Home loans pioneer Mark Bouris has declared the biggest collapse in home lending on record will only get worse, in a prediction that bodes badly for property prices.
The executive chairman of mortgage broker Yellow Brick Road told the launch of a campaign against tax increases on investment property that mortgages sold through his business had fallen 28 per cent since March and “I don’t think we’ve troughed yet”.
“This is the worst period of reduction in mortgages in Australia’s economic history, or since records (were) taken,” Mr Bouris told some 300 people in central Sydney at the launch of a campaign against the tax increases. “Pretty much the investor market has disappeared.”
Changes to negative gearing and the capital gains tax in this year’s Budget were only going to slow the growth in property prices, not send them lower, the Government said at the time.
Instead, they have been blamed for the fastest falls in property prices in over 40 years, resulting in a $63,400 drop in the value of the average house or apartment.
Get Ahead
On Wednesday evening Sydney fund manager Geoff Wilson launched Get Ahead, a similar version of the campaign he successfully ran in 2019 to defeat proposed restrictions by the Labor Party on dividend tax credits.
The event was attended by leading figures from Sydney’s investment industry and others, including One Nation Senator Pauline Hanson’s chief of staff, Chris Taylor, and Bruce McWilliam, the second-largest investor in Seven Media Group, which owns The Nightly.
Mr Wilson, the chairman of Wilson Asset Management, told the event he believed the odds of reversing the Government’s decision were two-to-one. He appealed for donations and said he would hold meetings around Australia to build opposition to the changes.
Mr Wilson said he was prepared to campaign against the increases for four-and-a-half years, which would be until a second general election.
“We were brought up on having a fair go and this budget has destroyed the opportunity for all young Australians to have a fair go,” he told The Nightly.
“As an older Australian I am acutely embarrassed that this is occurring and if I just stood there and did nothing I would be ashamed.”
A spokesperson for Treasurer Jim Chalmers did not immediately respond to a request for comment.
Comedian Dave Hughes also spoke at the event, and described why he turned on the Labor Party.
“The Budget triggered me,” he said. “When you can’t trust the government you don’t want to put any of your f---ing capital at risk.”
The changes, which are forecast to raise $3.6 billion in three years, appear to have triggered a buyers’ strike.
The number of new home loans issued in July, August and September was 15 per cent lower than the previous three months, according to the statistics bureau. People buying their first home — the group the tax increases are designed to help — applied for 12 per cent fewer loans than in the same period a year earlier.
Mr Bouris reported a more dramatic shift. In February and March, 32 per cent of Yellow Brick Road’s borrowers used their loans to invest in property and 38 per cent bought homes to live in.
Today, only 3 per cent of his clients are investors and 3 per cent are homebuyers. The rest are refinancing existing loans as interest rates go up, Mr Bouris told the Get Ahead event.
He questioned the fairness of a policy, designed to reduce competition for first-homebuyers, that has contributed to an $850b fall in the value of houses and apartments this year.
“What about the generation of people, which, by the way, is much bigger than the generation of people who don’t have homes?” he said. “But what about the generation of people who’ve been working really hard all their lives to accumulate property, and they’ve watched their property go up?”
Nationals MP Bridget McKenzie accused the Government in a television interview of betraying the “great Australian dream of home ownership”.
‘Good news’
Workplace Relations Minister Amanda Rishworth said a 30 per cent fall in new investor home loans was “good” because it was part of a move by investors to newly built houses and apartments, which still offer lower capital gains taxes.
“There’s been a shift to investors investing in new housing, and that’s a good thing because that does add to supply,” she told the ABC on Thursday. “We want to see more homeowners, first-homebuyers, into their own home and our policies are certainly geared towards that.”
Fewer new mortgages reduce the profitability of banks, which are among the most widely held stocks. Shares in the Commonwealth Bank of Australia, for example, have fallen 2 per cent over the past six months while the overall market has risen 5 per cent.
Last weekend only 29 per cent of homes auctioned in Sydney sold, down from 49 per cent a year earlier, according to Louis Christopher, the owner of SQM Research. In Melbourne, the figure dropped to 37 per cent from 54 per cent.
Lobby group Master Builders NSW said it was concerned about “a downward trend that’s eroding confidence” from the tax increases and inflation, which has led to five interest rate increases this year.
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