Are property investors turning to cheaper housing markets?
The latest ABS Lending Indicators for the June 2025 quarter reveal shifting dynamics in Australia's housing finance market.
While overall lending rose modestly, a closer look at investor activity shows a trend towards targeting more affordable housing markets.
Lending Snapshot: June 2025
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By continuing you agree to our Terms and Privacy Policy.- Total new loans: 129,994 commitments worth $87.7 billion
- Quarterly growth: Loan numbers up 1.9%, loan values up 2%
- Annual growth: Loan values up 7.2% - the strongest since March 2022
Investors remain a key force in the market. Over the quarter, there were 49,065 investor loan commitments worth $32.9 billion, with the average investor loan size sitting at $670,957.
Investors: Buying more, but cheaper properties
The key shift? While investor loan numbers rose 3.5%, the total value only lifted 1.4%. This suggests investors are becoming more active, but increasingly targeting cheaper properties rather than stretching into higher-value markets.
Compared to the same time last year, investor lending by value is up 6.9%, but loan numbers rose just 0.8%. That earlier growth was driven by higher-priced purchases, while the June 2025 quarter points to a pivot back towards affordability.
State-by-state trends
Investor activity varied significantly across the country:
- New South Wales: Investors made up 42.3% of loans by number and 43.2% by value - the strongest investor presence nationally.
- Northern Territory: Record investor share at 47.7% of loans - their highest on record.
- Tasmania & ACT: The weakest investor presence, both at around 27% of loans and value.
- Northern Territory & Tasmania: Investors are buying more properties but at lower price points, highlighting a focus on affordable markets.
What it means for you and your mortgage
With interest rates already cut - and more reductions expected - borrowing capacity is improving. For homeowners and investors alike, this means:
- Cheaper repayments: Falling rates reduce mortgage servicing costs.
- More competition: Investors re-entering the market could increase pressure on entry-level housing, especially in affordable states like Tasmania, NT, and Victoria.
- Equity gains: Rising home values are boosting borrowing power for those already holding property.
If you're an investor, the data suggests opportunities are strongest in lower-cost markets with higher rental yields. If you're a homeowner, expect more competition at the affordable end as investors chase better returns.
With two more quarters left in 2025, analysts expect a surge in investor activity. Lower rates, rising property listings, and stronger values are creating conditions for a more aggressive investor market.
But affordability remains the key trend - many investors are shifting strategy towards cheaper housing markets that offer superior rental returns and potential for growth after years of subdued price performance.
Originally published as Are property investors turning to cheaper housing markets?
