Experts say property investment fundamentals matter more than chasing the latest hotspot, especially in Australia’s major cities.
Long-term focus over quick flips
Vince Scully, co-host of the Retire Right podcast, warns that short-term gains from trendy suburbs often disappear once transaction costs are added.
He recommends holding assets for five to ten years, allowing price growth to offset fees and taxes.
According to Scully, the right approach is to target strong middle-ring suburbs where median prices align with local demand.
He cites proximity to rail stations and shopping precincts as essential criteria for stable returns. Proximity to a commuter rail line often correlates with higher occupancy rates because tenants value easy access to the central business district.
Data shows larger houses tend to outperform apartments in Melbourne, attracting higher-paying tenants. Larger detached homes also tend to attract families who are willing to pay premium rents for additional space and garden areas.
Scully notes that free data sources and local knowledge, such as the street-level differences in Sydney’s Balmain, can guide smarter purchases.
Narrow trends can backfire
Rich Harvey, chief executive of Propertybuyer, observes investors flocking to niche assets like National Disability Insurance Agency assets for their high yields.
He points out that such assets serve only about 1% of the population, limiting resale options. While niche assets can generate strong yields, the limited pool of potential buyers means that any sale may require a longer marketing period.
Harvey argues that a broader appeal, selling to roughly 95% of buyers, provides a reliable exit strategy. A property that appeals to the majority of home-buyers typically enjoys a smoother transaction process and can be liquidated more quickly if the owner needs cash.
Areas with steady population growth, scarce land and a high share of owner-occupiers tend to maintain demand regardless of market cycles. Suburbs that record steady annual population growth often see increased demand for rental units, which supports higher rental yields.
Infrastructure hype versus lasting demand
Anna Porter Primmer, a real-estate valuer, sees spikes in buying activity whenever new shopping centres or roads are announced.
She cautions that without solid fundamentals, these projects can lead to oversupply and vacant units. When developers rush to build units in anticipation of a project that never materialises, vacancy rates can climb, putting downward pressure on rents.
Porter Primmer adds that hospitals or universities generate long-term tenant demand, unlike temporary construction jobs.
She advises investors to assess each opportunity on its own merits rather than follow the crowd.
