Industry body urges policies to boost residential property investment
New investment in Australia’s housing market is slowing, raising concerns about future rental availability, according to the Real Estate Institute of Australia (REIA).
Data from the Australian Bureau of Statistics (ABS) shows that new investment loans for residential properties fell by 4.5% in the December quarter, marking the first decline since early 2023. In contrast, new home loans — excluding refinancing — rose for the third consecutive quarter, reflecting increased activity from owner-occupiers but a notable drop in investor participation.
According to REIA president Leanne Pilkington (pictured above), the decline highlights a growing imbalance in the market, as investors play a key role in maintaining rental supply.
“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,” Pilkington said.
While the total number of new dwelling loan commitments fell by 0.4% during the quarter, the value of these loans increased by 1.4%, indicating that buyers are borrowing more despite higher interest rates.
First-home buyers saw a slight increase in activity, with loan commitments rising by 1.3% in number and 1.5% in value.
“The increase in first-home buyer activity is encouraging, but it does not offset the broader issue of supply constraints,” Pilkington said. “Without sufficient investor participation, we risk further undersupply in the rental market, making housing affordability an even greater challenge.”
With investor lending now declining, Pilkington called for policy measures to encourage investment in residential property.
“Policymakers need to address the barriers discouraging investors, such as rising costs, tax settings, and regulatory uncertainty,” she said. “A balanced housing market requires a steady flow of investment to ensure adequate rental supply and affordability for all Australians.”
She also welcomed the government’s recent confirmation in Parliament that, if re-elected, it would not change negative gearing policies.
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