New lending to Australian property investors collapsed by nearly a third in the September quarter — the biggest fall in Australian Bureau of Statistics records stretching back to 2002 — according to The Guardian. The same data release showed the Commonwealth Bank's share of borrowers 90 days or more behind on repayments climbing to 0.8% of total lending, the highest level since 2014. Treasurer Jim Chalmers faced renewed pressure to defend the May budget's negative gearing and capital gains tax reforms as the figures landed.
ABS Records a Collapse Investors Haven't Seen Since 2002
The ABS figures show the value of new investor loans plunged by nearly a third in the September quarter — almost double the previous biggest quarterly fall on record. Mish Tan, the ABS head of finance statistics, said the data suggests investor activity is being influenced by factors beyond rising borrowing costs, including the potential impacts of tax changes and expectations of lower house prices. New lending to owner-occupiers fell by a comparatively modest 5.3%, as part of an overall 15% quarterly drop in new loans across the market.
For broader market context, see WealthWatchPro macro and interest rate analysis.
Lending to first home buyers also dropped, down 8.6% in the quarter, suggesting rate pressure and uncertainty about where prices are headed are keeping would-be owner-occupiers on the sidelines, even if not to the same degree as investors. The number of new loans to investors building a home fell 12% over the same period. Shadow housing minister Andrew Bragg argued the government's "higher housing taxes are discouraging investment when Australia desperately needs more homes," while Chalmers maintained the reforms were designed to reduce competition facing first home buyers against established investors for existing housing stock.
CBA's Arrears Climb to a 12-Year High
Commonwealth Bank's quarterly trading update showed the share of borrowers 90 days or more behind on repayments lifting from 0.73% of total lending to 0.8% — the highest reading since 2014. Nathan Zaia, a senior equity analyst at Morningstar, said rising arrears were occurring across the banking sector and had "probably hadn't peaked," though he noted the increase was coming off an unusually low base after a long period of historically low arrears. Nico de Lange, director of financial institution ratings at S&P Global, said that despite the uptick, there was no sign of significant systemic stress for the banking sector as a whole — though S&P was "watching things pretty closely" following five RBA rate increases this year.
That caution matters given where the cash rate now sits. REAStats data puts the RBA cash rate at 4.85% as of November 2026, with the national clearance rate holding at 68.8% and national days on market averaging 36. For borrowers weighing whether to lock in certainty or stay exposed to further moves, the Fixed vs Variable Rate Mortgage Australia 2026 comparison is a useful starting point for assessing risk tolerance against loan size and holding period.
Suburb-Level Divergence: Nedlands' 15% Growth vs Dandenong's 2.3%
The investor pullback is not landing evenly. REAStats suburb data shows Nedlands in Western Australia posting 15% annual growth to a $2.2 million median, clearing properties in just 15 days with a 65.5% auction clearance rate. Compare that with Dandenong in Victoria, where the median sits at $680,000, annual growth is just 2.3%, days on market stretch to 40, and the clearance rate trails at 56%.
Sydney suburbs show a similar split. Randwick holds a 73.5% clearance rate on a $2.4 million median with just 23 days on market, while Port Macquarie's clearance rate sits at 46% against a 48-day sales cycle and an $850,000 median. These figures underline why Auction Clearance Rates Explained remains relevant reading for agents and vendors trying to interpret local demand signals against a backdrop of national lending contraction. For investors comparing entry points, the Median vs Average Property Price distinction also matters — averages in premium pockets like Nedlands or Randwick can be skewed by a handful of high-value transactions, whereas medians better reflect what a typical buyer is actually paying.
New investor lending fell by nearly a third in the September quarter — the largest fall in ABS records stretching back to 2002, and almost double the previous biggest quarterly decline.
Policy Backdrop: Negative Gearing, CGT and the May Budget
The Albanese government's May budget banned negative gearing for new landlords buying an existing home and altered capital gains tax settings for investors. Chalmers has framed the changes as a multi-year play: "Our tax reforms are all about helping more first home buyers into the housing market and we expect to see those benefits play out over years, not months," he said, adding that reduced investor competition for existing stock is already visible in the latest lending data. The Coalition has promised to repeal the changes if it wins government, with Bragg calling for the taxes to be scrapped "before they do any more damage."
Against that backdrop, the Reserve Bank has delivered five rate rises so far in 2026, lifting the cash rate to 4.85%. The ABS data does not quantify precisely how the rate rises and the tax reforms interact, but both are now part of the same lending environment facing property investors.
What the Data Signals for Agents, Buyers and Vendors
For agents, clearance rates continue to vary sharply by market: Dandenong and Port Macquarie sit below 56%, while premium pockets such as Nedlands and Randwick clear above 65%, even as national investor lending contracts. For first home buyers, the 8.6% quarterly drop in new loans suggests affordability pressure is still outweighing any benefit from reduced investor competition — at least for now. For vendors in softer markets, the 36-day national average days-on-market figure offers a more immediate benchmark than assumptions about when investor demand might return.
