With attractive yields and strong capital growth, property investment remains a favourite strategy for building wealth. CoreLogic reports that new investor loans are outpacing the number of investment properties listed for sale, indicating more buyers than sellers. At the same time, some investors are looking to leave the market or reduce their portfolio due to high interest rates, tenancy reforms and increased property taxes. Let’s look at the investing trends forecast for 2025.
LJ Hooker Home Loans Head of Product and Marketing, Jeff Chapman, said they have seen a massive growth in people purchasing either residential or commercial property through their Self Managed Super Fund (SMSF). As more lenders enter this market, it has become more accessible. “The way SMSFs are assessed by the banks means they are not as impacted by affordability issues because it is not based on their personal income and expenses, it is more about how the fund is set up,” Mr Chapman said.
As property prices rise in capital cities, many young buyers are turning to rentvesting – leasing a property in a preferred area while purchasing in a more affordable one. While this strategy may limit access to first-homebuyer grants - often required to purchase the property - it offers tax benefits such as negative gearing, depreciation and the ability to generate rental income.
Savvy investors are targeting freestanding homes on large blocks, with redevelopment potential if rezoned. While apartments are more affordable for investors, there remain concerns about body corporates and building defects. “Investors are becoming a bit wary, and there is a need to do proper research and check how much money is in the sinking fund,” Mr Chapman said.
Some investors have been de-leveraging portfolios under cashflow pressure from high interest rates, with those who have purchased in Victoria particularly impacted by new taxes and regulations. LJ Hooker Head of Research, Mathew Tiller, said interest rates will play a key role in shaping market performance in 2025. “An earlier announcement and a significant reduction will likely strengthen the market, while prolonged rate stability at elevated levels may soften conditions,” he said.
Price growth will vary by geography, price point, and property type in the coming year, reflecting state-specific and buyer-specific dynamics. Investment hotspots include affordable suburbs with new infrastructure, transport links and housing supply. Prices in Brisbane, Perth, and Adelaide are expected to climb further, keeping these markets attractive for investors. Regional areas will remain popular due to their affordability and rental returns.
You may have purchased the right property, and the right location, but the success of any property investment relies on minimising any period of vacancy. Kathy Brown, LJ Hooker Network Performance Manager for Property Management in Queensland, said building and maintaining positive relationships with tenants can encourage them to stay longer. “The key to remember is that happy tenants are more likely to renew their lease – so it is important to respond to their concerns and address maintenance issues promptly,” she said. “Also, keep communication open with tenants to resolve issues early and ensure that they feel valued."
Higher interest rates and rising cost of living may make it tempting to increase rents, but it is important to keep them competitive with the local market. Listen to the advice of your property manager, keep an eye on what similar properties in your area are achieving and stay up-to-date with rental laws. For instance, in NSW, rental increases can only be made once per year for all leases. Previously, only periodic leases and fix-term leases of two years or more had this rule. “It is also important to plan for vacancies, so when a tenant does give the notice to leave, you have an action plan, and this can minimise any time of the property sitting empty,” Ms Brown said. “Work with your property manager to process applications promptly but still do your due diligence.You want to be sure that you find someone who is reliable and responsible and who is more likely to stay long-term.”
Australia’s peak rental season typically runs fromJanuary to March, making it an ideal time to schedule lease renewals. This increases your chances of quickly finding a new tenant if the current one decides to move out. Affordable improvements to your investment property can make it more appealing to tenants and incentivise them to stay longer. For example, installing a split system air-conditioning, ceiling fans, built-in wardrobes or updating kitchen appliances.
“This not only adds value when it comes to selling but is often appreciated by tenants who may be happy to stay longer,” Ms Brown said.
“And quite often, the cost of something like this can be lower than the expense of having to find someone new to rent the property.”
Other tips for minimising rental vacancy include:
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