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Home loan demand drops in May, first home buyers most affected


New data from the Australian Bureau of Statistics (ABS) shows a decline in home loan demand across all buyer categories in May, with first home buyers experiencing the largest decrease.

Key points from the ABS data include:

  • Value of new loans to investors fell 1.3% to $10.7 billion, but remains 29.5% higher than a year ago
  • Owner-occupier loans (excluding first home buyers) decreased 1.6% to $12.9 billion
  • First home buyer loans declined 2.9% to $5.2 billion

Tim Keith, Managing Director of Capspace, said: “Investor demand for housing has eased in May due to higher interest rates, though strong growth over the past year has added to upward pressure on property prices.”

Despite the overall decline, investor loans have seen significant increases since May 2023 in several states:

  • NSW up 24.8%
  • Queensland up 48.2%, reaching an all-time high of $2.4 billion
  • Western Australia up 73.9%

Keith noted that ongoing population growth is likely to continue putting pressure on house prices and rents nationally, potentially affecting mortgage sizes, inflation, and interest rates.

He added: “We believe that with the employment market remaining tight, and with no immediate signs of inflation falling below 3%, the RBA is likely to keep interest rates on hold at its August meeting and in the months to come or it could raise them again if inflation needs further taming.”

Keith suggested that investors should consider diversifying into other asset classes, such as fixed income, to mitigate risks associated with potential property price declines or interest rate increases.


He also highlighted private credit as an attractive option for investors, particularly younger ones, due to its stable cash income and lower entry barriers compared to property investments.

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