Category: Articles

he latest data from Lendi reveals that 37 per cent of all property transactions in the Perth metro area are being made by buyers from Australia’s east coast.

This surge in interstate investment is reshaping Perth’s housing market, potentially creating a two-tier system, where some areas experience unsustainable price growth that will feel the pain when the investment money dries up.

A two-tier property market occurs when certain suburbs experience rapid price increases driven by external demand, while others grow at a more sustainable pace through demand from local buyers.

In Perth, the influx of east coast investors—many attracted by the city’s relative affordability compared to Sydney and Melbourne—could be driving up prices in selected hotspots.

The problem? Many of these investors are chasing short-term capital gains rather than focusing on long-term market fundamentals like local job growth, population increases, and infrastructure development.

This means some suburbs may experience artificially inflated demand, which could reverse if investor sentiment shifts.

The investor trap: buying in unstable property markets

Perth has long been known for its cyclical property market, often dictated by mining booms and economic shifts. However, interstate investment can create temporary growth in suburbs that may not have long-term resilience.

Investors, lured by recent price surges and strong rental yields, could find themselves in trouble if:

Perth’s hotspot suburbs among those poised to join $1 million club

Another 20 Perth suburbs are set to become new entrants to the million dollar median club in 2025, but among those some are on the verge of greater price growth than others.

• local demand doesn’t match investor-driven growth; if an area is propped up primarily by out-of-state buyers rather than local owner-occupiers, prices could stagnate or decline once investor demand cools.
• rental markets become oversupplied; a flood of investor-owned properties could lead to increased rental supply, forcing rents down and impacting investor returns.
• exit strategies become difficult; investors banking on capital growth may find it hard to offload properties if local buyers aren’t willing to pay inflated prices.

While some Perth suburbs have solid fundamentals—strong population growth, infrastructure spending, and employment opportunities—others are growing due to investor hype.

Investors need to be wary of areas that:

• have high investor concentration but low local owner-occupier demand, which often occurs in areas with a glut of off the plan units and new units being built
• lack major long-term infrastructure projects or employment hubs
• are experiencing rapid price growth without clear economic drivers, such as regional pockets.

For those considering investing in Perth, it’s crucial to look beyond short-term price trends and focus on sustainability.

Some key WA investment strategies

It’s not just local property experts seeing this trend, many lenders are starting to get concerned with Perth.

Some are starting to shy away from markets that perceivably could be at risk.

Lenders have drawn on past experiences where they have been caught out in previous booms that saw investors superficially driving up new unit prices and jumping in to mining booms.

Many banks now have strict policies around lending in two-tier markets. To avoid this trap they rely heavily on their qualified valuers on the ground to identify this trend for them, coupled with data and analytics.

Outer suburban Perth property prices have skyrocketed, while inner city areas have experienced strong but less dynamic capital growth.

Once they have too much exposure, they will blacklist the postcode and not lend there until their exposure is decreased to an acceptable level.

Investors should be wary of this, because you may buy before the lenders blacklist an area and then find out that you have trouble selling due to changes in lending policies, consequently limiting your buyers’ access to funds on resale.

Perth’s property market is at an interesting crossroads.

While east coast investors are fuelling strong short-term gains in some areas, this growth isn’t guaranteed to last.

A two-tier market could emerge, leaving some investors exposed to sharp corrections when the hype fades.

For those looking to invest in Perth, the key is to think long-term—avoid speculative buying and focus on areas with genuine, sustainable growth drivers.

Those who chase quick gains in investor-driven hotspots may find themselves caught in the next property downturn.

Political posturing over the housing crisis has continued, with the Federal Labor Government undermining the Opposition’s stance on banning foreign property investors from buying established homes by adopting the same policy.

Foreign investors are already barred from buying existing homes but are allowed exceptions for some circumstances, like moving to Australia for work or study.

In 2022/23, foreign investors accounted for just 5,360 residential real estate purchases, of which only a third were existing dwellings.

The Albanese Government this week announced it will ban foreign investors from buying established homes for at least two years and crack down on foreign land banking.

Treasurer Jim Chalmers had described the same policy stance of Opposition Leader Peter Dutton as “unhinged” but has since changed his tune.

“It’s a minor change, but a meaningful one because we know that every effort helps in addressing the housing challenge we’ve inherited.

Treasurer Jim Chalmers

“We’re banning foreign purchases of established dwellings from 1 April 2025, until 31 March 2027 (and) a review will be undertaken to determine whether it should be extended beyond this point.

“The ban will mean Australians will be able to buy homes that would have otherwise been bought by foreign investors,” Mr Chalmers said.

Julie Kelley, Global Sales and Marketing Manager – SMATS Group of companies, said the changes would be ineffectual in contributing anything relevant to the housing crisis.

“This is little more than a political play of words.

“FIRB essentially restricts foreign buyers from purchasing established properties, although buyers may apply for exemptions.

“Foreign investors account for only a small margin of buyers and the new rules won’t make a scrap of difference.

“This is political nonsense on both sides of politics trying to win votes by playing the anti-foreigner card.”

“The percentage of foreign investors buying property in Australia isn’t huge and they are already paying colossal government fees in excess of the purchase price and stamp duty.”

Supporting Ms Kelley’s assertion about foreign buyers paying much higher entry costs, a local buying a $1.2 million Sydney property would pay the same $48,529 stamp duty as a foreign buyer. But the latter would also incur a whopping $96,0000 surcharge purchaser duty expense.

The ban has been branded irrelevant given the most significant proportion of foreign buying today is actually migrants becoming Australians and buying a place to live.

Ravin Chatlani, Director of Taxation, Australasian Taxation Services, said he didn’t believe it would make a big difference in the market given temporary residents can still buy brand new properties in Australia.

“My thoughts have always been that solving the supply issues and the time it takes to deliver more housing stock is more crucial than measures to restrict demand.”

In addition to the purchasing ban, Mr Chalmers added that the government was cracking down on land banking by foreign investors to free up land to build more homes more quickly.

“Foreign investors are subject to development conditions when they acquire vacant land in Australia to ensure that it is put to productive use within reasonable timeframes.

“The Government is focused on making sure these rules are complied with and identifying any investors who are acquiring vacant land, not developing it while prices rise and then selling it for a profit.”

The ATO and Treasury would be given $8.9 million over four years from 2025–26 and $1.9 million ongoing from 2029–30 to implement an audit program and enhance their compliance approach to target land banking by foreign investors.

WA political parties hacking away at stamp duty

Housing is also a hot political potato at the state level.

With an election looming on 8 March on Western Australia, the sitting Labor Government announced on Tuesday (18 February) that if elected they will raise the stamp duty exemption threshold from $450,000 to $500,000 and raise the concession threshold from $600,000 to $700,000 in Perth Metro and up to $750,000 in regional WA.

The Liberals had previously announced that if elected they will raise the stamp duty exemption thresholds from $450,000 to $550,000 and raise the concession threshold from $600,000 to $700,000.

Labor also announced they will raise the stamp duty threshold for first home buyers on land purchases from $300,000 to $350,000 and give a stamp duty discount up to $450,000.

A further $20.6 million was included in Tuesday’s announcement by Labor to expand stamp duty exemptions for new home purchased off-the-plan and under construction.

The Nationals went early with a policy to completely abolish stamp duty for first home buyers. But they did not announce any changes to exemptions on off-plan and under construction homes.

“Master Builders CEO Matthew Pollock said stamp duties are “amongst the worst taxes a government can levy on homeowners.”

“Every report on stamp duty shows it’s a bad and unfair tax that creates high economic loss, reduces labour mobility, and hits low-income households harder than high income households.

“Stamp duty is a major barrier for many families hoping to get on the property ladder and can make up as much as 20 per cent of the upfront cost of buying a new home.

“Stamp duty is a major financial handbrake on people looking to move.

“It’s a barrier to attracting talent into the state, or for people to move to communities where their skills are in high demand, including the builders and tradies we need to build more homes.”

It’s timely as the first of the big banks moves to reduce fixed interest rates that we look at the effect interest rates have on property investment.

Macquarie Bank is reducing its rates on fixed, one-, two- and three-year terms, which many believe will be the start of other major lenders assessing their fixed rates ahead of the first Reserve Bank of Australia board meeting on 18 February.

One of the great misconceptions of real estate at present is that high interest rates mean it’s pretty much impossible to find positive cashflow investments so it is a deterrent to investors.

It’s not. The RBA lifted interest rates 12 times between May 2022 and November 2023 and investors still bought property.

Yes, it may have reduced their borrowing capacity somewhat and made them a little more cautious about selecting the right property, but it didn’t deter them.

According to the Australian Bureau of Statistics as of November 2024, there were around 212,500 new investment loans in Australia – an 18.8 per cent increase from the previous year.

The ABS says, “Investor activity remains at high levels”.

Despite higher interest rates, Australia abounds with locations where rental yields are well above average, which means there are good possibilities for securing properties that pay their own way.

That old furphy in real estate that many people still believe – that you need to choose between high yields or capital growth but you can’t have both – has never been true and it’s certainly not so right now.

Our capital cities and many of our key regional markets have opportunities for the winning trifecta of real estate:-

1. Affordable purchases
2. Above-average rental yields
3. Great prospects for capital growth

In the past year, there have been multiple locations across Australia where there has been double-digit growth in prices, similar uplift in rents and gross yields well above 6 per cent – and, in many cases, yields above 7 per cent.

Many of these locations have been found in the boom states of South Australia, Western Australia and Queensland – but they can be found almost anywhere in the nation.

One of the reasons for that is that attached dwellings – units, townhouses and apartments – are being seen increasingly as a good alternative.

Units are challenging houses on capital growth, as more and more people opt for their lower prices, lifestyle features, low maintenance factor and the important safety and security aspects in many unit buildings.

It means that there are positive cash flow possibilities in inner-city locations in our biggest cities as well as houses and units in smaller, less expensive, cities and in many regional markets.

Inflation has taken a bigger than expected fall in data released today, placing more pressure on the Reserve Bank of Australia to cut interest rates on 18 February.

The most politically sensitive data released by the Australian Bureau of Statistics (ABS) in some years, with an election looming and mortgage holders under stress, showed a larger than expected fall in trimmed mean inflation, the measure watched most closely by the RBA.

Annual trimmed mean inflation was 3.2 per cent in the December quarter, down from 3.6 per cent in the September quarter. Markets had factored in a fall to 3.3 per cent.

The headline Consumer Price Index (CPI), which includes volatile expenses, rose just 0.2 per cent in the December 2024 quarter and 2.4 per cent annually, down from 2.8 per cent in the September quarter and a crippling 7.8 per cent in December 2022.

The lower than expected figure means inflation is now tracking quicker than forecast to the RBA’s preferred band of 2 to 3 per cent.

With financial markets 84 per cent certain of an interest rate cut before the Wednesday (29 January) announcement, mortgage holders can now be almost certain of some interest rate relief when the RBA next meets. That rate cut expectation is now above 90 per cent.

Interest rates have been locked at 4.35 per cent since November 2023.

Michelle Marquardt, ABS Head of Prices Statistics, said inflation rises were the lowest recorded since the June 2020 quarter when the CPI fell during the Covid outbreak when childcare was free.

“The trimmed mean excluded price falls in both Electricity and Automotive fuel this quarter, alongside other large price rises and falls. As a result, trimmed mean annual inflation of 3.2 per cent was higher than CPI inflation of 2.4 per cent,” Ms Marquardt said.

When prices for some items move by large amounts, measures of underlying inflation like the trimmed mean can give more insights into how inflation is trending.

99,000 borrowers with houses on the line

An interest rate cut in a few weeks would be welcomed by many, and a lifesaver for some, mortgage holders.

A disturbing 38 per cent of Aussie homeowners say they are struggling to pay their mortgage, according to data from Finder’s Consumer Sentiment Tracker.

While the RBA acts independently of government, the inflation data would be welcomed by Anthony Albanese, who is behind in the polls with an election looming and in need of any economic outcomes that lower the cost of living.

Less impressed by an interest rate cut are those relying on savings income and importers and travellers who will now contend with an even lower Australian dollar. Immediately after the inflation announcement, the dollar fell somewhat against the US dollar, but more sharply against European and Asian currencies.

While 49 per cent of borrowers say they are well placed to manage interest rates at their existing level, a worrying 3 per cent – equivalent to 99,000 mortgagors – would be forced to sell if rates don’t start dropping.

The Finder data also revealed 40 per cent – equivalent to 1.3 million mortgage holders – would have to cut back spending to afford their mortgage over the coming four months.

We’ve been able to preserve the gains we’ve made in our labour market at the same time as we’ve got inflation down.

– Jim Chalmers, Federal Treasurer

Australian Treasurer Jim Chalmers said the worst of inflation was over.

“On every measure, we’ve made substantial and sustained progress in the fight against inflation,” he said.

“It’s not mission accomplished, but it means we’ve made much more progress,” he said.

“Inflation was higher and rising under the Liberals, but it’s lower and falling under Labor.

“Inflation is now almost a third of the 6.1 per cent we inherited when we came to office.”

He said inflation was moderating faster than what Treasury had forecast in its December budget update and proved Australia was on track for a “soft landing”.

“Many countries around the world have paid for progress on inflation through higher unemployment or lower economic growth, but we’ve been able to preserve the gains we’ve made in our labour market at the same time as we’ve got inflation down,” Mr Chalmers said.

The big four banks’ economic teams are still split on the timing of the first cash rate cut and pace of subsequent reductions. Westpac on Wednesday updated its cash rate forecast, bringing forward its first projected cash rate cut from May to February 2025. (Source: Canstar)

The Australian Council of Social Service (ACOSS) CEO, Dr Cassandra Goldie, said the latest quarterly inflation figures must prompt the RBA to cut interest rates to ease growing financial distress and keep people in jobs.

“Raising the cash rate has dramatically increased financial stress among people on low and modest incomes and it’s time to finally give people some desperately needed relief.

“In recent years incomes have fallen, economic growth has stagnated and almost all jobs growth has been in government funded services.

“Failing to lower interest rates will only cause more economic damage and needlessly threaten thousands of jobs.

“Low unemployment is an opportunity, not a problem as some economic commentators suggest, and there is no sign that reducing unemployment further would risk a fresh outbreak of inflation.

“Easing financial stress for people and restoring jobs growth beyond publicly funded jobs should now be the RBA’s main concerns.”

An owner-occupier with a $600,000 debt and 25 years remaining on their loan could see their monthly repayments drop by $92 on the back of just one 0.25 percentage point RBA cut, assuming the banks pass it on in full to existing variable rate borrowers.

Housing costs falling

Annually, the CPI was at 2.4 per cent, down from 2.8 per cent last quarter, with the main contributors to the slowing of annual inflation being large falls in Electricity (-25.2 per cent) and Automotive fuel (-7.9 per cent) with easing inflation for New dwelling prices (+2.9 per cent).

The main contributors to the quarterly rise of 0.2 per cent were Recreation and culture (+1.5 per cent) and Alcohol and tobacco (+2.4 per cent). These rises were largely offset by falls in Housing (-0.7 per cent) and Transport (-0.7 per cent).

Shane Garrett, Chief Economist, Master Builders Australia, said a period of declining interest rates would be very beneficial for the economy and help lift new home building activity.

“The gross mismatch between supply and demand for rental accommodation is continuing to force rents higher.

“Encouragingly, the cost of owner occupier home purchases dipped slightly during the December 2024 quarter.

“However, the cost of a new home is still 39.5 per cent higher than it was five years ago.” Mr Garrett said.

The quarterly growth in Recreation and culture was driven by Domestic holiday travel and accommodation (+5.7 per cent). Higher prices for airfares and accommodation coincided with higher travel demand during the school holidays, the ABS reported.

The rise in Alcohol and tobacco prices was mostly driven by Tobacco (+5.8 per cent) reflecting the 5.0 per cent annual tobacco excise increase and biannual Average Weekly Ordinary Time Earnings based indexation that applied from 1 September 2024.

“The 2024-25 Commonwealth Energy Bill Relief Fund rebates led to a large fall in electricity prices this quarter,” Ms Marquardt said.

“Electricity prices fell by 9.9 per cent in the December 2024 quarter, following a fall of 17.3 per cent in the September 2024 quarter.

“Without the rebates, electricity prices would have risen 0.2 per cent this quarter.”

New dwelling prices also dropped this quarter (-0.2 per cent) which was the first quarterly fall since the June 2021 quarter. Price growth for new dwellings has slowed in recent months, as project home builders offered incentives and promotional offers to attract new buyers due to weak demand.

Automotive fuel prices fell 2.0 per cent this quarter, following a 6.7 per cent drop in the September 2024 quarter, reflecting lower global oil prices.

Homebuyers are being met with an abundance of new housing stock from which to choose, redefining the way they shop for their new home.

This is especially true for apartment buyers, with an increase in building approvals being driven by new apartments developments.

With new developments in the works and a wealth of information at their fingertips, the buyers of 2025 are also more informed and selective than ever before.

This access to information, paired with a more competitive market, has fuelled a shift in what the typical apartment buyer seeks in their new home or investment. As a result, developers are being kept on their toes as they try to stay ahead of the curve in buyer demands.

According to the Australian Bureau of Statistics, approvals for high-rise apartments in particular have surged, increasing from 1,815 to 2,782 in September 2024.

The Australian property landscape is evolving rapidly, and with it so too are buyer expectations. With the National Cabinet’s ambitious target to build 1.2 million new homes across Australia by 2029, gone are the days of limited choice.

Shift in buyer demographics

The Australian apartment market is now more diverse than ever, with a variety of buyer profiles embracing the apartment lifestyle.

The traditional first homebuyer demographic – often a couple in their mid 30s, according to Australia’s biggest lenders – still represents a significant portion of the market. These buyers are drawn to urban apartment living largely for convenience, seeking out dwellings that are in proximity to work hubs and with accessibility to lifestyle and entertainment amenities.

Older Australians are increasingly turning to apartment living too, however, with downsizing becoming a growing trend as the nation’s ageing population seeks to scale down their homes for something more manageable. Low maintenance requirements are a major drawcard for older buyers, in addition to practicality and accessibility as they age.

Five key buyer preferences of apartment buyers in 2025

1. Flexible floorplans and living spaces

With life feeling busier than ever, buyers are seeking apartments with flexible and functional layouts that can adapt to their changing needs.

Open-plan designs are highly desirable, in addition to multifunctional spaces that can accommodate a range of uses without sacrificing style or comfort.

2. Access to outdoor and green spaces

After being confined to their homes during the pandemic, buyers are increasingly seeking access to outdoor areas. Whether it’s a private balcony or shared outdoor spaces such as a garden, courtyard, or pool, access to the outdoors has become a must-have feature for many buyers.

With sustainability values also on the rise, eco-conscious and nature-centric developments have become more appealing.

3. Community and connection

Today’s apartment buyers are looking for beyond just a space to live, seeking to gain a sense of community and connection from their home too.

From residents’ lounges and social events spaces to shared rooftop terraces and communal gardens, buyers are prioritising developments where the word ‘neighbour’ is more than just a pleasantry.

The search for community goes beyond the four walls as well, with buyers looking for apartments located within vibrant community areas and social hubs.

4. Affordable financing options

With apartment prices increasing by a national average of 3.6 per cent in 2024 according to CoreLogic, apartment buyers will understandably be conscious of pricing in the new year.

Government incentives such as Western Australia’s off-the-plan duty concession will offer buyers extra financial security, making eligible developments more attractive.

In 2025, the Australian apartment market will be defined by a new profile of buyer – more informed and diverse than ever.

With the post-pandemic fallout ushering in a new era of living, heightened expectations around lifestyle and convenience are a main driving force behind buying decisions.

As the market continues to evolve, the ability to offer thoughtful, adaptable and community-centred developments will be the key to attracting today’s generation of buyers.

5. Location, location, location

It’s no surprise that location remains a cornerstone for buyers, but in 2025, the emphasis is set to shift slightly with the rise in flexible working arrangements offering some lenience.

Where buyers once may have prioritised proximity to work above all else, remote or hybrid working has shifted more weight into lifestyle factors.

Today’s buyers seek to strike a balance between convenience and quality of life. Apartment developments in well-connected suburban areas are growing in popularity, as opposed to busy and congested urban areas.

Eastern States investors have been drawn to WA in recent years, and for good reason – relatively affordable housing and strong rental price growth have created some excellent investment opportunities.

While rising property prices have seen yields decline slightly there are still good opportunities for savvy interstate investors.

However, navigating an investment purchase can be challenging when you’re buying in a state where market dynamics and legislation differ from your own – for example, did you know there is no cooling off period in WA?

Engaging a buyers agent will help make the process easier, but interstate investors should always ensure they’re working with WA-based buyer’s agents to ensure they find the right property, at the right price to meet their investment goals.

The biggest benefit of using a WA buyers agent is being able to access their extensive local knowledge of the WA property market. They know the intricate factors driving the market which frequently vary from conditions on the east coast. For example, right now, some national commentators are talking about buyers’ markets and falling prices on the east coast, whereas Perth and WA remain a sellers’ market.

WA buyers agents know what’s hot right now and which areas will have sustained demand, which is important for long-term capital growth.

They’re across the features that make a suburb appealing to tenants, such as good schools, public transport and local infrastructure, as well as the types of homes that WA tenants are seeking, particularly with the state’s large FIFO workforce who opt for more low-care, lock and leave dwellings.

Local buyer’s agents are also aware of potential changes to local amenity and upcoming infrastructure projects that could benefit or hinder your investment.

WA regulations vary from other states

If you are buying sight unseen, as many interstate investors do, it is important to have someone on the ground to act on your behalf.

Your WA buyers agent can attend inspections, provide detailed property assessments and flag issues you might miss when relying on photos and video walk-throughs provided by a selling agent.

They will negotiate on your behalf and can even bid at auctions.

And their service may not be limited to the sale. They may be able to connect you with trusted local professionals like building inspectors, property managers and tradespeople. For interstate buyers, this support is invaluable.

Another benefit is the relationships they have with local selling agents, which gives you access to off-market investment opportunities that you wouldn’t otherwise hear about.

When you engage a WA buyers agent you also have the advantage of dealing with someone who is licensed, or is supervised by someone who is licensed, under the Real Estate and Business Agents Act 1978 and must meet strict regulatory standards. This gives you peace of mind as well as protections under WA consumer law.

This is particularly important, as in some states the contract of sale is usually prepared by a solicitor and not a real estate agent.

If you’re using a non-WA buyers agent to purchase in WA, you should take extra care to ensure they have a robust understanding of WA documentation and legislation in order to avoid costly issues or delays that may arise if they do not.

While working with a WA’s buyers agent is an obvious choice for interstate investors, their services are also increasingly invaluable for locals as well who want to ensure their dream property ticks all the right boxes.

ore properties are coming onto the market to suppress real estate price pressures but expectations of one or more interest rate cuts have price expectations in uncertain territory.

The Commonwealth Bank has weighed in with an each-way bet, tipping property prices to fall in the next few months before picking up again at the back end of 2025.

Listings are up around the country, as the heat in the market gradually reduces to a lukewarm simmer.

SQM Research’s latest data shows that total nationwide residential property listings increased by 4.5 per cent over January 2025, reaching 243,642 listed properties. This marks a strong 10.3 per cent rise compared to January 2024.

The increase in listings was evident across most major cities. Sydney saw a notable monthly rise of 7.3 per cent, with listings reaching 29,791—19.0 per cent higher than the same time last year. Melbourne also experienced an increase of 2.1 per cent month-on-month, bringing total listings to 37,873, reflecting a 15.9 per cent yearly rise.

Brisbane recorded the highest monthly rise at 9.8 per cent, reaching 16,241 listings, with a modest yearly increase of 4.4 per cent. Perth followed with a 7.9 per cent monthly rise and a 5.0 per cent increase year-on-year.

Gareth Aird, Head of Australian Economics, Commonwealth Bank, said prices would recover from modest declines to finish 2025 up 4 per cent nationally.

“Momentum has cooled when looking at the pace of home price growth over the past year,” Mr Aird said.

“In turn, rental growth is also moderating in most parts of the country.

“It is not unusual to see some fatigue creep into the national housing market given affordability remains stretched on most conventional metrics.”

“If buyer appetite responds quickly to an interest rate cut it is possible that fear of missing out once again becomes a key theme in the market.”

What will the RBA do next?

Australia’s financial markets are predicting no more than four rate cuts this year, as a reaction to the RBA deliberately not raising the cash rate especially high by global standards.

The big four banks all predict the RBA will lower the cash rate — currently 4.35 per cent — at its 17-18 February meeting. The bond market predicts the RBA will lower the cash rate to 3.45 per cent by the end of the year.

Sally Tindall, Data Insights Director, Canstar, said banks were lowering fixed rates, although these loans are very much in the minority among borrowers.

“It’s no surprise to see NAB reducing their fixed rates in the lead-up to an expected cash rate cut,” she said.

“What is surprising is that we haven’t seen more lenders do it in the lead-up to the next RBA meeting.

“I do expect more lenders will follow suit and start paring back their fixed rates.”

If an interest rate cut does occur … housing prices are expected to rise between 6 per cent to 10 per cent for the year.

– Louis Christopher, SQM Research

Rate cuts could set up the national property market for price rises well above the 4.3 per cent seen in the past 12 months.

Louis Christopher, Managing Director of SQM Research, said it was hard to know whether the rise in listings has been driven by a rise in vendor confidence or a fear by vendors seeking to exit the market now.

“Afterall, let’s recall, 2024 did end on a rather weak note and the expectations of an imminent cut in interest rates only occurred from last week’s inflation numbers.

“Going forward, the RBA’s meeting and interest rate decision on 18 February will naturally be the focus for most participants.

“If an interest rate cut does occur, we believe this will lift confidence in buyer demand with housing prices expected to rise between 6 per cent to 10 per cent for the year.”

In January, Australian capital city house prices edged lower for a fourth consecutive month. Regionally, prices ticked up in January.

“We don’t expect property prices in Sydney and Melbourne to suddenly shift higher as rates are cut given there is a lot more advertised stock on the market compared to a year ago – advertised stock levels sit well above the five‑year average for this time of the year in Sydney and Melbourne – but it is a risk,” CBA’s Mr Aird said.

While Australian listings were up five per cent year-on-year in the six months to December 31, buyer enquiries have grown four per cent and “inspection interactions” climbing 36 per cent, according to REA Group.

REA Group CEO Owen Wilson on Thursday (6 February) said, “This is one of the healthiest markets I’ve seen in my time at REA.”

He attributed that to the fact there are a lot of buyers and sellers.

“There’s a lot of sellers, that means there’s stock for the buyers to buy, and then they can sell their property.

“I think that’s what you’re seeing here.

“I think there’s not a person in the country that thinks a rate rise is coming – it’s just a matter of time of when we get our rate cut.”

While property is generally regarded as a long-term investment vehicle, flipping houses can also be an incredibly profitable investment strategy.

It allows real estate investors to buy, renovate and resell properties for a significant return.

Over the past few years, house flipping has gained massive popularity in Australia due to rising property prices and strong demand for updated, move-in-ready homes.

Whether based in the big cities like Sydney or Melbourne or in smaller, up-and-coming areas, there are plenty of opportunities to cash in on the market.

Australian home owners are, on average, choosing to stay put for roughly eight to nine years but others are looking for quicker returns.

With the proper approach, house flipping (the practice of purchasing a real estate asset and quickly reselling it for profit) can boost an investment portfolio and let you tap into the real estate markets that are still experiencing growth.

1.    Accurate budget planning

When flipping a house, it’s crucial to factor in all the costs involved to avoid nasty surprises later. Start with the purchase price, which is likely your biggest upfront expense. Then, plan for renovation costs, including materials, labour and those inevitable unexpected repairs.

In addition, don’t overlook holding costs like loan repayments, utilities, insurance and council rates while you own the property. Finally, budget for selling fees, such as agent commissions and legal expenses.

With the median Australian residential property hitting $800,000, the stakes are higher than ever. Set aside a contingency fund to cover any surprises and protect your investment. This extra cushion can make all the difference in ensuring your flip is a financial success.

2.    Market research

To succeed in house flipping, focus on high-demand neighbourhoods and property types. Some of the most profitable opportunities in Australia right now are in regional areas, where growth is booming in some parts of the country.

CoreLogic Head of Research Eliza Owen states, “The Covid-boom unlocked enormous value across more affordable regional markets, such as South Australia’s South East region.”

Areas like this and regional Western Australia offer lower buy-in costs with a strong potential for returns.

Look for properties that cater to local buyers, such as family homes, stylish apartments or eco-friendly designs.

Stay ahead by using real estate platforms to research market trends, median prices and demand. These tools help you spot the best opportunities and make smarter investment decisions.

3.    Profit potential

Buyers actively seek renovated, move-in-ready homes, which creates a high demand for flippers who can deliver.

Ensure your flip is profitable by using the 70 per cent rule. Calculate the maximum amount you should pay for a property by taking 70 per cent of its after-repair value (ARV) and subtracting the estimated renovation costs. For example, if the ARV is $800,000 and repairs will cost $100,000, you shouldn’t pay more than $460,000.

This simple formula helps protect your profit margin and keep your numbers in check. With the right property and a proper budget, you can ride the wave of Australia’s market and maximise your returns.

4.    Permits and approvals

Getting the necessary permits for renovations helps you stay compliant and protect your investment.

Permits are often required for structural changes, electrical work, plumbing and extensions to ensure everything meets local council regulations and safety standards. For example, in Victoria, the local council, a registered surveyor or the Victorian Building Authority can advise whether your project requires a building permit.

Skipping this step can lead to costly fines or delays or being forced to undo the work. It can also turn off buyers, as unapproved renovations might fail inspections or impact the property’s value. Avoid these headaches by checking with your local council before renovating and working with licensed professionals who know the approval process inside and out.

5.    Capital gains tax

When flipping houses in Australia, you must understand how the capital gains tax (CGT) could impact your profits. If you sell a property within 12 months of owning it, you’ll be taxed on the entire capital gain at your marginal tax rate. However, if you hold onto it for at least 12 months, you could qualify for a 50 per cent CGT discount as an Australian resident, cutting your tax bill in half.

This discount can make a big difference to your bottom line but the rules can get tricky, depending on whether you’re flipping as an investor or running a business. To stay on the right side of the law and keep more of your profits, it’s a good idea to consult an accountant who can help you navigate your tax obligations easily.

6.    Hidden costs

Hidden costs can sneak up on you and eat into profits if you’re not ready.

One big culprit is unexpected repairs, such as water damage, outdated wiring or structural issues that only show up after renovations begin. These surprises can skyrocket your budget, so having a contingency fund is non-negotiable.

Another common pitfall is prolonged holding periods. For example, delays in renovations or a slower-than-expected sale mean you’re stuck paying for mortgage repayments, utilities, insurance and council rates longer than planned. To avoid these headaches, price your property competitively and always expect the unexpected when setting your budget.

7.    Return on investment

To calculate your ROI on a house flip, compare the amount you have invested in the property, including the initial purchase price plus any further costs, to its current value. Your total costs include the purchase price, renovation expenses, holding costs and selling fees.

When planning renovations, consider what materials your construction team already has and what needs to be purchased.

Overlooking these details can quickly drive up your budget. To avoid overcapitalisation — spending more than the market will pay for — do your homework on local trends and buyer preferences. With solid market research and smart budgeting, you’ll set yourself up for a flip that delivers great returns.

8.    Sustainability and trends

Adding sustainable design and features to your house flip is a fantastic way to attract eco-conscious buyers and boost your property’s value.

Real Institute of Australia President Leanne Pilkington notes, “Sustainability will continue shaping housing policy and Australia’s progress toward environmental targets.”

Buyers in 2025 are looking for energy-efficient upgrades like solar panels, water-saving features and homes built with sustainable materials.

Trending renovation styles this year include open-plan layouts with plenty of natural light, biophilic designs with indoor plants and minimalist finishes that complement eco-friendly elements.

Successful property flips

Approaching house flipping with careful planning and professional guidance is crucial to maximise your profits and avoid costly mistakes.

Working with experts and thoroughly researching each step sets you up for a successful, relatively stress-free flipping experience.