Australia is in the midst of one of the strongest waves of investor activity seen in years, and one type of home is firmly in their crosshairs.
Demand from investors accelerated in the past year, despite rent growth slowing and rental yields declining, a new report has revealed.
Previously-unloved property markets are now experiencing new waves of investor activity as buyers look for high-yielding assets and position themselves for the next leg of growth.
Investors now account for an increasingly large share of new lending, particularly in NSW, Queensland and Western Australia.
The growth in investor lending in the past year outpaced the uplift in borrowing by owner-occupiers, according to the PropTrack-Westpac Investor Report 2026.
The share of investor lending in Queensland is at its highest level since 2004. Picture: Getty
Report author and PropTrack executive manager of economics Angus Moore said investor participation lifted sharply in the past year.
“Investors were incredibly active in 2025,” Mr Moore said. “Far more investors are buying today than a few years ago.”
Even though the pace of rental price growth has slowed since the rapid rises recorded in 2022 and 2023, the high demand and low availability of rentals has contributed to more investor activity.
Source: PropTrack Westpac Investor Report 2026
Homes are leasing quickly across most cities, vacancy rates remain low, and rents are still rising faster than inflation in many parts of the country, the report found – conditions expected to remain in place in the near future.
“Low rental vacancy rates, tight rental market conditions and solid growth in rents are likely to continue, which may support strong investor activity in 2026,” Mr Moore said.
Where investors are most active
In Queensland, the investor share of new lending has climbed to its highest level since 2004, while Western Australia is close to its highest level since 2010, the report found.
New South Wales has also seen investor participation lift to levels not seen since 2017, while South Australia and the Northern Territory are sitting just shy of all‑time records.
Victoria remains the outlier, with investor activity picking up in the second half of 2025 but still below the state’s long‑run average.
However, Melbourne regions made up the majority of the top 20 parts of the capitals with the biggest increase in the share of investor enquiries on realestate.com.au, although this was partly because the city was less popular with investors in 2024.
Source: PropTrack Westpac Investor Report 2026
Darwin also recorded a notable increase in investor interest, the report found.
Within the capitals, investors have gravitated towards outer areas at the more affordable end of the market.
“Investors are likely to look for more affordable homes,” Mr Moore said. “Nearly half of enquiries on realestate.com.au from investors are for properties under $700,000.”
Source: PropTrack Westpac Investor Report 2026
In Sydney, the most popular areas with investors include St Marys, Fairfield, Mount Druitt and Blacktown.
Investors looking in Melbourne gravitated towards the northern and western suburbs, while parts of Perth’s south were in investors’ sights, including the Kwinana, Rockingham and Mandurah regions.
However, inner city regions were still popular with investors, particularly in Brisbane, Melbourne and Adelaide.
Investor demand in Melbourne has rebounded, particularly in the outer north and west, and the inner city. Picture: Getty
Westpac data shows one in five investors buy an investment property outside their home state – a trend most prevalent in the smaller states.
However, investors living in Queensland, South Australia and Western Australia were less likely to buy interstate – a result of strong demand and tight rental market conditions in these states.
Meanwhile, Victoria and Queensland had the highest share of enquiries from interstate, realestate.com.au data shows.
Investing remains extremely profitable
The report found that the vast majority of investors who sold a property in 2025 made a profit.
Investment properties sold in Brisbane and Adelaide were most profitable, with 99% of resales returning a profit following rapid price rises in these cities.
Brisbane investment properties sold in the past year generated a median profit of $445,000, while Adelaide investments returned $395,000.
Source: PropTrack Westpac Investor Report 2026. *Among sales that were profitable
Melbourne had the lowest share of profitable sales at 84% – a result of the city’s slower price growth in the past few years compared to the other capitals.
Rising prices and slowing rent growth have put pressure on gross rental yields, which have declined in the past year, the report found, particularly in cities where price growth has been strongest.
"While yields in Sydney and Melbourne have been relatively stable in the past couple of years, Perth, Adelaide and Brisbane have seen yields decline," Mr Moore said.
Source: PropTrack Westpac Investor Report 2026
Rental yields have been highest in the smaller capitals, with Darwin topping the list for both units and houses. Yields for houses were high in Hobart, while units had high yields in Canberra.
Westpac Group chief economist Luci Ellis said tight rental markets and a shortage of supply would still present opportunities for prospective investors.
"Securing tenants and achieving a reasonable rental yield in the four to five per cent range will be more than feasible in that context,” she said.
Top investor hotspots
The report also revealed the top-ranked suburbs for investors, based on a combination of factors including home price growth, rental profitability and demand.
In NSW, Tumbi Umbi on the Central Coast came in first place for houses with 21.5% annual price growth and 3.8% rental yield. Moorebank was the top pick for units, with the median price rising by 29.4% in a year, and properties returning a rental yield of 5.2%
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Affordable outer suburbs were top picks in Melbourne, including Coolaroo where the median house price rose 14.2% to $650,000.
Biggera Waters was the highest-ranked suburb in southeast Queensland, with prices having grown 34.7% in the past year. Ipwich suburbs including North Booval, Lowood and Laidley were also ranked highly.
Suburbs of Adelaide's north including Elizabeth Park topped the list in South Australia, while Cannington came out on top in Perth, with 22.% annual house price growth, and a 4.5% rental yield.
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