Australia’s housing affordability crisis is deepening as new investment in residential property declines, raising concerns about future rental supply and housing availability said, Real Estate Institute of Australia (REIA) President, Ms Leanne Pilkington.
According to the latest Australian Bureau of Statistics (ABS) data, the number of new investment loans for dwellings fell 4.5 per cent in the December quarter—the first decline since early 2023. Meanwhile, new home loans (excluding refinancing) rose for the third consecutive quarter, indicating stronger activity among owner-occupiers but a concerning retreat in investor participation.
Ms Pilkington said the figures highlight a growing imbalance in the market as investors play a crucial role in maintaining rental supply, and this decline in new investment loans is a worrying trend.
“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. While the total number of new loan commitments for dwellings fell 0.4 per cent in the quarter, the value of loans increased by 1.4 per cent, suggesting that buyers are borrowing more despite higher interest rates.
“The good news is there was an increase in first-home buyers with loan commitments rising 1.3 per cent in number and 1.5 per cent in value, reflecting ongoing government incentives and support schemes.
“The increase in first-home buyer activity is encouraging, but it does not offset the broader issue of supply constraints,” Ms Pilkington said. “Without sufficient investor participation, we risk further undersupply in the rental market, making housing affordability an even greater challenge.”
With investor lending now trending downward, Ms Pilkington stressed the need for policy intervention to encourage investment in residential property.
“Policymakers need to address the barriers discouraging investors, such as rising costs, tax settings, and regulatory uncertainty,” she said. “A balanced housing market requires a steady flow of investment to ensure adequate rental supply and affordability for all Australians.”
Ms Pilkington concluded that it was promising to hear that the Government has confirmed in Question Time that if re-elected, they will not be touching negative gearing.
