The real estate market is gaining momentum as interest rates fall and industry data points to values growing across the country, led once again by Sydney and Melbourne.
It’s a prime opportunity for investors to expand their portfolios and capitalise on anticipated capital growth.
KPMG’s latest property forecast indicates a steady climb for the rest of this year and into 2026. Just a few weeks ago, the property portal Domain released research predicting Sydney and Melbourne prices would rise 7% and 6% respectively – faster than any other capital city.
If there’s any uncertainty right now, it’s being dictated by geopolitical concerns and the possibility of higher oil prices due to troubles in the Middle East.
However, there is one certainty – we are enjoying lower interest rates since their post-Covid peak of 4.65%. Australia now has a cash rate of 3.85% and the market anticipates more cuts to come from the Reserve Bank of Australia.
In this scenario, investors who focus on capital growth as their primary return on investment should consider moving quickly if they wish to expand their portfolios.
Prices are already starting to rise in previously struggling markets, such as Melbourne, Canberra and Hobart.
Meanwhile, the cities that have had stellar rises in the past two years – Perth, Brisbane and Adelaide – have come off their peak performances but are still forecast to move in the +4%-5% range in the next 12 months.
And if that’s not enough, industry researcher Cotality (formerly CoreLogic) says values in regional Australia – led by regional Western Australia and South Australia – are growing faster than metro areas.
If investors question whether the momentum will persist, it’s worth noting the recent population data released by the Australian Bureau of Statistics. The national population has been confirmed to be 1.7% higher in 2024 than 2023, or 445,900 more people.
Immigration trends will continue to put the housing supply under pressure.
Here are some tips if you’re thinking of investing in the current market:
Clear objectives – What are your financial goals? Are you solely focused on capital growth, or is rental yield also a significant factor? Your objectives will shape your property selection and overall portfolio strategy.
Stay rational – Don’t let emotion influence your buying decision. Rely on research and data analysis to identify desirable suburbs or areas that possess growth potential, low vacancy rates and access to essential services, such as public transport, schools and healthcare.
Use equity – Leverage existing equity in your portfolio to make your next purchase. Many investors use this strategy to expand their portfolios and accelerate wealth creation.
Professional Advice – The tax rules and property regulations can be complex and change regularly. So, seek professional financial advice from market experts as part of your decision-making process.