The value of new home loans fell 3.2 per cent in March, more than wiping out the previous month's 2.2 per cent rise as tighter lending standards continue to weigh.
The value of mortgage lending excluding refinancing was 18.4 per cent lower than a year earlier at $16.93 billion, according to seasonally adjusted figures released Monday by the Australian Bureau of Statistics.
The total value of lending to households fell 3.7 per cent to $30.75 billion.
JP Morgan researcher Tom Kennedy said there were nascent signs of run rate stabilisation for both owner-occupiers and investors, but both were set to remain in negative territory.
"We expect each series to remain under pressure as more stringent lending standards make it harder to secure financing, while falling house prices and historically low rental yields limit the appeal of the asset class in general," Mr Kennedy said.
Nationally, lending for investment dwellings contracted further in March, down 25.9 per cent compared to March 2018.
The ABS said the level of new lending for investment dwellings is at its lowest level since March 2011.
NAB analyst Kaixin Owyong said investors would likely feel the lending downtrend more severely than owner-occupiers going forward "as a number of off-the-plan apartments are completed and settled over the next year or two."
Meanwhile, there was a 0.5 per cent decline in the number of loans granted to first home buyers in March, extending the annual volume decline to 10.3 per cent.
BIS Oxford Economics' Maree Kilroy said the number of first home buyer loans would likely be subdued until 2020, despite the fanfare surrounding the recently announced federal First Home Loan Deposit Scheme.
"Whilst we are starting to see some policy responses to weak first home buyer demand ... any proposal is unlikely to have a material effect until 2020," she said.
Lending for owner occupier dwellings fell 5.7 per cent in NSW and 5.3 per cent in Queensland in March, after rises in both states the previous month.
Meanwhile, new lending for personal finance fell 11.2 per cent in March to $4.6 billion, after rises in January and February, while lending to businesses fell 1.5 per cent to $32.13 billion for the month.
The value of total lending for March was 2.6 per cent lower at $62.88 billion.
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