10 insights into the investment property market

In recent news, townhouses and apartments boom thanks to affordability issues; regional prices accelerate at fasted pace in three years and deliver the highest rental yields; ATO to change rules around holiday rentals; Tasmania goes pet-friendly; new rental reforms come into effect in Victoria; and investor confidence surge drives loans higher.

Each month we pull together 10 insights impacting the investment property market. Read on for this month’s instalment…

1. Rents ease in key capitals as vacancies hold steady. Rents eased slightly in November as vacancies held steady at 1.2%. Capital city rents rose just 0.2%, with declines in Melbourne, Brisbane and Perth. National rents now sit at $665 p/w, while affordability remains strained; Cotality reports renters spend 33% of income on rent, and nearly half of renters struggled to pay in October.
2. Housing values rise at fastest pace in two years. Housing values jumped 1.1% in October (the fastest monthly rise in two years) lifting annual growth to 6.1%. House and unit prices continued climbing, with the national median home value now around $858,000. Prices are up 7.5% over the year and 51% over five years. Forecasts from Domain and SQM expect new records in every capital city by 2026, with national growth of 6–10% and up to 16% in Brisbane, Perth, Adelaide and Darwin.
3. Housing affordability drives demand for apartments and townhouses. Housing affordability has hit record lows, with the median dwelling now requiring 45% of household income to service a new mortgage and nearly 12 years to save a 20% deposit. The gap between house and unit prices is at an all-time high, pushing buyers toward apartments and townhouses, which remain closer to buyer budgets. Many first home buyers now rely on family support, and most expect mortgage repayments to take up 30% or more of their income.
4. Regions wrap: Regional Australia continues to outperform the capitals, with stronger quarterly and annual price growth and leading rental yields. Regional WA topped recent growth charts, while long-term gains have also outpaced capital cities. Mining towns and major regional centres remain the strongest performers, with Townsville flagged as a key growth market.
5. Listings skyrocket as asking prices lift further. Listings surged in October, rising 11% nationally as new listings jumped 18%, signalling stronger seller confidence. Asking prices also continued to lift, with solid clearance rates and quicker sales. Vendor discounting fell to its lowest level in more than three years.
6. Building approvals lift but rising costs threaten. Building approvals and new home sales have lifted, but rising construction and land costs continue to outpace inflation. With build costs climbing as much as 9% in key markets, industry forecasts warn of further cost escalation ahead.
7. On the radar for investors: Tasmania has introduced laws making it easier for tenants to keep pets, strengthening renters’ rights. In Victoria, new reforms now ban rental bidding, prohibit ‘no-fault’ evictions, and add further protections for tenants. The ATO has issued draft guidance tightening tax deductions for properties also used as holiday homes. The RBA kept rates on hold at 3.60%, and APRA will limit high DTI lending to 20% of new loans.
8. Investor market confidence soars. Investor confidence is strong, with 61% confident in the market and 88% expecting prices to rise. About 30% plan to buy in the next year, mostly detached homes, followed by units and townhouses. Queensland and Victoria lead as top investment states, while markets show growing regional diversity and optimism.
9. Investment loans reach record high. Investment lending hit record highs in September, with new loans up 14% in number and 18% in value, averaging $685,634. Investment loans now make up around 40% of all new home loans, rising across every state and territory, and activity is 32% above 2023 lows.
10. Snippets: Cyber scams targeting property transactions are rising, affecting nearly three-quarters of mortgage brokers. Bushfire risk is elevated this summer in parts of Victoria, WA, and central-northern NSW. NSW introduced strata reforms, while Victoria is cracking down on underquoting, with fines already imposed on agencies for breaches.