Newly released data and recent developments have some analysts speculating that the housing boom may be on its last legs.

Investment loans have dipped to 48% from a high of 50% in January, hitting their lowest level in 10 months, according to the latest figures from the Australian Bureau of Statistics (ABS).

The drop follows the recent regulatory clampdown and the Turnbull government’s efforts to cool both the Sydney and Melbourne property markets. Figures released yesterday by the ABS indicate that home loans to investors as a proportion of all loans had dropped 1.25 percentage points in March to its current 48%.

Sydney’s house prices had not dropped in 18 months until April, and have been steadily falling since. Moreover, prices fell 0.5% in both Sydney and Melbourne during the week following the 2017-18 budget announcement.  

The drop in investment-loan value was in part a reaction to Australia’s five biggest banks being slapped with a hefty $6.2bn levy by Treasurer Scott Morrison. 

Housing supply to increase across Australia

Morrison and the Turnbull government said they would tackle the housing crisis by building more homes across Australia, noting that “prices are higher where demand is greater than supply.”

The National Housing Finance and Investment Corporation (NHFIC) will also be established to operate an affordable housing bond aggregator to encourage greater private and institutional investment to registered providers of affordable housing. The Turnbull government will provide an initial investment of $9.6m in 2017-18 to establish the NHFIC, which will begin operations on 1 July 2018.

Morrison announced an increase in taxes for the banks and also called on the nation’s regulators to take the appropriate steps to slow growth in the investor market.

Among other things, the NHFIC will address the growing influence of foreign investment, as foreign buyers are spending $8bn annually on property in NSW and Victoria.