PIPA's Bakos says Budget changes drove investors out of lending

What PIPA says

Ms Bakos says first home buyer loan activity has not been this low since the June quarter of 2019, and that investor activity has not been this weak since the December quarter of 2020. PIPA argues the Budget changes to negative gearing and capital gains tax removed investors from the market almost at once.

PIPA also says restricting negative gearing to new property has not drawn investors into new-builds. Citing the data tables it supplied, it says new investor loan commitments for constructing new dwellings fell 11% over the quarter.

A caution on timing

Ms Bakos says many September quarter settlements were probably investment purchases made before the 12 May Budget announcement. She notes that investor settlement periods often run 60 to 90 days, and up to 120 days in some states.

She also points to a rush of self-managed super fund investor activity before the borrowing arrangement eligibility period ended on 10 August. On that reading, PIPA expects the December quarter figures to show a deeper fall in investor lending.

What PIPA expects next

PIPA says fewer investor loans will mean fewer rental properties and higher rents, which it argues will make it harder for first home buyers to enter the market. It also says falling transactions will hurt state government revenue, with the Victorian and New South Wales elections as the test.

The ABS lists the December quarter lending indicators for 10 February 2027. Ms Bakos is available for interview through Bricks & Mortar Media.