New data from the Australian Bureau of Statistics shows the value of investment finance commitments reached $11 billion in April, an increase of 29.8 per cent over the previous year.
Investors now account for 39.4 per cent of the market or 47.8 per cent when refinances are excluded.
These figures are close to the highest levels since 2003, the tail-end of the last property boom, according to RP Data research director Tim Lawless.
Given such frantic investment activity, Mr Lawless warned banking regulators may "show signs of being uncomfortable" with the level of housing market investment.
“Compared with this time last year, investors may now find it harder to secure a property with changes to solid investment fundamentals, particularly in the cities where capital gains have been significant and yields are low,” Mr Lawless said.
Mr Lawless said investment lending was currently outpacing growth in capital city home values.
“Since values reached their recent trough in May 2012, home values increased by 16.1 per cent to April 2014 compared to a 59.2 per cent rise in the value of investment lending,” he said.
At the same time, gross rental yields are decreasing across the capital cities.
In May 2012, yields across the capital cities were at 4.3 per cent, while currently yields are at four per cent.