Brisbane investors hold 40% of unit lending market

Brisbane's unit market is leaning more heavily on investors than at any point in the past decade, and economists warn there isn't enough first-home buyer demand to fill the gap if that capital pulls back.

Investor lending in Brisbane has climbed above 40%, well ahead of the decade average of 32%, according to Domain chief of research and economics Dr Nicola Powell. First-home buyers, by contrast, account for just 16% of lending activity in the city.

"In Brisbane, first-home buyers make up 16 per cent of lending right now, so if investors retreat there's not enough to fill the gap," Powell said.

Brisbane's investor concentration mirrors a pattern playing out nationally. Cotality data shows the investor share of lending value reached 40.3% in the March 2026 quarter, the highest level since December 2016, even as total lending volumes fell 6.2% and total lending value dropped 3.8% on the back of three RBA rate rises.

Queensland's first-home buyer loan volumes fell 5.8% over the same quarter, a steeper decline than most other states recorded.

This imbalance comes into focus against the Domain Forecast Report FY2027, which predicts Brisbane's unit median will rise by at least $40,000 to $861,000 over the next 12 months. Under the upper end of the forecast range, prices could climb by $74,000 to $893,000, putting growth at 5–9%.

The withdrawal is already underway

Ray White chief economist Nerida Conisbee said investor lending began softening in the March quarter, with that data only capturing two of the period's interest rate rises.

"Investor lending started to drop in the March quarter and that data only really accounted for the two interest rate rises," she said.

Conisbee said rather than exiting the market outright, some investors are likely to redirect funds toward new-build stock, particularly where rental yields remain attractive.

Tax changes set to redirect investor money

Federal budget changes taking effect from July 1, 2027, will limit negative gearing to newly built properties. The 50% capital gains tax discount will be replaced with an indexed model, though existing investors will retain current arrangements under grandfathering provisions.

Since the original forecast was published, those changes have moved from proposal to law. The Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 passed the House of Representatives 98 votes to 39, following Senate amendments secured with Greens support.

Treasury has confirmed approximately 85% of the projected $3.6 billion in additional tax revenue over the forward estimates will come from the negative gearing restrictions, with the combined negative gearing and capital gains tax measures projected to raise more than $40 billion over a decade.

Passage followed a close vote in the lower house, where the bill cleared 94 votes to 48 before heading to the Senate. Labor secured the numbers there with support from the Greens, who pushed for and obtained an additional concession: a ban on self-managed super funds borrowing to fund residential property purchases.

Powell said the policy is designed to steer investor demand toward new housing stock rather than established properties, the segment in which Brisbane's investor concentration is currently highest.

Rental squeeze could pull some investors back in

Brisbane's vacancy rate sits at 0.6%, according to the latest Domain Rental Report, with rents continuing to rise.

Domain's forecast notes that as unit prices ease and yields improve, some yield-focused investors could be drawn back into the market.

Jennison, of Brisbane's Streamline Property Buyers, said remaining investors are concentrating on rental appeal, scarcity, and long-term growth prospects rather than broad-based buying.

Construction costs add pressure on the supply side

Conisbee linked rising costs partly to construction activity tied to the Olympics, with building costs increasing by up to 4% annually. She said this cost pressure is limiting the viability of lower-priced developments, with higher-priced stock the only segment where the numbers currently work for builders.

"There is so much construction going on with the Olympics and construction costs have re-accelerated; that's problematic," Conisbee said. "Costs are rising up to four per cent per annum."

Regulators have already moved to contain risk building up from investor activity more broadly. APRA introduced a debt-to-income limit on home lending this year, with chair John Lonsdale saying the build-up of risk was concentrated chiefly in high debt-to-income lending to investors.

RBA governor Michele Bullock had previously warned that renewed investor appetite could add to property price cycles and increase loan-to-value ratios across the system.

Brisbane's growth pace is already slowing

Brisbane house prices rose 20% in the 12 months to March, a pace Powell expects to roughly halve over the coming year.

Brisbane unit prices are forecast to overtake Sydney's within 12 months, opening a $40,000 gap, while Brisbane house prices are forecast to rise 3–7%, taking the median to $1.34 million.

Sydney's unit median is forecast to fall by up to 3% ($25,000) to $821,000 over the same period. Melbourne is also forecast to record price falls, with the report citing declining consumer sentiment, rising costs, tax changes and global instability as contributing factors for both cities.

Brisbane, Perth and Adelaide are the only capitals tipped for price growth across both units and houses.

Migration slowdown adds to the affordability question

AMP chief economist Shane Oliver (pictured) said slowing migration and affordability limits will temper Brisbane's growth more than Domain's figures suggest.

Net interstate migration to Queensland fell by approximately 25% in the 2024–25 financial year compared with the prior year, according to ABS data, though it remains the strongest result of any state.

Moody's affordability data lends some support to Oliver's view. The agency's measure of housing affordability — the share of average monthly household disposable income required for mortgage repayments on a typical new loan — put Brisbane at 31.7% in March 2026, the second-worst reading of any capital city behind Sydney's 40.4%, against a national figure of 29.6%.

"My landing would be, in the next year we'll see even less growth," Oliver said, adding that buyer sentiment "is pretty bleak."

Powell said Sydney's geographic constraints will keep it the country's most expensive city for detached housing regardless of the unit market shift.

"Sydney has a land premium Brisbane doesn't have, and that's because it's landlocked," she said.

Jennison said Brisbane's property market is moving into a more cautious and selective phase, with buyer activity continuing but tied more closely to affordability considerations than in previous years.