Key takeaways
Western Australia led the nation in the September quarter for both owner-occupier and investor loan growth, with annual increases of 9% and 43%, respectively.
Victoria had the largest market share of owner-occupier loans at 28%, and the second highest annual growth in owner-occupier loan numbers at 7%
Queensland had the largest annual increase in average loan size, rising 11% from
$478,518 to $531,257. This is the average loan size across all owner-occupier loans types.
Is Australia still in the midst of an investor boom?
Well, investor loans are growing more than three times faster than owner-occupier loans, rising 19% annually, according to Money.com.au's Mortgage Insights Report.
In contrast, owner-occupier loans are growing at a much slower rate of just 5% annually.
Let's unpack the data from the report for each region.
New South Wales
According to the report, in New South Wales, the investor loan market is up 20% annually in loan numbers, outperforming the Australian average (19%).
NSW maintains its position as the largest market for property investors by market share, holding 30% of investor loans in Australia.
However, in terms of growth in the number of new investor loans issued, NSW ranks third, behind Western Australia (43%) and Queensland (24%).
Annual growth in occupier loans is lagging at just 4%, while construction loans and land loans are experiencing significant declines of 24% and 19% annually, respectively.
Money.com.au’s Property Expert, Mansour Soltani says what’s happening in New South Wales reflects broader market trends we’re seeing in Australia.
He said:
“Investor activity is being driven by strong rental demand and rising yields, fuelled by overseas migration, as well as strong property price growth in Sydney and regional or coastal areas like Wollongong, which are drawing investors and cashed-up retirees into the market.
Owner-occupier demand remains subdued, likely due to affordability constraints and the impact of higher interest rates on borrowing capacity for larger loans in NSW.”
Data also highlights that the average size of new and existing owner-occupier loans in NSW is $766,146, significantly higher than the national average of $623,414.
Victoria
Victoria has the largest market share of owner-occupier loans at 28%, and the second-highest annual growth in owner-occupier loan numbers at 7%, according to the report.
It is just behind Western Australia.
Notably, owner-occupier loans for existing properties are experiencing significant growth in Victoria, rising 15% annually (more than double the national average of 6.4%).
Mansour says Victoria appeals to homebuyers looking for affordability and stability in a competitive market.
He further said:
"House prices in Victoria haven’t increased as much as in states like NSW and WA, making it an attractive market for both first-home buyers and those looking to buy homes at prices that are not inflated by interstate migration and the promise of a shiny new lifestyle."
Meanwhile, new property loans for investors in Victoria have dropped by 20% annually, as investors flock to states offering more favourable taxes and incentives.
Queensland
Data from money.com.au's report show that Queensland is the second-largest market for property investors by market share, holding 23.4% of investor loans in Australia.
It’s also the second-fastest growing state for investor loans, with an annual growth rate of 24%.
In the homebuyer segment, Queensland's growth is primarily driven by land and construction loans, which are up 25% and 18% annually, respectively.
However, the state lags in loans for new builds, with a 4% annual decline.
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According to Mansour, Queensland's growth in land and construction loans is being driven by strong interstate migration and first-home buyers taking advantage of the increased First Home Owner Grant, which rose from $15,000 to $30,000.
He says this may explain why Queensland’s growth is weaker in construction loans and loans for new builds among investors, who don’t qualify for the grant.
South Australia
The strongest growth in South Australia is in land loans for homebuyers, ranking third nationally with an impressive 17% growth.
This is well above the national average of 4%.
However, for property loans to buy existing dwellings, South Australia is trailing with negative growth (-3%), compared to 6.4% growth nationally.
In the investor segment, alteration loans (loans for structural and non-structural renovations that add or change a home’s design) are a standout and recorded the second-fastest annual growth at 15% behind Western Australia at 26%.
Mansour says investors in South Australia are focusing on adding value to properties through renovations, likely driven by the potential for higher rental yields and capital gains upon resale.
Adelaide's rental yields have risen by 13% year-on-year, alongside a 14.9% increase in house prices, boosting investor confidence in renovating properties to maximise returns.
Western Australia
Western Australia continues to dominate as Australia’s hotspot for buying activity, leading the nation in annual loan growth for owner-occupiers and investors.
In fact, owner-occupier loan numbers in WA have risen by 9% annually.
In the owner-occupier category, Western Australia ranks first across all loan categories except loans for existing properties.
The state's property market growth is being driven by significant annual increases in loans for land (up 59%), construction (up 36%), and new properties (up 17%).
According to Mansour, Western Australia's strong migration and relatively affordable property prices are attracting interest from homebuyers and investors on the East Coast.
He noted:
“Many see WA as a market with significant growth potential and a more attainable entry point compared to the Eastern states.
However, this has created an inflated market that could face a bubble burst once demand stabilises and attention shifts back to the Eastern states.”
On the other hand,
For investor loans, Western Australia is significantly ahead of other states, with an impressive 43% annual growth.
WA also ranks first in nearly all investor loan categories, except for new property loans, where it trails New South Wales and Tasmania.
Tasmania
In the owner-occupier segment, Tasmania continues to experience negative annual growth, currently at -1%.
Annual growth in existing loans is relatively strong at 4%, placing Tasmania third behind New South Wales and Victoria.
However, other loan categories have declined by over 10% in the past year.
In the investor market, Tasmania lags overall but shows strong growth in construction loans, up 68% annually, and loans for new properties, up 22% annually, ranking second nationally in both categories.
