Is 2025 the year to buy an investment property?
With strong rental yields, a growing demand for housing, and an evolving economic landscape, 2025 could be the perfect time to secure your next investment property.
Across the country—especially in regional markets—rental yields remain solid, giving investors excellent opportunities to generate consistent returns.
Investor activity remains robust around Australia, with CoreLogic data* showing investors’ loan commitments comprising 38.3 per cent of new loans secured in September 2024. NSW continues to record the highest portion of investor financing at 44 per cent of new loans, followed by South Australia (41.1 per cent) and Queensland (40 per cent).
Notably, there’s a trend of investors moving beyond traditional blue-chip and inner-city areas to more affordable suburbs and regional markets, particularly in Queensland, Western Australia and regional lifestyle hotspots. At The Agency, we are seeing heightened interest in these emerging markets as investors seek steady returns and growth opportunities outside the major city centres.
If you’ve been considering stepping into the property investment market, this might be your year. The key is knowing how to identify high-performing suburbs, treating your investment like a business, and making smart, strategic decisions.
In this guide, we break down why 2025 could be the right time to invest and share our expert tips to help you buy with confidence.
Why 2025 could be a prime year for property investment
1. Strong rental yields across Australia
Rental demand is high in both cities and regional areas, with CoreLogic figures showing gross rental yields nationally holding firm at 3.5 per cent, and across regional Australia at 4.4 per cent.
Here at The Agency, we are seeing regional hotspots offering excellent rental returns compared to capital cities. CoreLogic data reflects this, with dwelling values across the combined regional areas rising a further 0.4 per cent in January, driven largely by renewed internal migration and healthier affordability in some regions.
While change in capital city values has dipped into negative territory (-0.7 per cent) regional values continue to display remarkable resilience, with values up 1.0 per cent over the rolling quarter.
2. Limited housing supply driving tenant demand
One of the fundamental drivers of Australia’s rental market strength in 2025 is the persistent undersupply of housing, in both urban and regional areas, which continues to place upward pressure on rents. Vacancy rates—the proportion of available rental properties relative to total stock—remain at low levels.
Several macroeconomic and demographic factors underpin this supply-demand imbalance. Net overseas migration has surged post-pandemic, with Australia experiencing a significant influx of skilled workers, international students, and expatriates returning home.
This sharp rise in demand has outpaced new housing supply, particularly in urban centres where planning restrictions and construction delays have constrained new developments. This trend, combined with an increased demand for larger regional homes amid hybrid work arrangements—have led to heightened competition in these markets, further tightening rental supply.
This structural undersupply, combined with demographic shifts and migration trends, makes 2025 a prime time for property investors to secure assets in high-growth rental markets with strong yield potential.
3. Interest rate stability and greater affordability
With a wave of market optimism approaching, it’s the perfect time for investors to build their portfolios at good price points and with more manageable repayments.
Lower-than-expected inflation numbers in the December quarterly CPI release have raised expectations for a February rate cut, with each of the Big 4 banks forecasting a February 18th cut, and financial markets putting the chance of a February cut at 95 per cent.
Along with probable rate cuts in 2025, CoreLogic figures* show the housing market cooling across some capital cities.
In Sydney, dwelling values are now -1.7 per cent below the record high, which was in September 2024. Melbourne dwellings are now -6.9 per cent below the record high in March 2022, and Hobart offering significant value with dwelling values now -12.5 per cent below the record high in March 2022.
On the other hand, Brisbane dwelling values are currently at a record high with a 10.4 per cent increase in house prices over the past year. Adelaide and Perth are also experiencing current record high values, with 12.7 per cent and 17.1 per cent increases in dwelling values in the last year respectively.
This affordability across some capital cities combined with a predicted stabilising in interest rate conditions may bring more aspiring investors into the market, while allowing established investors to build and diversify their holdings.
*CoreLogic HVI February 2025
Top tips to make 2025 the year to build on your investment portfolio
- Get educated on market trends and suburb performance
- Secure pre-approval and understand your budget
- Work with the experts – real estate agents, property managers and financial advisors
- Consider diversifying your portfolio with regional investments
- Plan for the long term – investment success takes time
If you’re thinking about building your investment portfolio, now is the time to act. Get in touch with The Agency today to optimise your investments and discuss a tailored strategy that will maximise your returns in this evolving market.