Investors pour into Perth, but shun certain suburbs

Investor lending in Western Australia has risen sharply over the past year, with data from the Australian Bureau of Statistics (ABS) showing average loan sizes and new loan commitments have continued to climb.

The latest ABS lending indicators reveal that average investor loan sizes in Western Australia grew to $644,000 in the December 2025 quarter, up 15.2 per cent from $559,000 when compared to the same quarter last year. 

The number of new loan commitments experienced a similar 13 per cent annual growth, with 7,230 new investor loans recorded in the December 2025 quarter.

While the ABS data reflects strong growth in investor activity nationwide, Western Australia has been a clear contributor to this upswing.

Investors have been drawn to the state’s comparatively affordable prices, tight rental markets and strong rental yields, particularly across Perth and select regional centres.

The increase in average loan size suggests investors are having to go the extra mile to secure property in Perth’s hot market, borrowing more due to higher dwelling values and greater competition as housing supply tightens.

As a result, the value of total investor loan commitments in Western Australia now sits at $4.659 billion as of the December 2025 quarter.

This represents an eye-watering annual growth rate of 30.39 per cent, up from $3.573 billion in the same period of 2024.

Combined with a rise in total commitments, the new ABS data points to sustained investor confidence in Western Australia throughout much of 2025.

Investor transactions decline during new year crossover

Despite the strength in lending data, investor transaction activity told a different story at the end of the year.

The FOUNDIT Investor Index tracked properties that had re-entered the market as rentals after being sold in the previous 12 months.

Comparing data from December 2025 to 2026 with the same period last year, the index revealed a decline in investor transactions across Western Australia.

Perth’s investor pullback was the sharpest in the nation, with Greater Perth decreasing by 38.7 per cent and regional Western Australia down 26.7 per cent.

The shift isn’t reflective of tenant demand, which still remains at a high, but rather of cooling conditions after last year’s surge.

The pullback was most pronounced in land-backed outer suburbs, where exponential price growth over recent years has led to many investors now perceiving these areas as overpriced.

Investor transactions in Armadale declined by 56.6 per cent, while Wanneroo dropped by 50.7 per cent.

A more selective investor market

While Western Australia has experienced a recent dip in investor transaction volumes, rising loan sizes and new loan commitments suggest a shift in strategy rather than a decline in investor interest.

Buyer interest and activity remain exceptionally strong, particularly in the downsizer category, with the slight investor pullback creating space for owner-occupiers.

Despite fewer investors transacting recently, those who remain active are committing larger sums of capital, becoming increasingly discerning about investment purchases.

With property values still expected to rise in 2026, this more selective phase of the investment cycle could be a temporary pause or a broader trend, depending on factors such as rental market performance and further interest rate movements.

Western Australia’s investor market appears to be transitioning from rapid expansion to a more measured phase, where confidence remains but decisions are more calculated.

For now, investors remain engaged and capital is still flowing healthily to Western Australia, albeit more slowly than before.

With changes to negative gearing and capital gains tax also potentially on the horizon, the investor market will be an interesting one to watch in 2026.