The decline in residential property investment is raising concerns about future rental shortages, according to the Real Estate Institute of Australia (REIA).
Recent ABS data shows a 4.5% drop in investment loans for residential dwellings in the December quarter—the first decline since early 2023. Meanwhile, new home loans (excluding refinancing) have risen for three consecutive quarters, signalling strong owner-occupier activity but waning investor participation.
REIA President Leanne Pilkington warns that this trend could further pressure an already tight rental market. “With vacancy rates already at record lows in many parts of the country, a continued drop in investment will further strain the rental market, driving up rents and exacerbating affordability challenges for tenants.”
While first-home buyer loan commitments rose 1.3% in number and 1.5% in value, Pilkington emphasises that this alone won’t solve the broader supply constraints. “Without sufficient investor participation, we risk further undersupply in the rental market, making housing affordability an even greater challenge.”
To counter the downturn in investor lending, Pilkington calls for policy measures to remove barriers discouraging investment, such as rising costs, tax settings, and regulatory uncertainty.
With housing supply and affordability at stake, investor sentiment will be a key factor to watch.
Stay informed—subscribe to our newsletter for expert insights.
