Mortgage commitments plunge after negative gearing and CGT changes
Data from the AFG group of mortgage brokers, presented below by Justin Fabo from Antipodean Macro, shows that the number of mortgage commitments issued in the June quarter fell sharply, presumably reflecting the changes to negative gearing and capital gains tax (CGT) announced in the federal budget in early May.
As illustrated above by Fabo, the AFG series tends to track the official Australian Bureau of Statistics (ABS) series closely, suggesting the ABS will also record a significant fall when it releases its lending indicators for the June quarter on 14 August.
The sharp decline in mortgage commitments recorded by AFG has been reflected in the nation’s auction market, which has recorded seven consecutive weeks of final auction clearance rates below 50%, with this week’s figures likely to be the eighth consecutive week below 50% when they are released on Thursday.
Indeed, Treasury modelling suggests that the 2026 CGT and negative gearing reforms are expected to reduce house price growth by around 2% “over a couple of years relative to no tax policy change”, primarily by reducing investor demand for established properties.
Based on the market impacts to date and the broad-based deceleration of prices since the federal budget, Treasury’s modelling of only a 2% impact looks optimistic.
Sentiment in the housing market has dampened considerably since the budget, with ‘fear of missing out’ (FOMO) now replaced by the ‘fear of overpaying’ (FOOP).
