Investor Activity Reaches a New Peak as New Builds Hit Record Lows — Here’s What’s Really Going On

Australia’s property market continues to throw up a mix of challenges and opportunities — and once again, it’s the savvy investors who are moving first.

The latest Mortgage Insights Report from Money.com.au paints a fascinating picture of how lending patterns are shifting across the country.

On one hand, investor lending is climbing back toward record highs.

On the other hand, loans for new residential construction have plummeted to their lowest levels in more than a decade.

This divergence in activity tells us something important: confidence is returning, but it’s selective.

And right now, the smart money is flowing toward established properties, not risky off-the-plan projects.

Let’s unpack the data, the drivers behind these shifts, and what it really means .

Investor loans rebound

In the year to March 2025, 196,241 new investor loans were written, just 3% shy of the all-time peak set in June 2022 when buyers were scrambling to lock in ultra-low fixed rates.

That’s a 19% increase year-on-year, and it’s more than triple the growth rate of owner-occupier loans, which crept up by just 6%.

This surge is even more remarkable considering we’re in a higher interest rate environment.

But smart investors understand the market isn’t just about interest rates — it’s about timing, sentiment, and positioning.

Jacob Overs, General Manager of Lending at Money.com.au, summed it up perfectly:

“We’re just shy of the investor loan peak set in 2022, but this time, the uptick in activity is happening in a very different rate environment.

With rates falling from a much higher base and more cuts likely, many cashed-up investors see this as their window to strike before competition returns from owner occupiers and first home buyers.”

And he’s right.

We’re entering the early stages of an RBA easing cycle.

Investors with equity or liquidity are using this as a buying window, stepping in ahead of the broader market recovery.

Refinancing hits record levels — but it’s happening quietly

The report also shows refinancing activity is back on the rise.

In the 12 months to March, 554,820 loans were refinanced — up 1% overall.

But what’s particularly interesting is the breakdown:

• Internal refinancing (switching products with the same lender) is up 33%.

• External refinancing (moving to another lender) is still down 11%, though that’s a recovery from the 21% drop seen in the previous quarter.

This tells us something: borrowers aren’t necessarily shopping around, but they are being proactive.

Investors, in particular, are leading this shift.

Investor refinancing hit a new high of 173,948 loans, narrowly beating the previous record of 173,942 set in September 2023.

These are seasoned players repositioning themselves financially in preparation for the next phase of the property cycle.

If you haven’t reviewed your mortgage structure in the last 6–12 months, now’s the time.

Victoria: a changing of the guard

One of the most intriguing subplots in the report is what’s happening in Victoria.

Traditionally, Victoria has been an owner-occupier stronghold.

But that’s starting to shift.

While national owner-occupier loan growth is sitting at 6%, Victoria has seen a sharper drop, down to 8.1% from 9.8%.

At the same time, investor lending in Victoria rose 12% year-on-year.

What’s driving this reversal?

Many investors see that the Melbourne property market is at the stage of the property cycle where Brisbane and Perth were three or four years ago and I wanted to get ahead of the curve.

At the same time, incentives and affordability are playing key roles.

Overs explains:

• Also read:Perth housing market update | May 2025
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• Also read:This week’s Australian Property Market Update – Latest Data, State by State May 20th 2025
• Also read:Adelaide housing market update | May 2025
• Also read:Melbourne housing market update | May 2025

“Stamp duty concessions for off-the-plan properties have provided a lifeline for some investors buying new units and townhouses.

At the same time, others are offloading their rental properties due to higher taxes in the state.

But many of those homes are being picked up by first-home buyers as investment properties, thanks to their relative affordability.”

In other words, the traditional roles are flipping.

Owner-occupiers are stepping back, while investors (including first-home buyers looking to rentvest) are stepping in.

This creates opportunities, particularly in inner and middle-ring Melbourne suburbs, where prices have adjusted, yields are rising, and vendor discounting is still on the table.

New build loans sink to a 12-year low

Now for the red flag — and this one should concern anyone watching the long-term health of our housing market.

That’s the lowest level since September 2013 — and a whopping 42% decline from the peak of 32,964 in 2021.

And the downtrend isn’t over.

If the current pace continues, Money.com.au predicts new build lending could fall another 17.2% by year’s end, bottoming out around 16,321 loans.

Overs points to construction costs and delivery risks as the culprits:

“High construction costs and long build times are pushing buyers into existing properties instead, because they’re seen as lower risk and quicker to access — both of which are major advantages in today’s lending environment.”

This is a classic case of short-term practicalities colliding with long-term supply shortages.

We’re simply not building enough new homes.

And while investors may benefit in the short term from rising rents and capital growth (thanks to limited stock), this systemic underbuilding is a long-term policy and economic risk.

Could the RBA’s rate cuts unlock a decade of growth?

Here’s where things get even more interesting.

We’ve now seen two rate cuts from the RBA — one in February 2025 and another in May.

That’s the first easing since 2019, and investors are clearly taking notice.

History gives us a clue as to what might come next.

During the last rate-cutting cycle — from 2011 to 2021 — owner-occupier loan volumes grew 60%.

That’s not a typo.

Annual new loans rose from 277,717 in 2011 to a peak of 443,150 by 2021.

Could it happen again?

Possibly.

While this rate-cutting cycle may not be as long, the conditions are ripe for a surge in lending activity, especially if inflation continues to fall and consumer confidence recovers.

Those who position themselves early, with the right finance, buffers, and asset selection, stand to benefit significantly.

Final thoughts

We’re at a pivotal moment in the property cycle.

• Investor confidence is rising, with activity nearing record levels.

• Refinancing is surging, especially among switched-on investors optimising their portfolios.

• Victoria is seeing a reshuffle as policies and affordability push new investors into the market.

• Meanwhile, the decline in new builds is setting us up for even tighter supply — and potentially higher prices — in the years ahead.

The window is open, but it won’t stay open forever.

If you’re in a position to act, now is the time to review your finances, reassess your strategy, and consider acquiring well-located, investment-grade properties before the broader market catches on.

At Metropole, we help strategic investors like you build resilient portfolios that grow over the long term, regardless of the noise in the short term.

Let’s chat.