Investors defy high prices and rates to buy up big

Investors have continued to shrug off spiralling home prices and the highest interest rate environment in more than 12 years to continue to pour into property.

The latest statistics from the Australian Bureau of Statistics (ABS) show investor lending rose again in April and is now up a whopping 36.1% in just a year.

The details

According to the ABS, investors took out $10.86 billion in new loans in April.

Seasonally adjusted, that’s a 5.6% jump on the previous month and means that over the past year, lending to investors is up an astonishing 36.1%.

Investor lending is also at its highest point since the peak between November 2021 and April 2022.

At that time, official interest rates were at pandemic lows of 0.1%—not at today’s 4.35%, which translates into retail banking variable investment rates of about 6.5%-7.0%. 

It’s clear the constant talk of a housing crisis, particularly when it comes to the ongoing shortage of rental properties, has spurred many investors into action.

“Supported by higher rental yields, investor lending sprinted ahead, recording its strongest monthly growth result since November 2021,” says Oxford Economics Australia’s Senior Economist Maree Kilroy.

Her assessment is backed by the findings of the recent 2024 Quarter 1 survey by Australian Property Investor magazine.

“Property investors are loading their artillery and chasing capital growth and high rents,” the commentary accompanying the survey declares.

“Last quarter’s record level of respondents saying their main financial priority over the coming 12 months was to buy an investment property has leapt higher again (to 22%).”

The conventional wisdom is that many property investors are abandoning the south-eastern states to put their money into Western Australia, South Australia and Queensland.

However, Maree Kilroy points out that this isn’t necessarily backed up by the actual lending statistics.

“All states contributed to the lift,” she says, “with New South Wales up a robust 8.9% to its second strongest level on record.”

The ABS data also shows lending to owner-occupiers also rose - up 4.3% nationally in the month.

Again, New South Wales was the strongest performer, seeing a 9.9% increase.



With house prices continuing to surge (the latest CoreLogic figures showed national home values increased 0.8% in May and considerably more in the fast-growing cities of Perth, Adelaide and Brisbane), the average owner-occupier loan size hit a new record of $625,791.

The outlook

“Property demand is outstripping supply in most markets,” says Oxford Economics’ Maree Kilroy. 

“Price growth is the strongest where total listings are the most constrained, notably Perth, Brisbane, and Adelaide.”

“The case for a cash rate cut this year has weakened and we now expect the first one in the front half of 2025.”

Australian Property Investor Magazine’s Q1 survey of around 600 investors found that “interest rates remain a concern”, but “our survey respondents are clearly of the view that investment opportunities abound.” 

“More than one in five are planning to buy an investment property.”

“Increases in interest rates are clearly not viewed in isolation by homeowners, renters or investors; the forces of supply and demand in the market are also inherent in how the market’s prospects are assessed.” 

“The proportion of respondents wanting to improve their rental returns has almost doubled from just three months ago to 7 per cent in the first quarter of 2024.”

“In the midst of a rental crisis, the pace of rental price growth is showing few signs of slowing.”

The advice from API Magazine’s Editor, Craig Francis, is crystal clear:

“For investors who have been contending with high interest rates – many of whom have been forced from Covid-era fixed rates to much higher variable rate loans – the still-high and rising rental environment offers the chance to purchase assets that are rising in value and positively geared.”