Property investment slumps in 2023, says ASX

By Jack Dona · · 2 min read
Fact Checked
An image of three high-rise apartment buildings with little money trees growing from their roofs. They're set at different heights, indicating different rates of growth.

Despite residential property investment remaining the second most popular asset for Australians in 2023, there has been a downward trend in the number of people investing in housing, according to the latest Australian Securities Exchange (ASX) report .

According to ASX data from 2020, the total share of Australian investors with a stake in a residential investment property was 39%. But in 2023, after numerous cash rate hikes from the Reserve Bank of Australia (RBA) to preemptively quash inflation , that number has slipped down to 35%.

Property investment then and now

In 2020, the cash rate hovered around lows of between 0.10% to 0.75% p.a. This meant investment property loan rates were much lower and more attractive than in 2023.

The current cash rate is certainly much higher at 4.10% p.a.

The ASX’s survey of investor goals showed that the portion of Australians who aim to purchase an investment property in the next three years is at a similar level for both current investors and ‘intending’ investors, at 16% and 15% respectively.

But with home loan interest rates being what they are right now, are prospective property investors being a little too optimistic about their goal? Not necessarily.

Compare investment home loan rates to find a lower rate

While the average variable investment property loan in Mozo’s database for September 2020 was 3.78% p.a. (P&I @ $400,000 – 80% LVR), the story in 2023 is a little different.

In September 2023 the average variable rate in our database sits at 6.96% p.a.† – at almost 7% p.a. it’s a far cry from the sub-4% figures up for grabs during the pandemic.

But it’s not all bad news for property investors.

In the Mozo database currently there are three lenders offering a variable rate investment property loan below 6% p.a., and over 70 investment loan products with rates below the average of 6.96% p.a.

Some of the lowest variable rates in our database come from lenders like Bank Australia, Hume Bank, and Pacific Mortgage Group, whose variable rates sit around 5.89% p.a.‡ (comparison rates may vary*). At 5.89% p.a., a $500,000 investment property over 30 years would result in estimated monthly repayments of around $2,962.

In contrast, a loan for the same amount, paying an average variable investment loan rate of 6.96% p.a., would result in repayments of $3,313 per month – $351 more out of pocket and nothing to turn your nose up at.

There are still plenty of rates in the Mozo database on offer that are lower than the average, which is precisely why doing an investment home loan comparison before you settle on just any old lender can pay off.

Mozo compares over 90 providers to help kickstart your investment journey to finding the best home loan for you. Take a look at some of the featured products below to get started.

† Based on a variable rate investor home loan on the Mozo database, on a loan of $400,000, paying principal & interest, LVR <80%, as at 5 September 2023.

‡ Based on a variable rate investor home loan on the Mozo database, paying principal & interest on a $500,000 investor home loan, LVR <80% over a 30 year loan term, as at 5 September 2023.