Investment activity pushes housing finance to another new high

Housing finance figures show investors continue to pour into property markets, with loans for investment properties rising to their highest point in six years.

House for sale in Melbourne
Strong competition from investors is starting to price first homebuyers out of the market. Photo: Nils Versemann / Shutterstock (Image source:

Housing finance figures show investors continue to pour into property markets, with loans for investment properties rising to their highest point in six years.

Data from the Australian Bureau of Statistics showed the value of investor loans rose to $9.1 billion in May, a 13.3 per cent increase on the previous month and 116 per cent higher than at the same time in 2020.

Investor lending hasn't been this high since midway through 2015.

The burst of investor activity helped push total new loan commitments for housing to a record high of $32.6 billion, the ABS said.

The total value of refinancing rose 17.8 per cent month on month, with more than $24 billion of owner-occupier and investment loans refinanced in May.

Real Estate Institute of Australia president Adrian Kelly said the data illustrated investors’ intentions to capitalise on the rapid price growth across property markets in the last 12 months.

“Investors and first home buyers alike are diving into the market with the latter taking advantage of the current government incentives,” he said. 

But Mr Kelly said lenders remained on high alert, flagging the potential that lending restrictions may be put in place in coming months.  

“APRA has consistently said their true north for changes to current policy settings will be household debt to income with banks showing signs of responding to this in changing some of their products on offer,” Mr Kelly said. 

“Despite these strong lending results for investors, feedback on the ground from agents remains that many investors are taking the current high prices to offload investments in light of extensive reforms to residential tenancy laws in some jurisdictions.” 

Canstar Group financial services executive Steve Mickenbecker said the rush on finance, and the pressure investors were exerting on first homebuyers, supported recent Canstar research that showed 80 per cent of Australians believed the government and banks should provide better support to those looking to enter the property market.  

“The buoyant property market continues to pit first home buyers against investors, and while first home buyers led out of the blocks early last year, they are now being left in investors’ dust,” Mr Mickenbecker said. 

“Investors took a while to be convinced that property prices coming out of the first COVID-19 lockdown could be sustained, but are now true believers and piling into the market.”

Mr Mickenbecker said major banks had responded to the investor surge by increasingly low rates, as they compete for their share of the fastest growing segment of the property market.

“Runaway property prices fueled by investor competition is making it tougher for first home buyers to put together the necessary deposit to get into the market,” he said. 

“First home buyers don’t have investors’ borrowing track record and rightly lack the confidence to sign unconditional contracts, putting them behind the eight ball when a property is hotly contested.” research director Sally Tindall said high property prices were casting a dark cloud on many young Australians’ home ownership ambitions, even as the government opened up an additional 10,000 places in its First Home Loan Deposit Scheme. 

“We’ve just clocked up yet another record high in home lending, yet the government is pushing ahead with the scrapping of responsible lending laws, which it says will free up the flow of credit,” Ms Tindall said. 

“With over $32 billion worth of new home loan lending settled in May, it’s hard to see where the credit crunch is. 

“If anything, the government should be looking at whether we need more restrictions in place to cool the property market and protect Australian households from overburdening themselves with debt.”

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