Disclaimer: This article is intended for informational purposes only and should not be considered as financial advice. Market trends are subject to change, and past performance is not indicative of future results. It is essential to conduct your own research and consult with a qualified financial advisor before making any investment decisions.

As we head into 2025, the property market is showing signs of a significant shift. Investors are taking the lead, and the latest mortgage trends indicate that this gap will likely widen in the coming year. If you’re keeping an eye on the property market, this is the year to pay attention to key opportunities in the investment space.

Investors Are Outpacing Owner-Occupiers—By a Huge Margin

According to the latest Money.com.au Mortgage Insights Report, investor loans grew by 22% in 2024, while owner-occupier loans saw a modest 6% increase. This means investors are driving the market forward at more than three times the pace of owner-occupiers.

Why is this happening? As we enter 2025, investors are taking advantage of several factors. With record-low vacancy rates, rising rental demand, and continued population growth, the investor market is expected to continue its upward trajectory. Plus, the first interest rate cut has already occurred, with more expected, giving investors the chance to borrow more and expand their portfolios.

In 2024, a total of 192,843 investor loans were settled—up 34,234 from the previous year. If you’re an investor or looking to get into the market, these are the kinds of growth statistics to keep in mind.

Victoria: The Homebuyer Sweet Spot

While investors dominate the market, homebuyers are still finding success in some areas, especially in Victoria. In fact, Victoria led the nation in owner-occupier loan growth in 2024, with a 10% year-on-year increase. This growth can be attributed to the state’s relative affordability compared to other markets.

The average loan size in Victoria was $615,175 in 2024, with a modest 2% increase year-on-year—much lower than the 16% increase in Western Australia and 13% in Queensland.

Property prices here have remained steady, providing a unique opportunity for homebuyers to secure a property in a desirable location without the inflated prices seen in other states.

As interest rates decrease and demand increases, prices in Victoria could rise, making it harder to secure affordable property in the future.

Queensland: Australia’s New No. 2 Investor Market

2024 saw a significant shift: Queensland has overtaken Victoria as Australia’s second-largest investor market. With 23.8% of all investor loans, Queensland now holds the second spot, surpassing Victoria’s 22.1%. Investor loans in Queensland reached 45,872, compared to 42,567 in Victoria.

The driving force behind this change is Queensland’s affordability, strong rental demand, and attractive rental yields. In addition to these factors, recent government incentives—like changes to stamp duty—are making it even more enticing for investors.

These incentives provide additional opportunities for cost savings and better returns, especially for those entering the market in 2025.

First-Home Buyers: A Market Waiting to Rebound

First-home buyers (FHBs) have faced several challenges in recent years, but there’s potential for a market rebound in 2025. FHB loans grew 6% in 2024, but the growth slowed toward the end of the year. In Q4, there was a slight 1.3% decline in loan settlements compared to Q4 2023.

However, with interest rate cuts on the horizon and government incentives still strong, first-home buyers could see their fortunes change in 2025. At Loan Nerds, we believe there are key factors that could drive FHB demand:

1. Interest Rate Cuts: The RBA has already reduced rates, and further cuts are expected, which will improve borrowing power for first-home buyers.
2. Government Incentives: With government assistance at an all-time high, it’s easier than ever for FHBs to enter the property market.
3. The Bank of Mum and Dad: Rising home equity means parents are in a better position to help their children with their first property purchase.

While some states are seeing slight declines in FHB activity, Queensland (+6%) and the Northern Territory (+2%) have seen growth, offering hopeful signs for FHBs in 2025.

Refinancing is Back – And It’s Just the Beginning

Refinancing activity, which had slowed in recent years, picked up significantly in late 2024. According to the report, 161,276 loans were refinanced in Q4 2024, marking a 9% increase compared to the previous year. Internal refinancing saw a 15% surge, indicating that more borrowers are renegotiating with their current lenders rather than switching banks.

At Loan Nerds, we’re seeing a growing number of clients looking into refinancing options as interest rates shift. If you’ve been considering refinancing, now could be the perfect time to review your options and lock in a more favorable rate before the market changes further.

The Bottom Line

As we move into 2025, the property market is expected to continue evolving. Investors are leading the charge, with strong growth predicted in investor loans, particularly in Queensland. While homebuyers in Victoria still have opportunities for affordable properties, first-home buyers and investors will need to act quickly as conditions shift.

At Loan Nerds, we believe understanding these mortgage trends will provide you with a competitive edge in 2025. Whether you’re an investor, homebuyer, or looking to refinance, staying on top of these changes can help you make informed decisions and achieve your property goals.