First homebuyer numbers plunge despite Labor promising to slow housing market

The number of first homebuyers taking out a mortgage in Australia has dived to the lowest level in a year despite Labor curbing negative gearing and capital gains tax concessions in a bid to slow the market and help the young.

During the three months to the end of June, 29,319 first homebuyers took out an owner-occupier loan, down 2.9 per cent from 30,210 during the March quarter to be at the lowest level since mid-2025, new Australian Bureau of Statistics data released on Friday showed.

The fall was particularly pronounced in NSW, with the number of property newcomers plunging by 7.4 per cent to 6937 as Western Australia saw a 5 per cent drop to 3554.

This was more than double the 3.3 per cent plunge in Victoria, a more affordable market, with 9407 first homebuyers in that State.

The fall was less severe in Queensland, which experienced a 1.2 per cent drop to 5646.

Nationally, the value of all new home loans dived by 5.2 per cent, marking the biggest quarterly drop since late 2022 when the Reserve Bank was last repeatedly hiking interest rates.

Shadow treasurer Tim Wilson said Labor had failed in its promise to help more young people into the housing market, amid a downturn it had caused.

“New ABS data confirms the Albanese government’s Budget has smashed confidence, kneecapped first homebuyers, and driven investment and confidence from new homes, leaving young Australians behind,” he said.

“The government has achieved a rare quinella: rising rents, kneecapping first homebuyers, falling prices, fewer homes and smashing confidence – and their answer is to overshoot migration that doubles down on the problem”.

Across all home loan categories, the number of new mortgage commitments fell by 5.4 per cent, following a 6.2 per cent fall over the March quarter.

This covered the Reserve Bank of Australia’s three interest rate rises in February, March and May that undid last year’s relief and took the cash rate to 4.35 per cent.

With capital city home prices broadly in decline, the average new owner-occupier loan has fallen to $731,000, down $735,000 as the average value of new investor loans fell to $708,000 from $710,000.

This occurred as the number of investor loans fell by 8.6 per cent during the June quarter to 52,299 as owner-occupier mortgages fell 3.3 per cent to 81,626.

“The numbers confirmed that investors are reacting negatively to changes to the capital gains tax discount and negative gearing tax changes announced in the Federal Budget in mid-May,” Westpac senior economist Mantas Vanagas said.

The Commonwealth Bank, Australia’s biggest home lender, said it was clear Labor’s Budget tax changes had hit the mortgage market, with investors buying a property after May 12 losing the ability to negatively gear it from July next year as the 50 per cent capital gains tax discount was replaced with indexation and a minimum 30 per cent tax.

“There are clear signs that the decline in lending accelerated over the quarter, alongside the announcement of the Federal Government’s housing tax policy changes,” economist Ashwin Clarke said.

The Reserve Bank this week left interest rates on hold with the big four banks unconvinced the RBA would raise rates again this year, despite governor Michele Bullock hinting at another increase that would take the cash rate to a 15-year high of 4.6 per cent.

“The RBA was already aware of the decline in new housing lending at their meeting earlier this week and are taking this as one signal that financial conditions are somewhat restrictive,” Mr Clarke said.

“The key question now is whether this will translate into lower household spending and economic activity.

“We expect this will happen in our base case, which should allow the RBA to stay on hold for the rest of the year, though upside risks remain.”