Even before Labor had a chance to do some negative gearing reforms, house prices have already started falling. According to the latest CoreLogic RP Data figures this week, one in five apartments were flogged for less than their purchase prices during the March quarter across Australia. One in 10 house sales were also sold at a loss during the same period.

“In some of the mining regions it’s closer to 50 per cent,” said Tim Lawless, research director at CoreLogic. “But these are just the properties that are resold—for every property that’s resold there’s going to be more properties that are continuing to be held that are going to have lower values than their purchase price.”

The downturn in the market represents the fallout from both the mining boom and the apartment construction glut, rather than the scare campaign against negative gearing reforms. Home prices in Sydney and Melbourne continue to grow at a mind-boggling pace.

Still, homes now take longer to sell and vendors are offering large discounts to their asking prices. A typical Sydney home now takes 40 days to sell, compared to only 26 days a year ago.

“If we see lenders revaluing properties in their portfolio that had been purchased at a time when values were high and have since moved lower – take the apartment market in Melbourne’s inner city where we are seeing some downward price pressure – then of course it will be affecting lenders’ overall loan-to-value ratios across their portfolio,” Lawless said.