AARON PATRICK: Investors are already fleeing the property market. Blame Anthony Albanese

A great shift in capital has begun, thanks to the Albanese Government.

Investors are deserting the property market, according to figures published today by National Australia Bank, a shift that portends further falls in the home prices — the primary source of most Australians’ wealth.

In a presentation to investors, the bank revealed that it had received 15 per cent fewer applications for home loans in the three months ending June 30 compared with the quarter before.

That’s a significant drop, according to AMP chief economist Shane Oliver, and is clearly driven by the federal Budget’s changes that will phase out the tax benefits of investing in second-hand houses and apartments.

“I think it is consistent with an ongoing and further slump in demand for housing from home buyers and I suspect a big chunk is weaker investor demand,” he said.

Anyone who has been to a house auction over the past two months won’t be surprised. In Sydney, for example, of 610 scheduled auctions last week only 37 per cent found buyers, according to SQM Research, an incredibly low rate that will have caused significant angst to families across the city.

The consequence is already showing up in prices, which are falling in all cities except Darwin. Rents are declining too, although not yet in Melbourne, Hobart or Darwin.

The price falls represent a transfer of wealth from home owners to home buyers. Which means, in rough terms, government policy is being used to take money from the rich and give it to the not-rich, which is consistent with the Albanese Government’s overall approach.

There are two main second-order effects of the investors’ strike: lower prices will make Australians feel less wealthy, likely hitting spending, and money that would have been spent on second houses or apartments to rent or Airbnb out will have to go somewhere else.

Some of the capital will go into newly built homes, which is what the Albanese Government is counting on to help meet national housing targets that would otherwise be almost impossible to reach.

No doubt some experienced investors will be willing to buy apartments off the plan or new houses on the suburban fringes.

But amateur property players gravitate to what they know, and that is usually existing homes in nearby suburbs. Not only do they have a good sense of valuations in the neighbourhood, there is comfort in being able to easily drive by and check out what the renters are up to.

That’s why removing the tax benefits from property investing will change Australia. Middle-class families hoping to buy a holiday house near the beach and rent it out over summer will have to reconsider their plans. Tradesmen are going to find it harder to build property portfolios in their twenties. Wealthy retirees are more likely to play the stock market than renovate run-down houses near where they live.

There are alternative ways to fix the property market. In NSW, the government this week said it would require councils to draw up 30-year plans to create extra housing.

The effect, according to Premier Chris Minns, will be a doubling in potential housing in addition to policy changes that have already doubled the number of homes that can be built.

In other words, Mr Minns reckons he will quadruple the potential number of new homes that can be built in NSW, supply that should naturally suppress prices in what has been called the world’s second-most expensive property market relative to incomes.

“Now is not the time to lose our nerve and go back to the planning failures that left a generation priced out of home ownership,” he said.

NSW is following Victoria, which implemented more liberal property rules under the old property-investment taxation system. As a consequence, Victorians have some of the cheapest housing options in the nation. South Australia has promised to follow.

Allowing new homes to be built is one thing. Changing the tax rules and pushing down prices is another. Mr Albanese is changing the country. Investors are being forced to adapt.