The share of property investors in the market has realigned to its standard levels, making up 34% of mortgage demand for new commitments.
New South Wales (NSW) stands out as the most attractive destination for investors, contributing 38% to the value of new mortgage lending. In contrast, Tasmania and Western Australia record the lowest levels of investment activity, with shares of 24.5% and 28%, respectively.
Interestingly, the Perth market, despite its high gross rental yields and potential for capital gains, sees limited investor activity. This could be a result of a trend-following mentality that favors the Sydney market, notwithstanding its lower rental yields and affordability constraints. Conversely, the real estate market in Perth presents appealing opportunities with its lower median home values and resilience in the face of rate increases.
Both the Perth market and southeast Queensland are emerging as strong investment opportunities. This growth is propelled by high yields, affordable housing prices, and rapid population expansion due to interstate migration. While Sydney and Melbourne have traditionally provided robust capital gains, their relatively higher prices may potentially inhibit future capital gain potential. For investors seeking a balanced portfolio, Perth and southeast Queensland offer enticing prospects with a healthy mix of housing demand driven by both interstate and overseas migration.
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