Investor apps down 28%: where it matters

Investor loan applications at Australia’s biggest bank are down 28% since May, while owner-occupier applications are down 9%. That split is the real story. - Same bank, same rates, same economy — very different borrower response - Westpac reported applications down 20% since May - NAB flagged 15% down since the end of March - The exit is already in the price on some streets, and nowhere on others Today’s brief looks at why the buyer mix changed, what the bank results are really telling us, and why street-level data matters more than a national average. Download Ripehouse Advisory’s free Top Five Markets Report: ripe.house/brief-28 Disclaimer: General information only, not financial advice. Seek professional advice before making investment decisions.

Investor loan applications at Australia's biggest bank have fallen 28% since May. Owner-occupier applications fell nine. That gap is the most useful number in property this morning because the buyers who left were not the market. They were one cohort of it. Stay with me because the street maps at the end show you where that missing bid was holding the price up and where it never mattered at all. Three numbers, the first 28%, that is the fall in investor loan applications at the Commonwealth Bank since the 12th of May. Budget. The second, 9%. That is the fall in owner-occupier applications over the same period. Same bank, same rates, same economy, and roughly a third of the impact. And the third, $10.9 billion. That is the profit the bank reported this morning while that was happening. The lender is fine. It is the borrower mix that changed. Here is how it is being reported. Applications down 15%. Housing activity softening. The downturn arrives at the banks. All true and all averages because the average hides the split. Investor applications down 28%. Owner-occupier applications down nine. Those two numbers describe completely different markets and the reason is not the interest rate. Both cohorts pay the same 4.35%. The reason is the May budget. Negative gearing is now limited to newly built property. The 50% capital gains discount is gone, replaced with an inflation-based one, and there is a 30% minimum tax on net capital gains. Owner-occupiers were not touched by any of that and their applications barely moved. The policy targeted a cohort and the cohort responded. And it is not one bank's book. Westpac reported applications down 20% since May. National Australia Bank flagged 15% since the end of March. Three of the big four, same direction, which makes this a system-wide read rather than a story about one lender. The chief executive also said volumes appear to have stabilised in recent weeks and that activity bottomed in late June. So the exit is not still unfolding. It already happened and it is now sitting in the price of some streets and not others, which means the useful question is no longer how many investors left. It is where they were the ones setting the price. That is a question a national average cannot answer and it is the one worth your next two minutes. And what it left behind is different on every street, which is exactly what our free e-book is for. It shows the five markets we are buying in right now and why. Go to ripe.house slash brief dash 28. So let us test it. Melville in Perth, about 10 kilometres south of the city, a median around $1.5 million, an 83% owner occupied. On paper, this is the safest kind of suburb there is, but look at the signals. The 12-month gross yield of 4.68% has compressed to 2.79 on the 90-day read. Vacancy has gone the other way from 1.60% to 2.83. Rents are not keeping up and more properties are sitting empty. In a suburb this expensive, the investor was the marginal bidder. Take that bid away and the price has less underneath it. Now, Berserker in Rockhampton, Queensland, a median around 550,000 and 55% owner occupied, less than half the price and a far higher share of renters. And every signal moved the opposite way. The 12-month yield of 5.01% has strengthened to 7.23 on the 90-day read. Vacancy has tightened from 2% to 1.05. Same 28% national pullback, same tax change, opposite result. Because here the price is set by what a tenant will pay, not by what an investor could deduct, whi