Property investor retreat sparks rental market concerns

Investment in residential property fell 4.5 percent in the December quarter 2024, marking the first decline since early 2023 amid growing concerns about rental supply.

The drop in new investment loans contrasts with rising owner-occupier activity, according to the latest Australian Bureau of Statistics data.

Real Estate Institute of Australia President Leanne Pilkington said the decline threatened to worsen the housing affordability crisis.

“With vacancy rates already at record lows in many parts of the country, a continued drop in investment will further strain the rental market, driving up rents and exacerbating affordability challenges for tenants,” she said.

While total loan commitments fell 0.4 percent, the value of loans increased 1.4 percent, suggesting buyers are borrowing more despite higher interest rates.

First-home buyer loan commitments rose 1.3 percent in number and 1.5 percent in value, supported by government incentives.

Pilkington called for policy intervention to encourage property investment.

“Policymakers need to address the barriers discouraging investors, such as rising costs, tax settings, and regulatory uncertainty,” she said.

The government has confirmed it will maintain negative gearing if re-elected.