Investor Lending Falls by a Third: The Largest Quarterly Drop on Record

The combined capitals cleared a preliminary 44.0% on 1,888 auctions, down from 51.5% on 1,734 a week earlier and the lowest preliminary result of 2026. Of 1,436 results collected, 637 sold and 799 did not (Cotality). Cotality had 1,951 auctions scheduled, and the 1,888 that went ahead are the most since mid-June. The same weekend last year 70.0% of 3,258 auctions cleared on Cotality's preliminary count, so volume is about 42% lower and the clearance rate 26 points lower.

Cotality's final figure for last weekend (8 November) was 45.2% on 1,695, 6.3 points below its preliminary 51.5% and up from 40.7% the week before. It was the eighth straight week with a final below 50%, and the four-week average was 44.3% (Cotality). This weekend's preliminary is already below last weekend's final. If the usual gap between preliminary and final figures holds, the final could land below 40%, under the 40.7% recorded on 1 November.

City by city

Sydney cleared 48.1% on 716 auctions (254 sold, 274 not), narrowly the best of the capitals, down from a preliminary 52.3%; last weekend finalised at 45.2% on 692. A year ago Sydney cleared 70.8% on 1,253.

Melbourne fell furthest, to 47.8% on 692 auctions (278 sold, 304 not) from 59.1% a week earlier; last weekend finalised at 51.7% on 594, the only mainland capital above 50%. A year ago Melbourne cleared 70.5% on 1,484.

Brisbane cleared 25.3% on 235 (41 of 162 results), down from 31.2%; last weekend finalised at 27.0%, the fourth straight week Brisbane had the lowest final of the mainland capitals, and a year ago 71.8% of 215 cleared. Adelaide eased to 41.3% on 148 (38 of 92), against 67.7% a year ago. Canberra fell to 34.9% on 80 (22 of 63) from 47.2%, against 59.3% a year ago. Perth sold 3 of 8 results on 16 auctions, and Tasmania 1 of 1. Cotality does not publish withdrawals in its preliminary table.

My Housing Market, which counts the week to Saturday, read the national rate at 43.9% (45.6% the week before, 67.4% a year ago). It had Sydney at 49.7% on 1,013 auctions (houses 46.2%, units 57.8%) with a house auction median of $1,645,000, 18.9% lower than a year ago, and Melbourne at 60.1% on 773 (houses 58.1%, units 63.9%) with a house median of $1,100,000, 4.8% higher. Brisbane cleared 18.8% on its count. Cotality expects about 1,800 auctions next weekend.

Prices: Cotality's daily index in November

Cotality's daily index for the five largest capitals is down about 0.8% in November so far, after a 1.5% fall in October, and is 6.3% lower over the year and 4.7% lower over three months (our arithmetic on Cotality's daily index, mid-November against the October month-end value). Brisbane, including the Gold Coast, is falling fastest (about -1.3% month to date) and is now 1.6% lower over the year, followed by Perth (-1.0%), Sydney (-0.8%), Adelaide (-0.5%) and Melbourne (-0.4%). Over the year Sydney is down 10.6% and Melbourne 8.2%, while Adelaide (+2.6%) and Perth (+1.5%) are still higher, though Perth's annual gain has fallen from 3.9% at the end of October (Cotality).

Cotality's October Home Value Index, the latest monthly figures, had national values down 1.2% in October, 2.8% over the year and 6.7% below the March peak, with a national median of $884,855. The combined capitals are 8.1% below their March peak, a tenth of a point short of the largest peak-to-trough fall in at least 40 years (8.2% in 2017–19). Cotality's research head Gerard Burg expects the current fall to pass that mark in November's figures, and Sydney (-10.1%), Perth (-8.9%) and Brisbane (-8.3%) have the deepest falls from their peaks (Cotality). November's index is due on Tuesday 1 December.

Selling conditions

Cotality's November chart pack shows the slowdown in detail. About 116,000 homes sold in the three months to October, roughly 18% below the five-year average, and annual sales have now fallen for ten straight months, led by Perth (-21.4%) and Brisbane (-17.8%). The median home took 41 days to sell, from 24 a year earlier, and the median vendor discount widened to 4.5%, the largest since mid-2019, with Brisbane (5.6%) and Perth (5.3%) the widest. New listings in the four weeks to 8 November were 13.9% below a year earlier and 15.7% below the five-year average, while total listings were 18.6% higher, led by Perth (+71.7%), Brisbane (+59.5%) and Adelaide (+50.7%). Melbourne is the exception: its total stock is 5.3% below the five-year average, and Burg links that better balance to Melbourne having the slowest fall of the major capitals (Cotality).

The cash rate is 4.85% after the RBA's 25 basis point rise on 3 November, its fifth of 2026, and the big four passed it on from Friday 13 November (RBA). The minutes of the November meeting are due on Tuesday 17 November and the October labour force figures on Thursday 19 November; unemployment was 4.7% in September (ABS). The next decision is Tuesday 8 December, the last of 2026.

Confidence is falling

The Westpac-Melbourne Institute consumer sentiment index fell 2.7% to 78.2 in November, the lowest since late 2022. Sentiment among mortgage holders fell 11.6% to 68.1, the lowest on records back to 1994. The mortgage rate expectations index eased 1.1% to 177.8, and 72% of consumers expect mortgage rates to rise further over the next 12 months, down from 80% in October and up from 64% in September (Westpac-Melbourne Institute). Westpac's economists also note that NAB's October business survey had confidence at -15 and forward orders at -12, the weakest since the pandemic, and conclude that "the data points to a further loss of momentum across the domestic economy".

Lending: a record fall for investors

The ABS lending indicators for the September quarter, released on 11 November, showed new loan commitments for dwellings down 15.5% in value to $81.2 billion. Investor commitments fell 32.3% to $24.7 billion and 30.6% in number to 35,301; owner-occupier commitments fell 5.3% to $56.5 billion, and first home buyer commitments 8.0% to $16.2 billion (ABS, seasonally adjusted, excluding refinancing). The Featured Insight below sets the investor fall against the series' history.

Building approvals

Dwelling approvals rose 5.1% to 17,948 in September, 9.2% above the decade average but 0.8% lower than a year earlier. Units rose 24.6% to 7,371, helped by public-sector approvals, while houses fell 5.3% to 10,577 (ABS). October's figures are due in early December.

SQM Research's October figures put national vacancy at 1.5%, up from 1.4% in September and 1.2% a year ago, on 44,275 vacant rentals, 22.5% more than a year earlier and the highest count since December 2024. Melbourne reached 2.0%, the highest of the capitals, with Canberra at 1.9% and Sydney at 1.8%. Brisbane rose to 1.0%, Darwin to 0.8% and Perth and Adelaide held at 0.6%, while Hobart eased to 0.4%, the lowest of the capitals (SQM Research).

Against the season

From September to October national vacancy is usually flat or slightly lower; on SQM's series it moved between a 0.09-point fall and no change in each of the five years to 2025. This year it rose 0.07 points, and Sydney, Melbourne and Brisbane all rose by more than their usual September-to-October moves (our arithmetic on SQM's series). Vacancy normally rises further into December, so the summer figures are likely to be higher again.

Rents

National asking rents were $708 a week in the week to 12 November, 0.5% higher over the month and 6.4% higher over the year, down from 7.6% annual growth a month earlier as last year's strong spring drops out of the comparison (SQM Research). Capital-city rents rose 0.3% over the month and are 4.9% higher over the year. Unit rents fell over the month in Sydney (-0.7%, a second monthly fall), Melbourne (-1.6%), Canberra (-0.2%) and Darwin (-3.2%), and Sydney unit rents are now only 2.0% higher than a year ago. Annual combined rent growth ranges from 1.6% in Canberra to 11.8% in Darwin, with Brisbane at 7.1%, Hobart 7.3% and Perth 6.2% (SQM Research).

Yields

Cotality puts the national gross yield at 3.92% in October, the highest in more than seven years, as values fall and rents edge higher. Sydney's 3.45% is still the lowest of the capitals and Darwin's 6.4% the highest; regional markets yield 4.4% against 3.8% in the capitals (Cotality). At a 7.25% test rate none of the large capitals' average yields covers interest on an 80% loan, which is why our Top 3 leans on regional and Darwin unit markets.

New lending to property investors fell 32.3% in the September quarter to $24.7 billion, seasonally adjusted and excluding refinancing, and is 38.1% lower than a year earlier (ABS). The number of investor loans fell 30.6% to 35,301. Owner-occupier lending fell 5.3% to $56.5 billion and first home buyer lending 8.0% to $16.2 billion, so investors account for most of the 15.5% fall in total new lending.

The largest fall on record

On the ABS series, which starts in September 2002, no quarter comes close. The next-largest falls were 18.4% in the December quarter 2015, when APRA capped investor credit growth at 10% a year, and 17.5% in the June quarter 2020, when the pandemic shut open homes and auctions. Investor lending peaked at $43.6 billion in the December quarter 2025 and has fallen 43% in three quarters, to its lowest level since the September quarter 2023. In the 2022–23 hiking cycle it took a full year to fall 32%, from $32.7 billion to $22.3 billion a quarter. Investors took about 30% of new lending by value, down from 38% in the June quarter (our arithmetic on ABS figures). Our investor lending chart sets both cycles against the cash rate.

Two pressures at once

The quarter combined higher rates with new tax rules. The RBA raised the cash rate in September, its fourth rise of the year, and the average variable rate for investors reached 6.41% that month (Cotality). From 1 July 2027 negative gearing no longer applies to established homes bought after 7:30pm on 12 May 2026, and the 50% CGT discount gives way to cost-base indexation with a 30% minimum tax, so an investor buying an established home today buys under the new rules. Since 10 August SMSFs can no longer use a limited recourse loan to buy residential property. Westpac's economists link the fall to "higher rates combined with the housing tax changes announced in May". We can't split the fall between the two, but the timing suggests both played a part. Investor lending fell 11.2% in the June quarter, which included Budget night, and three times as much in the first full quarter after the law passed in late June.

Where it shows up

Fewer investor buyers means fewer bidders at auctions and open homes. The combined-capital final clearance rate has been below 50% for eight straight weeks, and the median vendor discount widened to 4.5% in the three months to October, the largest since mid-2019 (Cotality). New listings in the four weeks to 8 November were 13.9% below a year earlier while total listings were 18.6% higher (Cotality), so stock is building because fewer homes sell. Over time, fewer investor purchases should mean fewer homes added to the rental pool. There is no sign of that yet. Vacancy rose to 1.5% in October, its highest since December 2024 (SQM Research).

What it means for you

If you're buying, you face fewer investor rivals than at any time since 2023, which strengthens your hand on price and terms. Ask how long a property has been listed and price your offer from recent sales. New builds keep negative gearing after July 2027, which may draw investors towards them, so check whether a new build's price premium outweighs the tax benefit before you pay it. If you already own, homes bought before the cut-off keep negative gearing, and the CGT change matters only when you sell. Work out whether selling before or after 1 July 2027 leaves you better off before you act on the headlines; our Sell or Hold Planner models both under the enacted rules. Keep testing every purchase at 7.25%.

What would change our view

A recovery in investor lending while the cash rate stays at 4.85% would suggest the tax changes caused a one-off adjustment rather than a lasting shift. The RBA's monthly credit figures at the end of November give the first read on October, and the ABS December-quarter figures follow in February.

The week ahead

Tuesday 17 November: minutes of the RBA's November meeting. Thursday 19 November: ABS labour force figures for October, and Cotality's final clearance rates for this weekend. Saturday 21 November: about 1,800 auctions expected across the capitals (Cotality). Cotality's November Home Value Index follows on Tuesday 1 December.