Why investors have gone quiet, and why it's an interesting time to start your property portfolio

Higher rates, less equity and unresolved tax rules have pushed investors to the sidelines. But rents are rising and there's more stock to choose from. Could this be the opening aspiring investors have been waiting for?

Investors have stepped back.

ABS figures show the value of new investor loans fell 10.2% in the June quarter, the biggest drop since 2022.

Here's what's changed.

Three reasons investors are sitting out

1. Rates are higher: the cash rate is 4.60% after four rises this year, and the RBA's average rate on new investor loans in July was 6.4%, about 0.2% above what owner-occupiers pay.

2. Equity has shrunk: property values have fallen six months in a row, according to Cotality, and are now 5.2% below their March peak. If you were planning to fund a deposit from the equity in your home, a lower valuation could leave you with less to work with than you had in March.

3. Negative gearing is changing: the first stage is law and starts on 1 July 2027. Properties bought before budget night are grandfathered, and qualifying new builds keep the deduction. On an established property bought after that, rental losses can still be offset against other property income or carried forward, just not against your salary. Treasury's definition of a new build is still in draft, and people seem happy to sit on the sidelines until they have more clarity.

But the other side is more interesting

As Warren Buffett put it, "be fearful when others are greedy and greedy when others are fearful".

Rents are up 5.5% over the year, and with values down, the national gross rental yield has reached 3.85%, its highest since August 2019.

There's also more to choose from, though not because sellers are rushing in. New listings are actually down 9.2% on a year ago. Homes are simply taking longer to sell, so stock has built up, and capital city listings now sit 23.1% above a year ago.

So there's less competition, more stock and better yields than investors have seen in years.

What's the catch?

Cotality's own words: yields in the larger capitals "remain well below the level required to achieve a neutral cash flow position for most investors".

So the question isn't whether the market looks good. It's whether you can fund the gap, and whether a lender agrees.

Are you in a position to invest?

It comes down to three things.

1. What can you contribute? This is the deposit, plus stamp duty and legal fees. It can come from cash, from the equity in your home, or a bit of both.

2. What do you already owe? Your existing debts affect how much a lender is willing to add on top. Since February, APRA has capped high debt-to-income lending at 20% of each bank's new loans, counted separately for owner-occupiers and investors. It's a limit on the bank's book rather than on you, but it leaves lenders less room.

3. Can you cover the repayments? If the rent doesn't cover the loan, your lender needs to see that you can comfortably fund the difference. They'll also check that you could still afford the repayments if rates rose by at least three percentage points.

If you'd like to run the numbers, we can help.

There's a whole other conversation to have with your accountant about negative gearing. Purchase timing, grandfathering and whether a property counts as a new build all change the answer.

Give us a call

It costs nothing to find out where you stand, and it's a lot easier than working it out after you've made an offer.

Sources: ABS Lending Indicators, June quarter 2026. Cotality Home Value Index, 1 October 2026. RBA cash rate and statistical table F6, housing lending rates. APRA, limit on high debt-to-income home loans, effective 1 February 2026. ATO, negative gearing and capital gains tax reform.