The number of property investor loans processed by Australia's largest mortgage broker fell in June, with a big slide in investment loans in the booming Sydney market.
AFG processed a record 11,056 mortgages worth $5.1 billion in June, but only 36.9 per cent were for property investment, down from 40.9 per cent in May.
The sharpest fall in investor loans was in NSW, sliding to 41.6 per cent in June from 49.8 per cent in May, amid ongoing concerns of overheating in Sydney's house market.
Rapid price rises in the NSW capital have largely been fuelled by investor activity.
"If this trend continues, it should help allay concerns about overheating in Sydney in particular, as investment levels there come back into line with the sustainable, long term national average," AFG managing director Brett McKeon said.
The figures show moves by the Australian Prudential Regulatory Authority to cool the Sydney market were taking effect, he said.
The regulator has heightened surveillance of lending practices and warned that growth in investor loan portfolios materially above 10 per cent could prompt regulatory action.
AFG said the number of loans to investors were also down in South Australia, Queensland, Victoria, and Western Australia.
Figures released last week by the Reserve Bank showed the value of investor housing loans rose 0.8 per cent in May, taking growth over 12 months to 10.4 per cent.
Meanwhile, the latest property market analysis from CoreLogic RP Data showed house prices continue to surge.
In the week ending Sunday, prices rose an average 1.2 per cent in Sydney and 2.3 per cent in Melbourne - the third consecutive weekly rise in both cities.
Annual price growth has lifted to 16.4 per cent for Sydney and 10.4 per cent for Melbourne.