04.08.201700:07:00UTC+00Australia Housing Boom Starts to Lose Steam

Property investors, who have helped fuel growing home prices in Australia, are in a tight spot as regulators impose restrictions to control lending.

Price growth in Sydney, the world's second-most expensive housing market, has slowed to 2.2 percent in the three months through July, lower from a high of five percent earlier this year, according to CoreLogic Inc.

Australia's largest banks have this year raised minimum deposits, tightened eligibility requirements and increased rates on interest-only mortgages.

The nation's tax breaks for landlords, along with record-low borrowing costs, have made Australia home to over two million property investors. Demand from such buyers has contributed to a bull run that has raised Sydney and Melbourne into the ranks of the world's priciest property markets.

However, signs have started to emerge that the curbs are deterring speculators while home prices are beginning to cool.

Property auction clearance rates in Sydney are below 70 percent in seven of the past eight weeks, compared to as high as 81 percent in March prior to when the curbs were imposed. Investor loans accounted for 37 percent of new mortgages in May, down from 2017's high of 41 percent in January.