Why now may be the time to buy a rental property

2025 has been a big year for property investors. But the rapid growth of investment lending has fuelled speculation about a possible crackdown on loans to property investors. We explain what’s happening, and why it might be worth considering bringing forward your plans.

The past year has been a cracker for property investors.

The tightest vacancy rates on record have seen a pick-up in rental growth.

Interest rates on investment home loans are at their lowest since late 2023.

And to top it off, property price growth nationally has hit the fastest pace in over two years.

No wonder investors are buying up property in record numbers.  

But as lending to investors hits the fastest pace in a decade, our bank regulator – the Australian Prudential Regulation Authority (APRA) – is watchful.

Some commentators are even suggesting APRA could clamp down on investment lending in a bid to cool property price growth.

Here’s what you need to know if buying a rental property is on your wish list.

Investment lending outstrips mortgages to owner occupiers

There’s no doubt about it, investors have been a driving force in the property market this year.

The September quarter alone saw a 13.6% rise in the number of new investment loans.

That’s 57,624 new investment home loans in the space of just three months – the highest number since early 2022.

Zooming out a little further, the past year has seen lending for investment properties outstrip growth in home buyer loans, according to ABS data.

So what’s the problem?

What’s worrying APRA are potential signs of a pick-up in riskier lending, in particular what it describes as “high debt-to-income borrowing by investors”.

Here’s the red flag for would-be investors.

In a recent report, APRA warned it is “ensuring banks are prepared to implement additional macroprudential tools where required to reinforce lending standards”.

In plain English, APRA is reminding banks that as the industry regulator, it can, and may, change the rules around lending to property investors – a step it has taken in the past.

The lessons of 2014–2018

2014 might seem like a lifetime ago.

However, seasoned property investors may recall 2014 as the year APRA aimed to gently cool the property market by limiting annual lending growth to property investors to 10%.

APRA further tweaked the rules by imposing a 30% limit on interest-only loans, which are typically favoured by investors.

The regulator eventually relaxed its investment lending restrictions in 2018.

Could history repeat?

Property market conditions back in 2014 were similar to those we see today.

Values were rising fast, interest rates were on a downward trend, and household income growth was sluggish.

This has fuelled speculation that APRA may introduce new regulations for today’s generation of property investors.

What it could mean for your investment plans

The decision to buy an investment property should never be rushed.

That said, if APRA does tighten lending policies, investors who delay their decision could find they have missed the boat due to changes to their borrowing power or lender restrictions.

So, somewhat ironically, APRA’s latest warnings may just spur some investors to bring forward their buying plans.

If you’re keen to become a property investor or expand your portfolio, get in touch with us today.

We can help you assess your borrowing capacity as it currently stands, and provide insights into the different funding options that could help you invest.

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