First home buyers and property investors continue to retreat from the real estate market, according to analysis by one of the country's biggest valuation firms. Meanwhile, Google Trends research indicates Australians' interest in home loans and mortgages has been declining since the end of March this year.

Valuation and data insights firm Herron Todd White (HTW) analysed figures released on Wednesday by the Australian Bureau of Statistics (ABS) and said "investor lending has just suffered its biggest fall on record".

Google Trends data points to a declining interest from NSW consumers in home lending. From a peak towards the end of March this year, there has been a 42 per cent reduction in search interest for mortgage and home loans.

The federal government's budget announcements in May included an overhaul of capital gains tax measures, negative gearing restrictions and changes to the tax rate on discretionary trusts – measures intended by Treasurer Jim Chalmers to improve affordability for first home buyers.

But HTW argues that the tax reform measures plus five interest rate rises in a single year "had broken buyer confidence".

"It is first home buyers, the very people the tax changes were meant to help, who are retreating fastest among owner-occupiers," the firm said.

The latest ABS statistics are the first to reflect a full quarter since the budget was handed down.

The number of new loans to property investors fell 30.6 per cent in the September quarter which was the largest quarterly fall on record, according to ABS figures.

"Total new housing loan commitments fell 15 per cent over the quarter to 111,878, with their value down 15.5 per cent to $81.2 billion, which is the lowest number of new loans in more than three years," HTW added.

HTW Chief Economist Cameron Kusher said confidence in the property market has been decimated, and that the scale of the investor retreat was "without precedent in the series".

“With residential property prices and sales volumes trending down, it’s little surprise to see that mortgage finance commitments have continued to reduce over the September 2026 quarter,” he said.

Higher interest rates lead to lower interest: Google Trends data for NSW shows a 42 per cent reduction since late-March in search interest for mortgage loans (shown in blue) and home loans (red). Source: Google Trends.

Earlier this week, the Real Estate Institute of NSW (REINSW) laid the blame for the significant decline in the number of loans to investors, and the subsequent pain being experienced by tenants, at the NSW Government’s feet.

Home loans are down significantly, largely driven by a drop-off in loans to investors, according to the Reserve Bank – a trend playing out with significant consequences in NSW, REINSW CEO Tim McKibbin says.

Mr McKibbin said on Monday the exodus of investors and the resultant shortage of rental accommodation in NSW is largely the fault of the NSW Government's failure to understand the realities of the rental market.

“Every anti-landlord reform the NSW Government has introduced has had an adverse impact on tenants in the form of fewer homes to rent and higher rents as a consequence,” Mr McKibbin said.

“Landlords have heard the Government’s message loud and clear. That message is to get out of the market, irrespective of the impact this has on tenants."

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