(Bloomberg) — Australian home loans to property investors jumped for a third straight month in April, rising at a faster pace than owner-occupiers as surging residential rents make housing an even more attractive investment.

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The value of new loans to home investors rose 5.6% to A$10.9 billion ($7.3 billion), to be up 36.1% compared with a year ago, data from the Australian Bureau of Statistics showed on Thursday.

“This likely reflects expectations of higher rental yields and the greater borrowing capacity of investors,” Mish Tan, head of finance statistics at the ABS, said in a statement.

The strongest markets were New South Wales and Queensland where investor lending climbed about 44% and 46%, respectively, since April 2023, the data showed.

Separate figures from property consultancy CoreLogic Inc. earlier this month showed rents advanced 8.9% in Sydney in May from a year ago and 9.7% in Melbourne. That compares with annual house price gains of 7.4% and 1.8% in the two biggest cities, respectively.

With rents climbing at a faster pace than home values, gross rental yields have risen to 3.56% across the eight capital cities — the highest since August 2019, CoreLogic data showed.

“For most investors, higher yields will be welcome considering variable interest rates for investor loans are averaging 6.7%,” CoreLogic research director Tim Lawless said. “Given the high cost of debt, a large portion of leveraged investors are probably recording a cash flow loss despite the substantial rise in rental income.”

Today’s data also showed the value of new loans to owner-occupiers, excluding first-home buyers, rose 4.7% in April to A$13.1 billion, up 18.8% from a year ago.

–With assistance from Tomoko Sato.

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