- Investors should avoid locations that are already experiencing significant growth and target areas early in their growth cycle.
- Perth market shows signs of being past its peak with growing listings and dropping transaction levels.
- Melbourne, Darwin, and several regional cities expected to perform well in 2025.
The safest way to pick the best location to invest in 2025 is to ignore what the herd is doing and target locations early in the growth cycle.
It sounds easy, but it’s a fundamental error many who are new to property investing make, according to Hotspotting General Manager, Tim Graham.
Mr Graham said many investors get caught up in the media’s hype that a location is hot, and end up investing in a market that is already overheated.
“If you are reading about it in the paper or someone at a barbecue is telling you a location is hot, that means it’s already undergone significant price growth, and you will end up buying at an elevated price,” he said.
“Perth is a perfect example of this. Properties are selling in ten days or less, which is a big red flag, and many locations have had growth in excess of 20% in the past 12 months. That can’t continue.
“We believe the Perth market is past its peak. Listings are growing and transaction levels are dropping, and that can only lead to one thing – a slowdown in price growth”.
Mr Graham said that buyers should focus on locations that have the fundamentals in place for good growth in 2025 but have not yet taken off.
“The important things for investors to analyse when selecting a location with future investment potential are infrastructure spending, job nodes and growing population. Also important is a trend of rising transaction numbers from quarter to quarter.”
Tim Graham, Hotspotting
“Locations with all these factors in place are well positioned for future capital growth.”
In 2025, Mr Graham expects the regeneration of a number of ‘second wind’ markets.
“These are markets that had a period of strong growth which has paused or eased in the past 18 months to two years but are now showing signs of increasing demand in terms of growing transaction numbers,” he said.
“Melbourne did not have a good year in 2023 or 2024, but I believe it will start to rise next year, thanks to the price differential with Sydney and its high population growth. This will occur despite Melbourne having the worst state government and the highest taxes in the nation.”
“Darwin will also begin to show some price growth next year. There are some big infrastructure projects either underway or about to start in the Northern Territory, which will result in job growth and rising demand for property.
“And Darwin still offers investors affordable houses and high rental yields.”
Mr Graham said regional cities such as Albury-Wodonga, Ballarat, Launceston and Burnie were also likely to perform well in 2025.
“If you are buying at the right time, you really can take advantage of buying well and potentially even below asking price,” he said.
“Unfortunately, investors will continue to pile into the frenzied markets, however, the smart money will target locations early in the growth cycle, not at the end.
“You can’t rely on the past to predict the future. Some markets that have not been to the fore in the past 12 months to two years will be the surprise performers.”
