Westpac has warned that growth in investor home loans is expected to more than halve over the coming year, signalling a significant slowdown in Australia’s property investment market as borrowing conditions and policy uncertainty weigh on demand.
The major Australian bank said investor housing credit growth could fall from around 9.1 per cent to about 4.5 per cent, reflecting weaker investor appetite and a cooling property market. Westpac also reported a sharp decline in mortgage applications, with average monthly applications falling by about 20 per cent following recent policy changes affecting property investors.
The slowdown comes as investors reassess the outlook for residential property amid higher borrowing costs, changing tax settings and uncertainty around future housing policies. Analysts say property investors are becoming more cautious as rental returns, financing costs and potential regulatory changes influence investment decisions.
Westpac said owner-occupier lending has remained more resilient compared with investor activity, although overall housing credit growth is also expected to moderate. The bank noted that first-home buyer demand has not fully offset the decline in investor lending activity.
The changing lending environment could have broader impacts on Australia’s housing market. Investors have traditionally played a major role in property demand, particularly in major cities, and a reduction in investor borrowing could affect prices, construction activity and rental market dynamics.
Despite the weaker housing outlook, Westpac said households and businesses have shown resilience, with its latest results showing continued customer strength. The bank reported a quarterly cash profit of about $1.8 billion, although concerns over future mortgage growth weighed on investor sentiment towards the company.
Market participants are now watching interest rate decisions, government housing policies and property demand trends closely as Australia’s housing sector enters a period of adjustment.
