Nearly all investor sales yielding gains across Brisbane, Adelaide and Perth, but gains harder to sustain going forward
Property investors remain active in Australia’s housing market, with lending reaching record levels in 2025 and conditions remaining favourable in 2026, according to a joint report by PropTrack and Westpac.
Investor lending surpassed 40% of all new home lending in both the September and December quarters of 2025. The 2026 Investor Report attributed this sustained activity to tight rental markets and rapidly rising rents in the post-pandemic period.
The report found that more than 93% of recent investor property sales nationally returned a profit – the highest rate in at least a decade. In fast-growing markets such as Brisbane, Adelaide, and Perth, where prices have more than doubled over the past six years, nearly every investor sale yielded a gain.
Investors targeting affordable stock
Westpac’s managing director of mortgages, James Hutton, said investors in 2025 exhibited greater financial discipline than in previous years.
“What stood out was how disciplined investors became,” Hutton said. “Many focused on fundamentals, backing areas with strong long-term rental demand rather than chasing short-term momentum.”
An analysis of realestate.com.au enquiries found investors gravitating toward more affordable segments of capital city markets, putting them in direct competition with first home buyers. Nearly half of all investor enquiries were for properties priced under $700,000, despite fewer than three in 10 homes nationally falling below that threshold.
Cooling growth forecast for 2026
Westpac group chief economist Luci Ellis said the broad gains seen across the market in recent years would be harder to sustain in 2026.
“We expect [home] price growth to cool in 2026 to a more sedate 5% gain nationally, down from 8% in 2025, with a more pronounced slowing in the ‘hot’ markets of Brisbane and Perth,” Ellis said.
The report also noted that rental yields have declined over the past two years, particularly in Perth, Adelaide and Brisbane, where surging property prices have compressed returns.
Regulator limits on high debt-to-income lending – largely targeting investors – took effect on 1 February 2026, though the report made no direct mention of these changes. Rising interest rates and geopolitical conflict in the Middle East were flagged as additional headwinds for Australia’s housing markets.
RBA rate rise adds pressure
The broader lending landscape shifted in February when the Reserve Bank of Australia raised its cash rate by 25 basis points to 3.85%, ending a brief easing cycle that had supported borrowing through 2024 and 2025. The RBA cited a material pick-up in inflation in the latter half of 2025 as the key factor for the decision.
Investor lending remained strong in 2025, with ABS data showing a notable rise in housing loan commitments, while investor participation in housing finance continued above its long-term average. Regulators also introduced limits on high debt-to-income lending from 1 February 2026, aimed at containing risks in the investor sector.
Looking ahead, CBRE forecasts that median apartment rents across Australian capital cities are likely to increase by around 24%–27% between 2025 and 2030, following a period of strong rental growth over the past decade, supporting ongoing investor interest.
“While the negatives for investors around prices and interest rates will ebb and flow with the economic cycle, the opportunities created by tight supply and intergenerational transfers will be enduring,” Ellis noted.
