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The southern state is leading the way for investor borrowers, with new Australian Bureau of Statistics (ABS) data revealing double-digit investor loan growth.
While investor lending has been hitting new records recently, Victoria has been leading the way when it comes to volumes, according to lending indicators data from the ABS.
In the 12 months to September, investor loans nationwide rose by 9 per cent, 32.3 per cent above September 2023 lows, with Victoria recording 13 per cent growth in annual investor loans.
The ABS revealed that NSW recorded an 11 per cent increase in investor loans, South Australia grew by 10 per cent, while Queensland followed at 8 per cent.
However, Queensland remains a marginally larger investor market share at 23.4 per cent versus Victoria’s 23.2 per cent – a difference of just 0.2 percentage points.
Nationwide, investor loans have been growing at three times the rate of owner-occupier loans, totalling an annual loan growth of 9 per cent compared with 3 per cent.
Owner-occupier and investor loans for new builds, land, and construction fell 3.5 per cent annually – now 38.3 per cent below their June 2021 peak – reflecting the broader housing supply shortage.
Money.com.au property expert Debbie Hays commented: “The fundamentals are still there in Victoria, including improved rental yields, stronger population growth and more attractive price points in Melbourne compared with Sydney, particularly across inner and middle-ring suburbs.
“This raises the question of whether Victoria could reclaim its position as Australia’s second-largest investor market by year’s end.”
Hays noted that the data also showed that supply has been narrowing.
“When borrowing for new builds continues to go backwards, itʼs a clear sign that supply isnʼt keeping up, and more buyers are being pushed to compete for existing properties,” Hays said.
“That inevitably drives prices higher, and with it, the average debt size.ˮ
Across the country, owner-occupier loans continued their recovery, rising 3 per cent nationally in the year to September and 9.3 per cent above September 2023 lows.
Queensland has been leading the growth, with a 5 per cent increase driven by its lifestyle appeal, issuing 72,475 loans, more than Western Australia and South Australia combined.
In other states, annual growth in owner-occupier loans was modest, with Western Australia the only state to record a 2 per cent decline.
While overall loans continued to grow, Hays said that refinancing hit a four-year high following market shifts.
In the year to September, Australians have refinanced 618,966 loans, surpassing new loans by 81,640.
Hays said the numbers have marked a significant shift from September 2021, when new loans exceeded refinances by 97,502 – a turnaround of nearly 180,000 loans.
Owner-occupiers have continued to drive 70–75 per cent of the country’s refinancing, while internal refinancing was up 29 per cent year on year, doubling the growth in external refinancing.
“Home owners are more focused on rate reduction than investors, who can claim interest expenses as a tax deduction,” Hays concluded.
“However, debt reshuffling remains common across both segments.”
[Related: Mortgage applications soar to 4-year high]