Home / Business and Economy / Aussie Property Slowdown Rattles Lenders
Aussie Property Slowdown Rattles Lenders
1 Oct
Summary
- Australian banks' shares declined by nearly 10% recently.
- Mortgage applications dropped 15% following tax changes.
- Business credit growth is projected to exceed 7%.
Australian banks are feeling the pinch from a cooling property market, leading to a nearly 10% drop in their share values over the past six months. This situation was exacerbated by rising interest rates and the government's decision in May to scrap longstanding tax incentives for buy-to-let investors. These changes have significantly dented housing market activity.
Following the tax adjustments, mortgage applications saw a 15% decrease, and house prices in Sydney and nationwide have slipped from their March peak. With mortgages constituting a substantial portion of their loan books, Australian banks are actively seeking to rebalance their portfolios.
Despite the housing slowdown, there are promising growth areas, particularly in renewable energy infrastructure and AI data centers. Businesses are investing at their highest level in over a decade, driving robust demand for business credit, which is expected to grow at 7% or more annually for the next two years. This presents a vital opportunity for banks to redirect capital toward more profitable ventures, such as corporate lending, which is already showing stronger growth and higher earnings contribution.
