Westpac Banking's (ASX:WBC, NZE:WBC) housing investor loan applications declined 20% over the last three weeks after Australia's federal budget proposed changes to negative gearing and the country's capital gains tax, the Australian Financial Review reported Thursday.

The budget included a minimum 30% tax on capital gains starting from July 2027, as well as the end of negative gearing for existing properties. Carolyn McCann, Westpac's head of consumer banking, said there is broad concern over the proposed reforms, according to the report.

"Customers and the community could be a bit concerned about the changing signals," McCann reportedly said ahead of a strategy briefing, pointing to the Middle East conflict and interest rate hikes in addition to the tax changes.

House prices slid in Sydney and Melbourne after the release of the budget, but McCann believes supply-side constraints will help limit further declines, AFR reported.

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