Renters looking to escape a tight and expensive market could face even more competition from property investors and each other as they seek to buy a home.
Bank lending to investors has reached its highest level in almost a decade, buoyed by lower interest rates.
Hopeful first home-buyers can access five per cent mortgage deposits, but some warn the scheme will also push up prices and saddle them with larger debts.
Investor lending has reached its highest share of new loans since 2017 in a report on Thursday by property data and valuation firm PropTrack, sponsored by landlord insurer Terri Scheer.
Rents for tenants and yields for landlords have both risen, as vacancy rates remain low.
Along with rental yields, more than 90 per cent of investment properties sold in the last year had increased in value, according to PropTrack.
The share of property investors aged over 60 has almost doubled since the early 2000s, to 27 per cent.
More than two-thirds of investors have only one investment property, while slightly more than 20 per cent have two.
More than one-in-eight tax returns for 2022/23 included rental income, compared to fewer than one-in-20 in 1978/79.
Among those declaring rental income are dozens of federal parliamentarians, with 55 per cent also owning more than one property, according to analysis of the register of members' interests by The Guardian.
A growing national obsession with property investment is increasing along with investor yields, and more want in.
"Investors are now making up a substantial share of new lending," REA group senior economist Angus Moore said.
Rental markets remain tight, with prices growing rapidly in recent years.
"That's likely encouraging investors to buy in."
Markets also expect at least one more rate cut from the Reserve Bank, likely sustaining investor activity, Mr Moore said.
As first home-buyers and investors alike look to buy property, they face a shortage of stock.
Attempts to build 1.2 million new homes across the nation by mid-2029 face a challenge from rising construction costs, but a separate report by Cotality showed the rate of increase has slowed, to 2.5 per cent over the past 12 months.
"While underlying construction costs remain high, the rate of annual increases has not been this low since March 2002," the property data firm's research head Eliza Owen said.
Australian Bureau of Statistics data released on Wednesday revealed slow progress towards the 1.2 million homes by 2029 target.
Australia is more than 60,000 properties behind schedule after a year, after construction was started on just more than 179,000 homes in 2024/25.
The latest building activity figures released on Wednesday revealed construction started on just more than 179,000 homes in 2024/25.
For the figure to be reached, 240,000 properties would need to be built each year.