Australia’s housing market is showing renewed optimism, with Money.com.au’s March 2025 Mortgage Insights report revealing a 10.5% year-on-year rise in total home loans to 521,400.
Although loans dipped 15.5% from the December 2024 quarter, investor lending continues to dominate, up 19% annually — more than triple the growth of owner occupier loans (6%).
New investor loans hit 196,241 over the year, just 3% below the June 2022 peak.
“We’re just shy of the investor loan peak set in 2022, but this time, the uptick in activity is happening in a very different rate environment,” said Jacob Overs (pictured), general manager of lending at Money.com.au.
“With rates falling from a much higher base and more cuts likely, many cashed-up investors see this as their window to strike before competition returns from owner-occupiers and first-home buyers.”
Refinancing rose 1% to 554,820 loans nationally in the year to March 2025. Internal refinancing surged 33%, while external refinancing rebounded from a 21% decline last quarter to just -11%.
Investor refinancing reached an all-time high of 173,948 loans, narrowly surpassing the previous record set in September 2023.
Owner-occupier loan growth remained stable nationwide at 6%, but some states saw declines — including Victoria, where growth slowed from 9.8% to 8.1%.
However, Victoria also posted a 12% rise in investor loan activity — bucking national trends and suggesting a strategic pivot among investors.
“Stamp duty concessions for off-the-plan properties have provided a lifeline for some investors buying new units and townhouses,” Overs said.
“At the same time, others are offloading their rental properties due to higher taxes in the state. But many of those homes are being picked up by first-home buyers as investment properties, thanks to their relative affordability.”
Loans for newly erected dwellings plummeted to 19,153 in the year to March 2025 — the lowest figure since September 2013 and down 42% from the September 2021 peak.
If the trend continues, lending for new builds could drop a further 17.2% by the end of 2025 to just 16,321 loans.
“High construction costs and long build times are pushing buyers into existing properties instead, because they’re seen as lower risk and quicker to access, both of which are major advantages in today’s lending environment,” Overs said.
That pressure is showing up in the numbers. Four Australian cities led the world in construction cost increases, according to Compare the Market. The Gold Coast topped the Tender Price Index (TPI) with a 7.4% rise, followed by Brisbane (7.1%), Townsville (6.9%) and Adelaide (6.4%), tied with Toronto.
The Reserve Bank has cut the cash rate twice in 2025 — in February and May — sparking speculation of a longer easing cycle.
The previous cutting cycle from November 2011 to 2020 delivered 18 reductions and helped lift annual owner occupier lending by 60%, from 277,717 to a peak of 443,150 loans.
“If history is any guide, a prolonged rate-cutting cycle could once again unlock a decade of lending growth — although the current cycle may prove shorter than the last,” the Money.com.au report said.
