Rental crunch and rate cuts spark investor boom
Australia’s property investment market is heating up, with new data showing investors currently account for the largest share of new lending since 2017.
The PropTrack Terri Scheer Investor Report published on Thursday attributed the surge in investor activity to tight rental conditions and expectations of further rate cuts.
This marks a decisive rebound after the slowdown that followed the Reserve Bank of Australia’s cash rate hikes in 2022 and 2023.
Since the RBA’s easing cycle commenced in February, Australia’s benchmark interest rate has reduced by a cumulative 75 basis points to 3.60% as of September.
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More Aussies investing in propertiesRents soar, yields strengthenHotspots: Cities and beyond
More Aussies investing in properties
The report revealed investing in housing “has become more common in the past four decades”, with more than 14% of Australian taxpayers reporting rental income in 2022-23, up from just over 4% in the late 1970s.
“This share has been largely stable since the turn of the 2010s, though it has declined from the peak seen in the 2013-14 financial year,” the report said.
“This is high by global standards,” it continued. “In other countries, corporate and government ownership of housing is more common.”
These investors are typically high-income earners, earning above $225,000, and aged between 35 and 64.
The share of property investors aged over 60 years has risen from 14% in the early 2000s to 27% today.
Among Australians who do invest in property, two-thirds own just one investment property, and one-fifth hold two. Only a small minority expand to three or more.
Falling mortgage rates and tight rental market conditions are seen as the drivers of the resurgence.
“The number of new investor loans has risen solidly in the past two years,” said REA Group senior economist Angus Moore.
“Rental market conditions remain very tight, and rents have grown rapidly in recent years. That’s likely encouraging investors to buy in.
“With markets expecting at least one further rate cut by the Reserve Bank, strong investor activity is likely to continue over the rest of this year and next.”
However, prior to the release of this report, three of the big four banks in Australia have pushed their rate cut forecasts from the upcoming RBA meeting in November to February or May 2026.
Rents soar, yields strengthen
The investor resurgence is being fuelled by two reinforcing forces: soaring rents and limited supply.
National vacancy rates have dropped to near record lows, with the latest figures at 1.2% in September, per SQM Research.
Meanwhile, advertised rents have surged nationwide, 4.8% year-on-year, taking the national average to $655 per week.
Gross rental yields have also improved, lifting the income appeal of residential investments.
More than 90% of investment properties sold in the past year achieved prices above their original purchase price, one of the highest proportions on record.
Terri Scheer executive manager Carolyn Parrella said the conditions were generating real momentum.
“With more than 90% of investment properties selling for more than their purchase price, the current market conditions could present a lucrative opportunity for property investors,” she said.
Hotspots: Cities and beyond
Inner-city Sydney and Melbourne remain favourites, but surrounding suburban belts and more affordable regional markets are also attracting strong attention.
The combination of rising yields and price growth across multiple geographies suggests investors are looking for both security and diversification.
Image by Daniel Brubaker on Unsplash
Property market rebounds after 3-month dip
Australia’s residential property values bounced back to a new record high in March, reversing a recent three-month decline.
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Published 03 Apr, 2025
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Price gains in mid-sized capitals easeRegional markets continue to outperform capitalsGrowth evens out across price points
The latest CoreLogic Home Value Index (HVI) revealed a 0.4% increase in property values during the month, lifting the nation’s median dwelling price to $820,331.
The monthly rise was broad-based, with gains recorded in every capital city except Hobart, where values fell by 0.4%.
Increases ranged from 0.2% to 1% across the other capitals.
Sydney and Melbourne continued their recovery, with values in both cities rising over the past two months following declines earlier in the year.
Sydney home values remain just 1.4% below their record high, despite a -2.2% drop between September 2024 and January 2025.
In Melbourne, where the downturn has been more prolonged since peaking in March 2022, values are still 5.6% below their peak.
Both cities carry the greatest weighting in the national index.
CoreLogic – soon to rebrand as Cotality – attributed March’s rebound to “improved sentiment” and a “slight improvement” in borrowing capacity and mortgage serviceability, following the RBA’s February rate cut.
“With the rate-cutting cycle expected to be drawn out, it will be interesting to see if this positive inflection in values can last in the face of affordability constraints,” said CoreLogic Research Director Tim Lawless.
Despite the rebound, the property analytics firm was quick to describe the recovery as likely “temporary.”
“On the upside, a gradual easing in monetary policy, cost-of-living relief, income growth, tight labour markets and improved sentiment are all likely to support housing sector activity,” Mr Lawless said.
He noted however that given the drawn-out nature of the rate-cutting cycle, ongoing affordability issues, and other headwinds, any growth in home values is likely to remain contained.
Price gains in mid-sized capitals ease
While larger capitals regain momentum, mid-sized cities appear to be losing steam – although property values are still rising.
This trend is particularly evident in Perth, where downward revisions over recent months have nudged values slightly below their October 2023 peak (-0.05%).
On a monthly basis, Perth and Canberra recorded the slowest growth among capitals, both rising by just 0.2%. However, on an annual basis, Perth led the nation with an 11.9% increase in home values.
Since March 2020, Perth home values have surged by 75.4% – the strongest five-year growth among the capitals.
Regional markets continue to outperform capitals
As seen in previous months, regional property markets-particularly in WA and Queensland-continued to outpace capital city growth, with a 0.5% monthly rise compared to 0.4% in the capitals.
“However, the growth trajectory looks to be converging as the capital city trend accelerates and the regional trend holds steady,” CoreLogic noted.
Western Australia’s Mid-West region, which includes Geraldton, posted the strongest annual growth at 25.4%. It was followed by Townsville (23.5%), Gladstone (22.2%), Central Highlands (21.8%), and Mackay (20.2%) in Queensland.
Growth evens out across price points
Since mid-2023, lower quartile homes have led price growth, but that trend is beginning to converge across market segments.
This shift is particularly evident in Sydney, where prices of top-end homes rose by 0.6% over the past three months, compared to just 0.3% for homes in the lower quartile.
CoreLogic has previously noted that higher-end markets, especially in Sydney and Melbourne, tend to respond more strongly to cash rate reductions.
“Most of the remaining capitals continue to see the lower quartile recording a higher rate of change relative to the upper quartile; however, the gap is narrowing,” Mr Lawless said.
Image by Freepik
