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Victoria surges ahead as fastest-growing investor market
Victoria has emerged as the fastest-growing investor segment, with double-digit loan growth, poised to reclaim its position as Australia’s second-largest landlord market by year’s end.
New Australian Bureau of Statistics (ABS) data showed that Victoria’s recovery was fuelled by double-digit investor loan growth, high yields, population growth, and competitive prices, which continued to drive the state’s popularity.
In the 12 months to September, investor loans nationwide rose by 9 per cent, 32.3 per cent above September 2023 lows, with Victoria leading annual growth.
Money.com.au property expert, Debbie Hays, said that, despite being traditionally an owner-occupier market, Victoria led the charge nationwide, recording 13 per cent growth in annual investor loans.
“The fundamentals are still there in Victoria, including improved rental yields, stronger population growth and more attractive price points in Melbourne compared with Sydney, particularly across inner and middle-ring suburbs,” Hays said.
She added that despite the surge, Queensland remain a marginally larger investor market share at 23.4 per cent versus Victoria’s 23.2 per cent, a difference of just 0.2 percentage points.
“This raises the question of whether Victoria could reclaim its position as Australia’s second-largest investor market by year’s end.”
Nationwide, investor loans have been growing at three times the rate of owner-occupier loans, totalling an annual loan growth of 9 per cent compared with 3 per cent.
Data showed that NSW recorded an 11 per cent increase in investor loans, South Australia grew by 10 per cent, while Queensland followed at 8 per cent.
Owner-occupier and investor loans for new builds, land, and construction fell 3.5 per cent annually, now 38.3 per cent below their June 2021 peak, reflecting the broader housing supply shortage.
Hays said the data showed that supply has been narrowing.
“When borrowing for new builds continues to go backwards, itʼs a clear sign that supply isnʼt keeping up, and more buyers are being pushed to compete for existing properties.”
“That inevitably drives prices higher, and with it, the average debt size.ˮ
Across the country, owner-occupier loans continued their recovery, rising 3 per cent nationally in the year to September and 9.3 per cent above September 2023 lows.
Data showed that Queensland has been leading the growth, with a 5 per cent increase driven by its lifestyle appeal, issuing 72,475 loans, more than Western Australia and South Australia combined.
In other states, annual growth in owner-occupier loans was modest, with Western Australia the only state to record a 2 per cent decline.
While overall loans continued to grow, Hays said that refinancing hit a four-year high following market shifts.
Data showed that in the year to September, Australians have refinanced 618,966 loans, surpassing new loans by 81,640.
Hays said the numbers have marked a significant shift from September 2021, when new loans exceeded refinances by 97,502, a turnaround of nearly 180,000 loans.
Owner-occupiers have continued to drive 70 to 75 per cent of the country’s refinancing, while internal refinancing was up 29 per cent year-on-year, doubling the growth in external refinancing.
“Home owners are more focused on rate reduction than investors, who can claim interest expenses as a tax deduction.”
“However, debt reshuffling remains common across both segments,” Hays concluded.
