FHB investors twice as active as owner-occupiers

Revealed in the inaugural first home buyer edition of Money.com.au’s Mortgage Insights Report, the segment of first home buyer (FHB) investors has shown staggering growth over the September quarter.

The research found that investor loans increased at twice the pace of owner-occupier loans annually, rising by 21.4 per cent, compared to 9.1 per cent for FHB owner-occupiers, representing 9,809 loans annually.

Nearly one in 10 FHBs in NSW (9.3 per cent) took out loans for investment purposes in the year to September 2024. Contrastingly, this trend was the weakest in Victoria over the same period, where only 4.8 per cent of FHB buyer loans were for investments.

According to the report, this is due to Victoria’s broader trend of being dominated by owner-occupiers and holding a smaller share of the market that caters to investor borrowers.

Following NSW, South Australia saw the second-largest growth over the year to September 2024 at 7.7 per cent, followed by Queensland (7.3 per cent), “other” at 6.7 per cent, and Western Australia at 5.7 per cent.

Annually, NSW saw investor loan growth skyrocket to 31 per cent, followed by South Australia at 24 per cent, Queensland at 23 per cent, Western Australia (21 per cent), and Victoria at only 7 per cent.

Money.com.au’s property expert Mansour Soltani said this surge in investor loans among FHBs may be indicative of “rentvesting” becoming more common.

“First home buyers are increasingly entering the property market as investors while continuing to rent in suburbs where they prefer to live,” he said.

“It’s a strategic approach to balancing affordability and lifestyle, as they may be able to borrow more as investors by factoring in potential rental income.”

Victoria a ‘hotspot’ for FHBs

While Victoria was lacking on the investor front, it is currently leading the nation in first home buyer loan growth, with a significant 14.6 per cent increase in the past year – more than three times Queensland’s growth rate of 4.5 per cent.

NSW follows with a 10.9 per cent annual growth rate, while South Australia records an 8 per cent increase. These figures represent owner-occupied loans only.

In addition to this strong growth, Victoria holds the largest share of first home buyers in the country, accounting for 36 per cent of all first home buyer owner-occupier loans.

Soltani attributed Victoria’s impressive performance to a combination of factors.

“Victoria’s surge in first home buyer loans is driven by a combination of factors, including more affordable property prices compared to New South Wales, particularly Sydney, and a relatively steady housing supply compared to other states,” Soltani said.

“There’s a balance of affordability and opportunity in Victoria which makes it an appealing destination for first-time buyers entering the property market.”

The average annual first home buyer loan size in Victoria has also increased, rising to $513,485, up from $500,313 a year ago.

However, Queensland recorded the strongest growth in the September quarter, with a 4.2 per cent increase in first home buyer loans. Victoria followed closely behind with a 2.5 per cent growth rate during the same period.

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Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.