The new property investor hotspots in Australia

Australian property investors are dipping their toes into the market in larger numbers, lending data from the Australian Bureau of Statistics (ABS) indicates.

Investors took out more than 51,000 new home loans in the three months to June, which is the highest quarterly figure recorded since late 2021.

"The number of new investor loans has risen solidly in the past two years, after a quieter period when the RBA started raising rates," says Angus Moore, senior economist at REA Group.

"This means investors are now making up a substantial share of new lending."

Close to two in five (38%) new loans taken out in the June quarter were for the purpose of purchasing an investment property - up from the five-year average of 32%.

"Rental market conditions remain very tight, and rents have grown rapidly in recent years. That's likely encouraging investors to buy in," Moore says.

"With markets expecting at least one further rate cut by the Reserve Bank and challenging rental market conditions persisting, strong investor activity is likely to continue over the rest of this year and next."

While the latest lending figures suggest a strong appetite for property investing, that's not to say that there aren't hesitations among existing investors.

A recent survey conducted by the Property Investment Professionals of Australia revealed that 53% of investors would sell up if any changes to negative gearing rule were made, while 25% were unsure.

Where are property investors buying?

While inner city pockets remain popular with investors, a new report from PropTrack (part of REA Group) suggests that buyers are also looking further afield in search of value.

"Affordable areas are also seeing a high volume of investor," the report notes.

"Areas like Wyndham, Tullamarine and Melton in Melbourne's west, Blacktown and St Mary's in Sydney's west, Ipswich in Brisbane's west, Kwinana in Perth's southwest and Armadale in its southeast, are all seeing a high degree of new investor purchases."

In many cases, these are also the types of areas PropTrack has identified as offering some of the best investment opportunities based on metrics such as capital gains, rental yields and renter demand.

For instance, Tumbi Umbi on the Central Coast, Werrington in the Outer West and Austral in the South West, were ranked as the three top-performing investor suburbs for houses in Sydney.

"While yields tend to be lower in Sydney compared to other capitals, many suburbs are achieving strong results across these key investment metrics, boosting demand from investors in the city," the report states.

It's a similar story in Melbourne. PropTrack identified Cranbourne South in the city's South East and the neighbouring suburbs of Meadow Heights and Coolaroo in Melbourne's North West as the three top-performing postcodes for houses.

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