Surging investor activity outpaces owner occupiers in several states, intensifying pressure on housing affordability
Investor borrowing climbed to a new peak last year, with 205,533 new investor loans written in the 12 months to September 2025 – a 9% annual rise and a 26.4% increase since 2021, new research from Money.com.au shows.
Lending to owner occupiers rose just 2.7% over the year, underscoring the extent to which investors are shaping mortgage demand.
The divergence is sharpest in New South Wales and Victoria, where investor loan growth is running about nine percentage points faster than owner occupier borrowing.
Average loan sizes also show investors and borrowers outside NSW steadily closing the gap with the country’s most expensive state, as prices rise more quickly in other parts of Australia.
Source: Money.com.au
State-by-state breakdown
New South Wales
NSW has set a new record for investor lending, with 62,501 investor loans written over the year and annual growth of 10.5%. Investor activity is being driven by existing housing stock, with loans for established dwellings up 13.2% year-on-year. Construction and land loans to investors have also reached new highs, pointing to broad-based demand across property types.
On the owner occupier side, growth is much more subdued. Lending to owner occupiers has risen just 2.7% annually in NSW, well behind the investor segment. Average owner occupier loan sizes in NSW have now passed $800,000 for the first time, reaching $812,644, a 6% increase over the year despite already elevated borrowing levels.
Victoria
Victoria is currently the fastest-growing major state for investor lending. Investor loans rose 13% over the year to 47,732, accelerating from 9% growth a year earlier. The state also recorded its strongest quarter on record for investor loan volumes.
Most of this expansion is concentrated in existing dwellings, where investor loans grew 19% annually, with 36,363 loans issued.
This momentum has brought Victoria almost level with Queensland in the national investor rankings. Over the latest quarter, Victoria issued 695 more investor loans than Queensland, although Queensland still holds a narrow annual lead of 364 investor loans. If current trends continue, Victoria is well placed to overtake Queensland and reclaim second position in the investor lending market.
Queensland
Queensland remains one of the strongest owner occupier markets in the country, with owner occupier lending up 4.6% annually, outpacing the national 2.7% rise. Investor lending in the state has also increased, but at a slower pace – up 7.9% year-on-year, down from 17% previously and now lagging the national investor growth rate.
Investor loans in Queensland have again passed 48,000 for the first time since June 2022, keeping the state in second place nationally for investor volumes. However, the gap with Victoria has narrowed to just a few hundred loans, setting up a closely watched contest between the two markets.
At the same time, many investors appear to be focused on their existing portfolios: loans for alterations and refinancing in Queensland are at record levels, with 47,339 loans across these categories, signalling an emphasis on upgrading properties and restructuring debt in a higher-cost environment.
South Australia
South Australia is outperforming the national market on both sides of the ledger. Owner occupier lending is up 3.5%, versus 2.7% nationally, while investor lending has risen 10.1%, compared with 9% across Australia.
The state is particularly strong in new housing finance. SA leads the country with 56.6% annual growth in owner occupier loans for new builds and 25.2% growth in investor loans for new construction. t is the only state to reach a new high in investor loans for new dwellings, with 467 loans recorded.
For owner occupiers, one in 11 loans in SA now funds a new build – the highest proportion on record and well above the national average of one in sixteen – underlining strong construction activity and buyer demand for new stock.
Western Australia
Western Australia stands out for a different reason: it is the only state to record a decline in owner occupier lending over the year, with volumes down 1.6% to 40,758 loans. The fall is driven largely by a sharp contraction in lending for new homes, which dropped 32% annually, while lending for existing dwellings edged up by 1%.
Investor momentum has also faded. Annual investor loan growth in WA has slowed from 10% to zero, indicating a plateau after a period of strong gains. Investor activity in WA peaked in December 2024, and capital now appears to be rotating towards other states.
WA’s share of national investor loans has slipped from 12.8% to 12.2%, with most of the shift going to NSW and Victoria as investors reweight their portfolios geographically.
Tasmania
Tasmania has posted the fastest growth in home lending among the six reported states. Owner occupier lending rose 11.1% over the year, while investor lending increased 14.1%, making it the strongest state for both borrower groups in percentage terms.
The growth is driven mainly by loans for existing dwellings, with some uplift in investor land loans from a low base. Even so, overall loan volumes remain about 25% below 2022 levels, suggesting Tasmania is in a recovery phase rather than a full expansion cycle.
Policy concerns: Investor surge and equity in housing
The renewed strength in investor lending is drawing increasing attention from policymakers worried about affordability and long-term access to home ownership. While the specific balance of risks shifts over time, the broad themes are familiar to mortgage professionals: heavy investor participation can add to price pressures, complicate monetary policy, and make it harder for first-home buyers and lower-income households to secure a foothold in the market.
Read more: RBA warns investor activity could knock housing market off course
The NSW Treasury has recently argued that one of the key tax settings benefiting property investors – the capital gains tax (CGT) discount – may need reform.
According to a submission to a federal inquiry, NSW Treasury “backs removing or reducing the Capital Gains tax discount”.
Under current rules, individuals and trusts can cut the tax payable on capital gains for assets held more than 12 months, while complying superannuation funds receive a further concession.
The Treasury submission notes that this discount is widely used by property investors and comes at a material fiscal cost, with the CGT concession estimated to cost government $23 billion in forgone revenue in 2024–25.
State officials also link the discount to declining home ownership, particularly among younger and lower-income Australians, pointing out that investor finance has consistently grown faster than lending to first-home buyers since the late 1990s.
Regulators have also signalled, in various public communications, that strong investor activity can add to housing market volatility and complicate inflation control, particularly if it drives rapid price growth in already stretched markets. In that context, the current surge in investor borrowing – and the widening gap between investor and owner occupier growth in key states – is likely to remain a focus for both the Reserve Bank and prudential authorities.
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