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Investors have been flooding back into Australia’s property market at an eight-year high, fuelled by low interest rates and tight rental supply, sparking fierce competition and hefty profits for sellers.
Investor activity has surged over the past 18 months, reaching its highest share of new lending since 2017, with about one in seven Australians now owning a rental property.
According to REA Group's PropTrack Terri Scheer Investor Report, new investor lending has risen steadily, fuelled by tight rental conditions and renewed confidence following the multiple RBA rate cuts.
Across the country, Queensland and South Australia recorded the highest increase in investor loans, up by 16 per cent from the 2024 to 2025 financial year.
Investor activity has also been strong in New South Wales, with investor loans up 12 per cent, while Western Australia saw a 10 per cent increase, and Victoria recorded a rise of 9 per cent over the same period.
In contrast, Canberra was the only territory to record a decline of 15 per cent in investor loans.
REA Group senior economist, Angus Moore, said that the peak in investor loans showed a strong market performance.
“With markets expecting at least one further rate cut by the Reserve Bank and challenging rental market conditions persisting, strong investor activity is likely to continue over the rest of this year and next.”
Moore said the peak in activity also resulted from rental conditions, as the report found that limited rental availability led to higher rents and increased competition, ultimately attracting investors.
Recent Cotality data showed that rental stock supply has remained below average, with about 25 per cent fewer listings on the market than the five-year average.
The decrease in listings, combined with a record-low vacancy rate of 1.47 per cent nationally, has resulted in a 4.3 per cent growth in rents over the year to September.
“Rental market conditions remain very tight, and rents have grown rapidly in recent years. That’s likely encouraging investors to buy in,” Moore said.
According to the PropTrack report, investors have heavily concentrated in inner-city Sydney and Melbourne, where large rental markets and strong demand exist.
Affordable outer suburbs in major cities, such as Wyndham, Blacktown, Ipswich, and Kwinana, have also attracted significant investor activity.
Across the popular investment hotspot, the report noted that many of the areas coincide with new housing developments, supporting continued investment.
Seller making a profit
While some investors have been focused on building up their portfolios, those who decided to sell reaped hefty profits.
In total, over 90 per cent of investment properties sold in the past year made a profit, among the highest shares on record.
According to the PropTrack report, the current capital gain for sellers was due to the strong price growth during and after the pandemic.
Sellers in smaller capitals such as Brisbane, Adelaide, and Perth have seen widespread investor gains, with property prices rising over 90 per cent since March 2020.
In contrast, Melbourne has experienced weaker growth in recent years, resulting in fewer profitable investor sales, although more than 80 per cent still achieved a gain.
Overall, national home prices have risen around 50 per cent, meaning most recent investor sales have been profitable.
Terri Scheer executive manager, Carolyn Parrella, said the market has been favourable for sellers.
"With more than 90 per cent of investment properties selling for more than their purchase price, the current market conditions could present a lucrative opportunity for property investors, “ she concluded.
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