Property Investors Now Dominate Australian Housing Market as Borrowing Hits Record High

Property investors are driving Australia’s housing boom, making up two out of every five home loans issued between July and September — a record level that has fuelled calls for urgent regulatory intervention.

According to Australian Bureau of Statistics (ABS) data released Wednesday, investors borrowed nearly $40 billion over the three-month period — a 17.6% jump in value and 13.6% rise in loan numbers compared with the previous quarter.

By contrast, lending to first home buyers rose only 2.3% and actually fell slightly over the year, highlighting the widening gap between new entrants and cashed-up investors.

Record Investor Activity Amid Falling Interest Rates

The surge follows three Reserve Bank of Australia (RBA) rate cuts in 2025 and persistently low rental vacancy rates, which have made property investment more profitable.

RBA figures show investor credit is now growing at its fastest pace since 2015, even outpacing the rise seen before the latest interest rate reductions.

“Investor lending has been rising more sharply than owner-occupier borrowing since early 2023,” said Mish Tan, the ABS head of finance statistics.

Calls for APRA to Step In

The Greens’ housing spokesperson, Senator Barbara Pocock, said the situation risked overheating the housing market and urged regulators to act.

“We need to urgently rein in an overheated credit market for property investors,” Pocock said.

She wrote to Australian Prudential Regulation Authority (APRA) chair John Lonsdale, urging the agency to “pull the handbrake” on investor lending, and called on Treasurer Jim Chalmers to authorise tighter controls.

In 2014, APRA capped annual investor credit growth at 10% to cool the market — a move that helped slow house prices at the time. Current investor growth is now nearly double that rate, reviving debate over whether similar restrictions are needed.

House Prices Surge Again

Housing prices are surging once more, with property analytics firm Cotality reporting the fastest monthly rise in two years this October — up 1.1% (about $10,000) — and more than 6% higher in 2025 overall.

Cotality’s head of research Eliza Owen warned that intervention similar to the mid-2010s could again cool the market if regulators step in.

Meanwhile, RBA Governor Michele Bullock said in November that while regulatory action could help stabilise prices if rates fall further, it was not yet necessary.

Banks Chase Investors Despite Risk Warnings

Major banks have continued to target investors. Both Westpac and NAB reported that investors made up over 40% of new home loans in their results for the six months to September.

Westpac’s CEO Anthony Miller described investors as “attractive customers,” citing their lower default risk and higher borrowing capacity.

“We’ve just got to be careful about the outlook and the risks that come from going too far too fast in a particular segment,” Miller said, “but we think we’ve got the balance right.”

An APRA spokesperson said in October that the regulator was already monitoring risky lending, including interest-only and small-deposit loans, and was in talks with banks about potential limits.