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In what one economist is describing as a “tiny step” toward a fairer housing market after decades of bad policy, property investors are shying away from established homes, and putting money into new builds instead, new data shows.

New lending to property investors fell sharply in the three months to June, slumping almost 9%, ABS data showed, while the number of total new home loans dropped by 5.4% in the June quarter.

The major banks have all reported a slump in mortgage applications in recent months, after three RBA official rate hikes and the federal budget’s investor tax changes that together have weighed on property prices.

The ABS’s head of finance statistics, Mish Tan, said: “lending fell across all borrower types this quarter and returned to similar levels to this time last year”.

Investor loans led the decline, falling by 8.6% in the June quarter after a 4.7% drop in the previous period. The number of investor loans was 2.8% higher than a year earlier, while the value of loans to investors was down by 10.2%.

The number of loans to first home buyers dropped by 2.9% over the three-month period, to be flat over the year.

Saul Eslake, a leading housing economist said the interest rates increases this year would be reducing the number of first home buyers..

“I don’t think it’s a cause for concern,” he said. “Whereas I would say the big fall in lending to investors for the purchase of established homes is actually something to be welcomed and celebrated.

“Because it means that prospective first home buyers are facing less competition from investors motivated by tax breaks for the housing we’ve already got.”

The number of loans to investors in established properties was down 14.8%, but the number of loans to investors buying new builds was up by 4.4% to a record high, a possible effect of the government’s budget carve-out for investor lending to build new housing.

Eslake said more investment in new builds actually increased rental supply, rather than pitting renters against investors for established housing.

He said these stats were a “tiny step” in the right direction to make Australia’s housing market more equal.

“A tiny step. But at least it is in that direction, whereas we’ve been taking tens of thousands of steps in the wrong direction for the last thirty years.”

National spokesperson for Everybody’s Home, Maiy Azize, said the figures show the governments tax reforms were “beginning to rebalance the market”.

“The most encouraging sign is that investors are pulling back from existing homes while investment in new housing is growing. That means less competition for first home buyers trying to buy a home,” Azize said.

“It also smashes the myth that immigration is the main driver of house prices. When governments change the rules and stop boosting investors, housing costs go down.

“Housing becoming more affordable is a good thing, especially for people trying to buy their first home.”