Home loans to property investors have fallen for a second straight month in a sign the brakes may soon be applied to soaring house prices.
The value of investor housing loans dropped 0.7 per cent in June, the first fall in two consecutive months since late 2012, and economists expect efforts by regulators to address record home prices cause further falls in the coming months.
The number of home loans for owner occupied housing rose 4.4 per cent in June, rebounding from a 7.3 per cent fall in May.
CommSec's Savanth Sebastian said the housing sector will continue to grow, but there may soon be a cooling off in prices.
"The outlook for the sector is it may start to lose some of that irrational exuberance that we've been seeing in the last few months - or over the last year - when it comes to investment purchases," he said.
"The massive year-on-year growth that we've seen is behind us."
Sydney home prices rose 13 per cent in the year to March, and Melbourne's rose 4.7 per cent, driving the national average higher.
Investor activity has fuelled soaring prices, and the Australian Prudential Regulatory Authority has moved to restrict growth in investor lending to slow the price rises.
All four major banks have also increased interest rates for home investors in recent weeks.
St George senior economist Hans Kunnen said those factors will take time to influence home lending figures.
"I don't think it's a magic bullet, but it'll influence people's decisions over the next 12 months as people say, 'oh gosh, it used to be cheaper, it's a little more expensive, we might have to pull back'," he said.
Westpac senior economist Andrew Hanlan said record low interest rates are having an impact on owner occupier lending, sending home loan approval rates to their highest level since March 2013.
"Lower rates have provided an immediate boost to the housing market, particularly in the eastern states," he said.
"It was to be expected that housing finance would strengthen in June and potentially rise further in July."
"People need a roof over their heads. Modest growth in home lending is to be expected as the economy grows, the population continues to grow - that's a key driver - and interest rates are low."
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