Property investor savvy tactics leaving average homebuyers stuck

Property investors capitalising on lower rates and using these savvy tactics to increase their borrowing power are leaving average homebuyers in the lurch.

Property investors are capitalising on lower interest rates and using little-known financial tactics to dramatically increase their borrowing power – leaving competing buyers seeking a roof over their heads at a disadvantage.

These sophisticated strategies were reported to be helping investors secure loans significantly larger than what standard banking criteria would typically permit. The result is an uneven playing field in an already competitive property market.

It’s a trend particularly noteable in Sydney, where Homeloanexperts.com.au senior mortgage broker Jonathan Preston said homes are “no longer about shelter at all – that is long dead and buried”.

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Homebuyers could be in strife with increased investors in the market. Picture: Julian Andrews

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Instead, he labelled Sydney property “an investment-grade global asset,” while revealing the savvy ways many investors maximise their borrowing capacities to make the most of recent rate cuts.

“Many wealthy borrowers who are looking to build large portfolios these days choose to acquire properties within family trusts, with the view that when they eventually become positively geared, they can provide a letter from the accountant confirming the positive trading of the entity, and some lenders then allow the trust’s loan to be excluded from servicing.

“This opens up a whole new playing field, where someone can potentially open up multiple trusts and go again and again – subject to not running out of lenders or deposits – this is the way people are generally getting to 5-plus properties in 2025,” Mr Preston said.

Jonathan Preston senior mortgage broker at homeloanexperts.com.au

The last time investors dominated NSW’s property scene in 2015 – accounting for around 40 per cent of all property purchases at the time – Sydney’s prices ballooned to eye-watering levels, eventually forcing APRA to crack down and introduce regulations to cool investment purchases.

Most investors using some of the above tactics were using interest-only loans, Mr Preston noted, to limit repayments and often seek higher-yielding properties to achieve positive cash flow faster.

He said there has also been a rise in borrowers who are still living with their parents who will then ‘rentvest’ and get into the property market before moving out, with almost a third of purchases he dealt with using this tactic.

“It makes borrowing power way higher,” he said. “Single-income borrowing is horrible right now. Even if you make big money, good luck making enough to buy something nice in Sydney.

A Northern Beaches property in Clontarf with price hopes over $3.55m.

“Borrowing is typically capped at about five times your annual income, so if you want a $3 million property, you are going to need to earn about $600,000 or more.”

He said property buyers prepared to branch out their searches had an additional advantage, adding that most property buyers in Sydney wanted a house and were only interested in the North Shore, Inner West, Northern Beaches, or in the east or south.

“I am a big believer in Western Sydney but many aren’t,” he added.

“So the starting point for those houses is probably north of $2.5 million now; hence, people even buy Gosford, or similar, instead. And northwest is often considered like the North Shore these days,” he said.

Homebuyers could see prices pushed up with investors having greater borrowing capacity. Photo: Tom Parrish

Mr Preston emphasised that once location preferences were established, buyers are essentially restricted to buying a unit, settling for a house in Western Sydney or beyond the city boundaries, or somehow managing to earn an annual seven-figure income — a far-fetched scenario for most Australians.

“Even those three options are challenging. For example, a nice apartment in those desired areas is generally more than $1 million.”

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Originally published as Property investor savvy tactics leaving average homebuyers stuck