes were repealed. Only 27.8% now plan to buy another investment property, down from 41% a year earlier.
Bakos said investors who lose faith in policy settings or future returns typically react in one way: “the first thing they tend to do is stop borrowing and wait on the sidelines.”
The findings matter for brokers, who wrote the last investment loan for nearly 82% of respondents. About a third said they could not refinance to the amount they could previously borrow, suggesting borrowing capacity has tightened.
Property professionals report the same pressure. In NAB’s latest residential property survey, interest rates ranked as the biggest constraint on established home buyers for a second straight quarter, followed by access to credit.
First-home buyers are also retreating. Their loan lodgements are down 13% nationally since January, with falls of 19% in New South Wales and 18% in Queensland, according to Loan Market Group.
Credit bureau data shows the slide deepening. Equifax found first-home buyer mortgage applications fell 22.1% year on year in September 2026, while demand from investors with two or more mortgages dropped 18%.
Keeping full tax breaks for new builds hasn’t shifted investors’ preferences. Only 4.8% of investors said the carve-out made them more willing to buy new dwellings, while 50.7% still prefer established property.
Lending data tells a similar story. Ray White chief economist Nerida Conisbee’s analysis of Australian Bureau of Statistics lending data for the June 2026 quarter found new homes made up 21.2% of investor loans, but mainly because established lending fell. Investor loans for new homes rose by 441, while those for established property dropped by 7,080, as total investor commitments fell 8.6%.
“The assumption that investors will seamlessly switch into new housing supply isn’t reflected in the data,” Bakos said.
Confidence in policy is also weak. About 87% of investors said they doubted future governments would keep tax settings stable.
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