Property investors drive home loan demand

Australia’s housing finance market is showing signs of recovery, but it is property investors, not owner-occupiers, who are leading the charge when it comes to taking out new home loans.

An analysis of ABS lending data for the year to the end of June 2025 by Money.com.au reveals that owner-occupier loan numbers remain 19.5% below mid-2022 levels, while investor loans are down just 2.9%.

The details

Money.com.au’s latest Mortgage Insights report highlights how investor demand for loans has rebounded far more quickly from the slowdown triggered by the Reserve Bank of Australia’s aggressive post-COVID rate-hiking campaign.

The report also details how the average homebuyer loan size has risen 8% year-on-year, outpacing a modest 4% rise in loan numbers.

The trend suggests that bigger loans, rather than a surge in borrower volumes, are driving the housing finance comeback.

State by state

New South Wales remains Australia’s most expensive borrowing market, with average loan sizes far ahead of the rest of the country.

Owner-occupier loans averaged $800,642, up 6% over the year to the end of June, while the average investor loan rose 5% to $840,938.

But while investors remain active, homebuyer lending in NSW is sluggish.

Annual growth in home loans to owner-occupiers was just 2%, half the national average, with 80,724 loans issued.

Money.com.au’s Property Expert Debbie Hays says NSW continues to attract investors, even as affordability weighs on first-home buyers.

“NSW continues to offer strong fundamentals for property investment,” she says.

“Investors who can still meet market prices continue to buy in the state, tightening supply for first-home buyers and keeping upward pressure on prices even as homebuyer demand stays soft.”

In Queensland, new lending to owner-occupiers rose 7% annually, with 71,292 loans issued, while investor loan numbers climbed 16% to 47,143.

Average loan sizes in the Sunshine State also grew strongly, with owner-occupier loans up 13% to $636,520 and investor loans up 11% to $616,679, the sharpest increase among the eastern states.

“Every owner-occupier loan category is in positive territory, indicating broad-based buyer confidence,” Money.com.au’s Mortgage Insights report notes.

South Australia leads the nation in construction-related finance, with lending for new dwellings surging 54% and construction loans up 20%.

Owner-occupier loan volumes rose 4% to 21,736, in line with the national average, while average loan sizes increased 13% to $581,717, the second-highest rise among all states.

Investor activity has also surged, with loans up 16% to 14,111 and nearly all lending categories recording double-digit growth.

Victoria recorded steady but unspectacular growth in the year to June 2025.

Homebuyer lending rose 4%, in line with the national average, while investor loans increased 9% to 44,178, below the national trend.

The state also posted the smallest increase in average loan size among the major states, with owner-occupier loans rising just 4% to $629,056, while investor loans edged up only 2% to $605,491.

Despite its relatively modest results, Victoria still saw strong growth in lending for existing dwellings, up 7%, tying with Queensland for the top spot in this category.

After three years of explosive growth, Western Australia’s loan market has slowed.

Homebuyer lending was flat at 40,760 loans, while investor lending rose 10%, below the national average.

But WA still recorded the sharpest rise in average loan sizes for owner-occupiers, climbing 16% to $593,027.

The state also leads the nation in external refinancing, with growth of 9% for owner-occupiers and 26% for investors.

Tasmania was one of the few states to record double-digit growth in homebuyer lending, with owner-occupier loans up 13% to 6,395.

Lending for existing dwellings also surged 16%.

But investor lending told a different story, falling 7% annually to 2,259 loans, well below the national average.

A market driven by investors

Overall, Money.com.au’s latest report makes clear that investors are driving growth in home loan lending.

Investor lending grew 12% nationally, six times the pace of owner-occupier lending, with growth strongest in Queensland and South Australia.

At the same time, lending for new builds and land remains weak.

Owner-occupier land loans are down 18%, while investor land loans fell 17%.

The focus on existing properties underscores the difficulty of boosting housing supply, even as population growth and affordability challenges mount.

As Money.com.au’s Debbie Hays warns, the rebound in investor activity is adding to competition in already tight markets.

“Investors who can still meet market prices continue to buy, tightening supply for first-home buyers and keeping upward pressure on prices,” she says.