Property investors flood back into market, targeting sub-$700,000 homes
Investor activity has surged to multi-year highs, with buyers focusing on affordable properties amid tight rental markets, strong yields and persistent housing shortages.
Australian property investors are out in force and they’re looking for bargains.
Newly released data shows that the number of new investor loans has grown 64 per cent since its early 2023 low-point.
The huge uplift comes amidst tight rental market conditions and rapid rent price growth over recent years, as well as the lure of near-certain capital growth in many cities.
The PropTrack Westpac Investor Report released Thursday (25 March) highlighted the rush for investment properties that has unfolded over the past year and also highlighted the particular demand for affordable homes.
Nearly half of enquiries on realestate.com.au from investors were for properties under $700,000, despite homes at this price point only making up three in 10 homes across the country. Investors are more likely to favour more-affordable homes than other buyers. That compared to 45 per cent of first-home buyers, and only 21 per cent of existing homeowners searching in that price range.
Investing was generally a profitable pursuit. In the last few months of 2025, 93 per cent of investor sales made a profit, the highest level in at least a decade.
The report noted that investors are also more likely to enquire about units than existing homeowners (though first-home buyers are the most likely). Given half of all rental properties are apartments or semi-detached homes, compared to 17 per cent of owner-occupied homes, this is perhaps not surprising.
Regionally, a third of rental properties are apartments or semidetached homes, compared to just 8 per cent of owner-occupied homes.
Top 3 investor suburbs in key states (HOUSES)
| State | Suburb | SA4 region | Median sale price | Annual median % growth | Rental yield | Rental days on market |
|---|---|---|---|---|---|---|
| NSW | Tumbi Umbi | Central Coast | $1,158,000 | 21.5% | 3.8% | 15 |
| NSW | North Richmond | Sydney - Outer West and Blue Mountains | $1,250,000 | 31.6% | 3.5% | 18 |
| NSW | Austral | Sydney - South West | $1,065,000 | 22.8% | 3.8% | 28 |
| VIC | Notting Hill | Melbourne - South East | $395,000 | 16.2% | 8.1% | 23 |
| VIC | Burwood East | Melbourne - Inner East | $644,000 | 17.5% | 5.2% | 19 |
| VIC | Cremorne | Melbourne - Inner | $620,000 | 9.3% | 6.1% | 16 |
| QLD | Biggera Waters | Gold Coast | $1,350,000 | 34.7% | 4.1% | 20 |
| QLD | North Booval | Ipswich | $675,000 | 22.8% | 4.1% | 19 |
| QLD | Lowood | Ipswich | $708,000 | 23.0% | 4.5% | 26 |
| SA | Salisbury | Adelaide - North | $525,000 | 38.0% | 4.5% | 19 |
| SA | Plympton | Adelaide - West | $580,000 | 34.9% | 4.3% | 15 |
| SA | Henley Beach | Adelaide - West | $910,000 | 35.8% | 4.2% | 17 |
| WA | Cannington | Perth - South East | $770,000 | 22.5% | 4.5% | 22 |
| WA | Pinjarra | Mandurah | $646,000 | 21.0% | 4.5% | 22 |
| WA | Sinagra | Perth - North West | $888,000 | 23.7% | 4.2% | 18 |
| ACT | Banks | Australian Capital Territory | $880,000 | 19.1% | 4.2% | 19 |
| ACT | Strathnairn | Australian Capital Territory | $955,000 | 11.0% | 4.6% | 20 |
| ACT | Franklin | Australian Capital Territory | $1,131,000 | 14.5% | 3.9% | 20 |
Source: PropTrack Westpac Investor Report
Bridget Bowman, Senior Mortgage Specialist, Specialist Mortgage, said interest rates could have a moderating impact on investors if they kept rising.
“We may see some moderation as interest rates rise, particularly if further capital gains tax changes eventuate - but not a sharp pullback.
“Strong rental yields and tight vacancy rates continue to underpin investor demand, so the fundamentals remain compelling.”
With a federal budget looming in May, changes to the property investment landscape may be taking shape.
“Over the years we have seen changes to capital gains tax, such as the reduction in the CGT discount and removal of the main residence exemption for expatriates, however, that market remains strong, with expatriates in particular still very active in the Australian property market,” Ms Bowman said.
Asked if investors were forcing out prospective owner-occupiers, she said bigger issues were at play.
“In some price brackets, particularly at the more affordable end, increased investor activity is adding to competition for owner-occupiers, however, the bigger issue remains housing supply, as demand is outpacing availability across the board.”
The RBA has raised the cash rate twice so far in 2026 and all four of the largest banks expect another in May, erasing the three cuts made in 2025.
The inflation rate (CPI) eased slightly in the 12 months to February, with ABS data released Wednesday (24 March) showing it edged down to 3.7 per cent from 3.8 per cent. This appears unlikely to dissuade the RBA from another rise, which could go some way to cooling investors’ collective appetite.
Top 3 investor suburbs in key states (UNITS)
| State | Suburb | SA4 region | Median sale price | Annual median % growth | Rental yield | Rental days on market |
|---|---|---|---|---|---|---|
| NSW | Moorebank | Sydney - South West | $925,000 | 29.4% | 5.2% | 14 |
| NSW | Chipping Norton | Sydney - South West | $830,000 | 24.6% | 5.3% | 27 |
| NSW | Kingsgrove | Sydney - Inner South West | $816,000 | 18.8% | 4.8% | 22 |
| VIC | Coolaroo | Melbourne - North West | $625,000 | 14.2% | 4.3% | 27 |
| VIC | Carrum | Melbourne - Inner South | $1,063,000 | 18.1% | 3.7% | 22 |
| VIC | Meadow Heights | Melbourne - North West | $670,000 | 12.8% | 4.0% | 26 |
| QLD | Spring Hill | Brisbane Inner City | $670,000 | 24.1% | 4.9% | 17 |
| QLD | Thorneside | Brisbane - East | $750,000 | 33.9% | 4.2% | 17 |
| QLD | Brisbane City | Brisbane Inner City | $735,000 | 22.1% | 5.2% | 21 |
| SA | Elizabeth Park | Adelaide - North | $616,000 | 22.7% | 4.4% | 23 |
| SA | Eyre | Adelaide - North | $651,000 | 21.7% | 4.5% | 24 |
| SA | Elizabeth East | Adelaide - North | $635,000 | 19.8% | 4.3% | 23 |
| WA | Leederville | Perth - Inner | $780,000 | 27.9% | 5.7% | 13 |
| WA | Bayswater | Perth - North East | $585,000 | 40.6% | 5.4% | 17 |
| WA | Jolimont | Perth - Inner | $955,000 | 47.2% | 5.0% | 12 |
| ACT | Denman Prospect | Australian Capital Territory | $597,000 | 6.6% | 5.9% | 22 |
| ACT | Mawson | Australian Capital Territory | $668,000 | 20.2% | 5.6% | 22 |
| ACT | City | Australian Capital Territory | $568,000 | 16.2% | 5.9% | 24 |
Source: PropTrack Westpac Investor Report
Interstate investment strongholds and hold outs
While activity from non-investors also picked up as rates stabilised in 2024 and then began falling in 2025, the increase has not been nearly as sharp. As a result, investors are making up a large share of new lending across the country, the report noted.
“In Queensland, the share is at its highest level since 2004, in WA it is close to its highest level since 2010, in NSW it is at its highest since 2017, and in SA and the NT it is just off its highest-ever level (the record being the prior quarter).
“In Victoria, investor activity picked up in the second half of 2025 following a few years of softer activity. But unlike other states, the investor share of new lending in Victoria is still below average for the state.”
Westpac data shows that 20 per cent of investors buy an investment property interstate.
The smaller states produce more investors willing to buy beyond their border, while only 12 per cent of South Australian, Western Australian and Queensland investors were doing so.
Antonia Mercorella, CEO, Real Estate Institute of Queensland, said investor activity is driven by a range of factors, including general economic conditions and the underlying demand for housing, which is underpinned largely by population growth.
“Whenever there is uncertainty and serious speculation about changes to effectively increase property-related taxes, there is a dampening impact to confidence,” Ms Mercorella told API Magazine.
“Given the large range of factors affecting activity in the property market, it is difficult to know whether investors are buying properties that would have otherwise been bought by owner-occupiers, however, the data suggests that new loan commitments to owner-occupiers in the December 2025 quarter (88,990 across Australia) are slightly above the available historical average (87,456 loans per quarter from September 2019 – December 2025).
“Further, property investors often disproportionately buy off-the-plan housing stock, thereby underpinning new housing supply.”
Ms Mercorella stressed that Queensland is a destination ‘on the map’ when it comes to property investors, with high interstate migration, expected strong population growth, a rental population higher than the national average, and a capital city that has a bright economic future particularly with the Olympics on the horizon.
“For the areas that have been identified in the report as investor hotspots, we would suggest that investor interest could be influenced by:
- Brisbane City and Spring Hill – strong demand from CBD workers and international students, and proximity to Olympic Games, which offers reasonable rental yield and the prospect of a capital gain.
- North Booval, Lowood, and Thorneside – relatively affordable housing stock, delivering higher rental yields and the prospect of capital gains.
- Bigger Waters – appeal for family holidays and as a future owner-occupied residence.”
The investor share of new loans has increased 6 per cent year-on-year in Canberra. They currently make up 27 per cent of new lending which is slightly above the 24 per cent recorded in December 2020.
Multiple suburbs in Canberra recorded strong performances over the past year based on the investor indicators of price growth, lease times and rental yields.
Maria Edwards, CEO, REIACT, said investors in the ACT have had the luxury of choice with available stock on the market.
“They have, however, also had competition from a strong first home buyers cohort pushing the prices up in some of the traditionally more affordable suburbs such as Banks and Franklin on the city fringes,” she told API Magazine.
“Newly developed areas such as Strathnairn and Moncrieff have also fared well, with buyers placing value on modern energy efficient construction and low maintenance lifestyle options that future proof occupants from potential bill shocks associated with spiralling utility and property upkeep expenses.”
Investors are not the only players borrowing more.
Renovation loans jumped 21 per cent in 2025, surpassing growth seen in the previous two years, new NAB data shows.
Many homeowners are using this financing to build granny flats to create more space, boost income and unlock extra value from the land they already own.
