Property Investors in Australia Make a Strong Comeback in 2023

Explore the resurgence of property investors in Australia in 2023 and the factors driving this trend. Stay ahead of the game with our latest insights.

Discover the surge in property investor lending and the decline in owner-occupier lending, as reported by the latest data from the Australian Bureau of Statistics.

Property investors have made a strong comeback in 2023, driven by rising property prices and tightening rental vacancy rates. Despite a slight decline in the value of new investor loans in December, investor lending surged by 20.4% over the year, reaching the highest level since August 2021. In comparison, owner-occupier lending fell by 5.6% during the month but was still 7.4% higher than the previous year, according to the latest lending data from the Australian Bureau of Statistics.

Mish Tan, head of finance statistics at ABS, noted that investors now accounted for more than one-third of all new lending, with the proportion of loans to investors increasing from 27.3% in December 2019 to 35.5% in December 2023. This surge in investor activity can be attributed to tight rental markets across the country, which are encouraging investors to re-enter the market.

According to PropTrack senior economist Paul Ryan, the tight rental market is expected to drive more new construction, slowly rebalancing supply and demand in the rental market. The national rental vacancy rate reached 1.1% in December 2023, lower than the 1.3% recorded the previous year, as a result of a slowdown in home building activity failing to keep up with Australia's growing population.

As a consequence, rents have been on the rise, with the median rent on realestate.com.au growing by 11.5% to $580 per week in 2023. Real estate agents and mortgage brokers have reported increased investor activity, but some investors are still being held back by increased costs to hold property, higher taxes, and compliance issues.

Starting this year, Victorians are set to pay higher land taxes and will face new charges on vacant homes and investment properties. Additionally, state and territory governments across the country have announced new rental rules designed to improve renters' rights, but these changes will also increase compliance for landlords.

The resurgence of property investors in 2023 has been driven by rising property prices, tightening rental vacancy rates, and increased investor activity. However, some investors are still facing challenges due to higher costs, taxes, and compliance issues.