Mortgage applications in Australia fell by 15 percent [1] over the last three months, according to data from National Australia Bank.

The decline suggests a cooling of the housing market as potential buyers and investors react to new fiscal policies. This shift in borrowing behavior could signal a broader correction in real estate demand if the trend persists.

The drop in applications follows the announcement of the Labor federal budget, which included changes to capital gains tax and negative gearing. These tax mechanisms have historically encouraged property investment by allowing owners to offset rental losses against other income.

Ross Greenwood, Business Editor for News24, noted the timing of the downturn. "That just about coincides with when the federal budget and those changes to negative gearing and capital gains tax were announced," Greenwood said.

National Australia Bank reported that the 15 percent [1] decrease occurred during the three-month window immediately following the budget announcement. The bank's data highlights a sharp contrast to previous borrowing patterns in the Australian market.

Investors typically rely on negative gearing to reduce taxable income, while capital gains tax affects the profit made upon selling a property. By altering these incentives, the federal budget has shifted the financial calculus for many prospective homeowners and landlords, potentially deterring them from taking on new debt.

Industry observers are monitoring whether this decline is a temporary pause or a long-term trend. The reduction in loan demand may influence how lenders price their products in the coming months as they compete for a smaller pool of applicants.

“Mortgage applications in Australia fell by 15 percent over the last three months.”

The correlation between the budget announcement and the drop in mortgage applications indicates that tax incentives are a primary driver of the Australian property market. By reducing the benefits of negative gearing and adjusting capital gains tax, the government is effectively curbing speculative investment. This could lead to lower property price inflation but may also reduce the availability of rental stock if investors exit the market.