- Elevated investor activity in housing is being driven by tight rental markets and rapidly increasing rents, a new report has found
- Almost 93% of investor sales nationally have returned a profit and almost 100% in Brisbane, Adelaide, and Perth
- Despite higher interest rates and market uncertainty in 2026, the report found continued shortage of rental supply will still present opportunities for investors
Investor lending reached record levels in 2025, accounting for more than 40% of all new home lending in both the September and December quarters.
The new Investor Report for 2026, released by PropTrack and Westpac, expects investor activity to remain strong despite rental growth slowing and possible changes to current investor tax concessions.
The report says strong investor activity, particularly during the second half of 2025, was driven by tight rental market conditions and rapidly rising rents post-pandemic.
It found ongoing growth in home prices in recent years saw more than 93% of recent investor sales nationally make a profit, the highest level in at least a decade.
In the rapid growth markets of Brisbane, Adelaide, and Perth, where prices have more than doubled in the past six years, almost every investor sale delivered a profit.
Investors more 'disciplined'
Westpac's managing director of mortgages James Hutton said investors in 2025 focused on affordability and maintaining exposure to traditional markets while also looking beyond them.
"What stood out was how disciplined investors became," Mr Hutton said.
"Many focused on fundamentals, backing areas with strong long-term rental demand rather than chasing short-term momentum."
An analysis of realestate.com.au inquiries revealed investors are targeting more affordable parts of capital city markets, pitting them directly against first home buyers.
Nearly half of investor enquiries are for properties under $700,000, despite less than three in 10 homes across the country coming in below this price point.
In some cities, this skew to more affordable housing has seen large inner-city rental markets proving most popular.
Below are the top three investor suburbs in key states for both houses and units:
Houses
| State | Suburb | Region | Median sale price | Annual median growth | Rental yield | Rental days on market |
| NSW | Tumbi Umbi | Central Coast | $1,158,000 | 21.5% | 3.8% | 15 |
| North Richmond | Sydney - Outer West | $1,250,000 | 31.6% | 3.5% | 18 | |
| Austral | Sydney- South West | $1,065,000 | 22.8% | 3.8% | 28 | |
| Vic | Notting Hill | Melbourne - South East | $395,000 | 16.2% | 8.1% | 23 |
| Burwood East | Melbourne - Inner East | $644,000 | 17.5% | 5.2% | 19 | |
| Cremorne | Melbourne - Inner | $620,000 | 9.3% | 6.1% | 16 | |
| Qld | Biggera Waters | Gold Coast | $1,350,000 | 34.7% | 4.1% | 20 |
| North Booval | Ipswich | $675,000 | 22.8% | 4.1% | 19 | |
| Lowood | Ipswich | $708,000 | 23.0% | 4.5% | 26 | |
| SA | Salisbury | Adelaide - North | $525,000 | 38.0% | 4.5% | 19 |
| Plympton | Adelaide - West | $580,000 | 34.9% | 4.3% | 15 | |
| Henley Beach | Adelaide - West | $910,000 | 35.8% | 4.2% | 17 | |
| WA | Cannington | Perth - South East | $770,000 | 22.5% | 4.5% | 22 |
| Pinjarra | Mandurah | $646,000 | 21.0% | 4.5% | 22 | |
| Singara | Perth - North West | $888,000 | 23.7% | 4.2% | 18 | |
| ACT | Banks | ACT | $888,000 | 19.1% | 4.2% | 19 |
| Strathnaim | ACT | $995,000 | 11.0% | 4.6% | 20 | |
| Franklin | ACT | $1,131,000 | 14.5% | 3.9% | 20 |
Units
| State | Suburb | Region | Median sale price | Annual median % growth | Rental yield | Rental days on market |
| NSW | Moorebank | Sydney - South West | $925,000 | 29.4% | 5.2% | 14 |
| Chipping Norton | Sydney - South West | $830,000 | 24.6% | 5.3% | 27 | |
| Kingsgrove | Sydney - Inner South West | $816,000 | 18.8% | 4.8% | 22 | |
| Vic | Coolaroo | Melbourne - North West | $625,000 | 14.2% | 4.3% | 27 |
| Carrum | Melbourne - Inner South | $1,063,000 | 18.1% | 3.7% | 22 | |
| Meadow Heights | Melbourne - North West | $670,000 | 12.8% | 4.0% | 26 | |
| Qld | Spring Hill | Brisbane - Inner City | $670,000 | 24.1% | 4.9% | 17 |
| Thorneside | Brisbane - East | $750,000 | 33.9% | 4.2% | 17 | |
| Brisbane City | Brisbane - Inner City | $735,000 | 22.1% | 5.2% | 21 | |
| SA | Elizabeth Park | Adelaide - North | $616,000 | 22.7% | 4.4% | 23 |
| Eyre | Adelaide - North | $651,000 | 21.7% | 4.5% | 24 | |
| Elizabeth East | Adelaide - North | $635,000 | 19.8% | 4.3% | 23 | |
| WA | Leederville | Perth - Inner | $780,000 | 27.9% | 5.7% | 13 |
| Bayswater | Perth - North East | $585,000 | 40.6% | 5.4% | 17 | |
| Jolimont | Perth - Inner | $955,000 | 47.2% | 5.0% | 12 | |
| ACT | Denman Prospect | ACT | $597,000 | 6.6% | 5.9% | 22 |
| Mawson | ACT | $668,000 | 20.2% | 5.6% | 22 | |
| City | ACT | $568,000 | 16.2% | 5.9% | 24 |
The report revealed only one in five investors purchase outside the state they live in although it is more common in the smaller states and territories.
In the Northern Territory, 60% of investors buy in other states, followed by Tasmania (42%) and the ACT (40%).
Investors in Queensland, South Australia, and Western Australia are far more likely to buy in their own states.
What will 2026 bring for investors?
The report forecasts investor activity will continue in 2026 despite changing and uncertain market conditions.
It makes no mention of regulator limits on high debt-to-income lending, largely targeting investors, that came into effect on 1 February 2026.
See also : Regulator lending crackdown turns the screws
However, it acknowledges rising interest rates and conflict in the Middle East will likely present a challenge to Australia's housing markets.
Westpac group chief economist Luci Ellis said gains across the wider market will be harder to sustain under the impact of interest rate rises.
"We expect [home] price growth to cool in 2026 to a more sedate 5% gain nationally, down from 8% in 2025, with a more pronounced slowing in the 'hot' markets of Brisbane and Perth," she said.
The report found rental yields nationally have also declined over the past couple of years, particularly in Perth, Adelaide, and Brisbane where they've been driven lower by rapidly rising home prices.
Unknown variables but supply shortage will remain
Dr Ellis said she would also be closely monitoring possible federal government policy changes that could shift property investment settings, including floated changes to capital gains tax on housing.
But, she said, tight rental markets and wider shortages of supply will still present opportunities for investors.
"Securing tenants and achieving a reasonable rental yield in the 4-5% range will still be more than feasible in that context," she said.
"Shortages and a wider economic backdrop of steady growth and a stable labour market should limit the downside risks for prices.
"Overall, while the negatives for investors around prices and interest rates will ebb and flow with the economic cycle, the opportunities created by tight supply and intergenerational transfers will be enduring."
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