Essential workers can barely find an affordable home to rent while investors flock to the property market.
Lower interest rates and higher rents have boosted bank lending to investors.
Its at its highest share of new loans since 2017 in a report on Thursday by property data firm PropTrack, sponsored by landlord insurer Terri Scheer.
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.
Rents for tenants and yields for landlords have both risen as vacancy rates remain low.
Increasing rents have also further strained housing affordability, with essential workers able to afford only a slither of listed dwellings.
Anglicare Australia's latest rental affordability snapshot on Thursday showed only 1.7 per cent of rentals were affordable for an aged care worker, rising to 3.3 per cent for a teacher.
The organisation called for bold action, including "reforming unfair tax handouts for investors".
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 12-month rate of increase has slowed to 2.5 per cent, its lowest since 2002.
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, with construction started on just more than 179,000 homes in 2024/25.
To hit the target, 240,000 properties would need to be built each year.
