Housing investment drop sparks rental shortage fears
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Photo by Kindel Media
The Real Estate Institute of Australia has warned that a recent decline in property investment could worsen Australia’s rental crisis.
New data from the Australian Bureau of Statistics showed investment loans for dwellings fell 4.5% between the September and December quarters of 2024, while the value of new investor loans dropped 2.9% to $32.4 billion.
REIA president Leanne Pilkington said the figures revealed “a growing imbalance in the market” that could affect rental availability.
“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.
The drop marked the first decline in both number and value of investor loans since early 2023, though levels remained 13.2% higher than the same quarter in 2023.
Owner-occupier loans increased 2.2% in the December quarter, with first-home buyer loan commitments rising 1.3% in number and 1.5% in value.
Meanwhile, REA Group’s outgoing Executive Manager of Economic Research, Cameron Kusher, defended developers against criticism over housing supply delays.
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“The mainstream media constantly bemoans the fact that we aren’t building enough homes, but it’s infuriating that they rarely go into why that is the case,” he said.
Kusher pointed to high interest rates and increased construction costs as key factors hampering new developments.
“Construction costs have surged, and while the growth has slowed, those prices aren’t going back down,” he said.
“Most developers aren’t in a financially bad enough state to sell the site, so the projects are just on pause,” he said.
The REIA called for government intervention to encourage more property investment, with Pilkington welcoming Labor’s commitment to maintain existing negative gearing policies if re-elected.