Strong competition has seen investment property prices rise. Picture: Jeremy Piper
Falling interest rates and tight vacancy rates have seen investors flood back into Australia’s property markets, with a major shortage of supply resulting in massive paydays for vendors selling the right homes.
REA Group’s new PropTrack Terri Scheer Investor Report has revealed that investors now account for their highest share of new property lending since 2017, which REA Group senior economist Angus Moore believes is a reflection of ideal conditions since 2023.
MORE:Full list of Sydney’s top investor suburbs
“The number of new investor loans has risen solidly in the past two years, after a quieter period when the RBA started raising rates,” Moore said. “Rental market conditions remain very tight, and rents have grown rapidly in recent years. That’s likely encouraging investors to buy in.
“With markets expecting at least one further rate cut and challenging rental market conditions persisting, strong investor activity is likely to continue over the rest of this year and next.”
The report revealed that more than 90 per cent of investment properties over the past year sold for more than they were bought for.
MORE:Full list of Melbourne’s top investor suburbs
REA economist Angus Moore said growing rents were encouraging investors.
Meanwhile, tighter rental vacancy rates have combined with higher demand, to see gross rental yields rise. Many suburbs have in fact seen back to back years of double digit growth for asking rents, providing stronger cashflow opportunities for investors.
At a national level, inner city Sydney and Melbourne, plus their surrounding areas, proved most popular with investors looking for apartments.
MORE:Full list of Brisbane’s top investor suburbs
Lakemba was Sydney’s most popular for units, with a $480,000 median price and 5.7 per cent gross rental yield. Values had also grown by 9.1 per cent over the year.
Notting Hill was most pop with a $384,000 median price, 6.9 per cent yield and 10.9 per cent 12 month value growth.
Brisbane’s Beenleigh has had 30.5 per cent growth in the past year, but still proved popular, with a $500,000 median and a 4.8 per cent yield.
Adelaide’s Brooklyn Park featured strongly, with a $455,000 median, 5 per cent yield and annual growth of 27.1 per cent.
For houses, Tumbi Umbi was Sydney’s most popular suburb, while Cranbourne South rated highly in Melbourne, North Booval was number one in Brisbane and Evanston Gardens was South Australia’s best.
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Terri Scheer executive manager Carolyn Parrella. Picture: Tom Roschi
The report also showed that the ratio of Aussies investing in property had more than tripled over the past 40 years, but that there is a growing divide in who can afford to invest. A significant 28 per cent of households earning more than $225,000 a year own an investment property, compared to just 6.5 per cent in the lowest income bracket.
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The majority of property investors (68 per cent) own just one rental property, while another 20 per cent own two. The share of investors aged over 60 has almost doubled recently, up from 14 per cent in the early 2000s to 27 per cent today.
Terri Scheer executive manager Carolyn Parrella said the current market was “dynamic” for property investors.
“With more than 90 per cent of investment properties selling for more than their purchase price, the current market conditions could present a lucrative opportunity for property investors,” she said.
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