Investor demand accelerates as the market enters 2026
As investor demand builds and supply remains tight, 2026 presents a narrowing but still achievable pathway into the property market for new investors.
There has been a lot happening in the investor market in recent months.
Investor home loans have risen for the first time in four years. New mortgage commitments to investors increased by 17.6 per cent in September compared to June, marking the biggest quarterly gain since June 2021 and pushing total investor loan commitments to a record $39.8 billion, according to the Australian Bureau of Statistics.
This increase raised investor borrowing to 41 per cent of total mortgage borrowings for the period - just a few percentage points below the 45 per cent peak in 2014, when the Australian Prudential Regulatory Authority (APRA) imposed ‘speed limits’ on investor loan growth.
It’s no surprise to see the jump in investor activity.
Firstly, a series of recent interest rate cuts naturally encouraged investors, as lower rates directly improve yields on investment properties. Additionally, volatility in the equities market has led many investors to return to the perceived “safety of bricks and mortar.”
In further reporting, the total value of new term loans funded over the June 2025 quarter was $187.096 billion, split between $118.971 billion for owner-occupied loans and $63.777 billion for investor loans. These figures, which pre-date the latest ABS numbers, highlight the significant growth in investor loans between the June and September quarters.
Capital growth outpacing the US
Interestingly, recent analysis has compared stock market performance with real estate over the first quarter of this century.
While the U.S. stock market, driven by technology stocks, was a standout, Australian housing consistently outperformed – even against the booming US market - in terms of capital growth.
The analysis found that capital city house prices in Australia occupied the top six positions for long-term growth, with at least 400 per cent capital appreciation.
Surprisingly, Adelaide topped the list with 559 per cent growth since 2000, followed closely by Brisbane at 533 per cent, where median property prices rose from $150,000 to $950,000.
Over the same 25-year period, US stocks were the best-performing equities, with the technology-focused NASDAQ index up 415 per cent and the S&P 500 rising 348 per cent.
Overcoming investment fears
Beyond capital growth, the need for rental accommodation has never been greater. Australia has approximately 9.7 million dwellings, of which around 2 million are owned by investors. This means just 22 per cent of Australian households own an investment property, while 78 per cent do not.
Of those who do invest, 25 per cent are aged 55–64, reflecting the accumulation of wealth over time. However, younger investors are entering the market rapidly: 23 per cent are aged 45-54, 22 per cent aged 35-44, and only 13 per cent are under 34.
Most investors hold just one property: 68 per cent own a single investment property, 20 per cent own two, 8 per cent own three, and only 4 per cent hold four or more.
This counters the perception that landlords are wealthy individuals with multiple properties; the majority are ordinary Australians - teachers, nurses, firefighters, GPs - simply building a foundation for retirement.
In concrete numbers, 1,363,000 households own one investment property, 411,000 own two, 155,000 own three, and just 87,000 hold four or more.
The need for new investors in 2026 continues to grow.
While existing investors may expand their portfolios, the greatest potential lies with the 78 per cent of Australians who do not yet own an investment property.
Often, fear holds them back from taking the first step, but research confirms that real estate remains one of the best investments. The sooner potential investors act, the better, particularly as Australia’s supply of affordable housing continues to shrink.
Recent data from Ray White Chief Economist Nerida Conisbee shows that nearly 23 homes priced under $750,000 are disappearing from capital city markets every day. While the number of affordable units has increased slightly, it is nowhere near enough to offset the losses of houses, creating a net reduction of 22.9 affordable homes per day.
Most investment properties are purchased within this affordable housing sector. Potential investors who delay risk missing opportunities, especially in properties under $1 million, the fastest-shrinking segment of the market.
Those who do not act early in 2026 may struggle to enter the market as the year progresses.
The Christmas break is an ideal time to plan for the year ahead.
Evidence overwhelmingly supports real estate as a safe and effective investment. With increasing awareness among investors, now is the time to act. Potential investors should take heart and make their commitments as early as possible in 2026.
