New figures show the number of mortgages taken out by property investors jumped by nearly 14% in the three months to the end of September 2025.
The Australian Bureau of Statistics says investor loans have now seen growth of more than 12% over the past year, with 2 in every 5 mortgages being written for investment purchases.
Analysts say investors are being lured to the property market by persistently tight rental vacancy rates, solid yields and the promise of strong capital growth, with home prices now rising at their fastest rate in more than two years.
Separate figures show the total value of Australian residential real estate has reached a new milestone of $12 Trillion, double what it was just ten years ago.
The details
The Bureau of Statistics says the number of new investment loans rose by 13.6% to 57,624 on a seasonally adjusted basis in the September quarter of 2025.
The ABS’ Head of Finance Statistics, Mish Tan, says it’s the highest number of investment loans since the March quarter of 2022.
“Falling borrowing costs and low vacancy rates are favourable conditions for investors,” she says.
On an annual basis, lending to investors has grown by 12.3%.
“Strength of lending for investment also pushed the total value of all new dwelling loans to a record high in September,” Dr Tan says.
The ABS says the total value of new investment loans was $39.8 billion in the September quarter, a rise of 17.6% or $6.0 billion.
The average loan size rose by $11,686 to $685,634 over the quarter.
“Both the number and the value of new investment loans reached record highs in September,” Dr Tan says, “with investment loans reaching around 40% of the total of new loans.”
The ABS figures show there was growth in the number of investment loans across all states and territories, with New South Wales up 19.0%, Victoria increasing by 18.5%, Queensland up 11.9% and investment lending in Western Australia increasing by 9.1%.
South Australia saw a 7.1% lift, Tasmania 10.6% and the Northern Territory was up by 5.1%.
Investor loans were also up a whopping 27.8% in the Australian Capital Territory, but the ABS cautions that the Canberra figures are not seasonally adjusted.
Owner-occupiers and first-home buyers
The ABS data also shows there were 83,846 new owner-occupied loans approved in the September quarter of 2025, a 2.0% rise compared to the previous quarter, and a growth of 1.7% through the year.
The total value of owner-occupied loans was $58.2 billion in the September quarter, a rise of 4.7%, with the average loan size rising by $15,873 to $693,801.
The number of first-home buyer owner-occupied loans grew by 2.3% to 29,637 in the September quarter, and 0.9% through the year, with the largest rises in Victoria (1.4%), South Australia (1.9%) and Tasmania (2%).
The ABS says the average loan size for first-home buyers rose by $5,532 to $560,249.
The Bureau’s data also shows that while growth in the number of loans refinanced between lenders was relatively flat at around 0.1% over the quarter, refinancing activity is 18.7% higher than this time last year.
This perhaps suggests that many home-owners with mortgages have given up on waiting for the Reserve Bank of Australia to cut rates further, and are instead trying to manufacture their own rate cuts by shopping around for retail lenders offering better terms than the bank they’re currently with.
The investor conundrum
The increasing amount of lending to investors raises an obvious question.
If investors are so active in the market, why aren’t there more rental properties available for tenants, thereby loosening very tight rental vacancy rates and slowing the fast pace of rental growth via more competition?
Independent Economist Saul Eslake says that if you look at the ABS Lending Statistics figures closely, the answer is clear.
“83% of the finance commitments made to property investors during the September quarter were for the purchase of established housing,” he says.
“These purchases do absolutely nothing to increase the overall supply of housing: and while they do increase the supply of rental housing, they increase the demand for rental housing by an exactly equal amount - by outbidding would-be owner-occupiers.”
$12 Trillion milestone
The increasing pace of activity in the mortgage market comes as residential property reaches a new milestone.
Cotality says a rapid surge in property values through October 2025 means the total value of Australia’s residential property market has now reached $12 Trillion - faster than it had expected.
“This unprecedented value is more than double the market’s size a decade ago, with the majority of the growth occurring over the past five years,” the data analytics firm says.
It also points out that the composition of this value is now more evenly spread across the nation, with South Australia, Western Australia and Queensland making up a larger share of the combined housing value, while New South Wales and Victoria now have a smaller share than five years ago.
“Victoria has seen the biggest drop off in housing market share in the past five years, from 29% five years ago, to less than a quarter of market share as of October this year,” Cotality Economist Kaytlin Ezzy says.
Cotality says this shift “illuminates new opportunities across the property ecosystem” for buyers and investors.
At $12 Trillion, the value of residential real estate in Australia is now nearly three times the amount held in Australian superannuation funds ($4.3 Trillion) and three and a third times the value of all Australian-listed shares ($3.6 Trillion).
Meanwhile, the property market continues to steam ahead, with Cotality reporting national dwelling values rose 2.8% over the three months to October 2025 - the largest increase in more than 2 years.
The data analytics firm says the premium for a house over a unit in Australia’s combined capital cities has also hit a new high of approximately $363,000, a figure just shy of half the median capital city unit value.
Cotality says the 49.9% premium marks a substantial increase from just 20% five years ago, “propelled by persistent demand for houses.”
It records the median house value across its combined capital city measure at $1,091,000, compared to the median unit value of $728,000.
“Houses have always seen stronger uplift than units in the long term because of the associated land value,” Kaytlin Ezzy says.
“That price sensitivity appears to have blown out through the strong growth cycle over the past five years.”
Across the capital city markets, the house price premium ranges from 31.6% in Hobart to a huge 77.8% in Sydney.
“Due to affordability constraints, we may see more of a deflection towards units in cities like Sydney in the short term, but over the long term, we still expect houses to outperform even if the premium on houses falls,” Ms Ezzy says.