Victoria has emerged as the leading state for investment in a regular survey of property investors.
Australian Property Investor Magazine’s latest sentiment survey also finds that investors are bullish about prospects for 2026, with nearly 9 in 10 respondents saying they believe property prices will continue to rise and nearly one quarter saying they are “ready to buy now”.
The details
Australian Property Investor (API) magazine’s quarterly sentiment survey provides a fascinating insight into the minds of investors, and the latest survey for the third quarter of 2025 is no exception.
“Property prices have risen again in the first nine months of 2025, and more people than ever think this will continue well into 2026,” says API Editor Craig Francis, who also compiled the results.
The latest survey shows a record 88% of respondents believe property prices will continue to rise, with 61% feeling positive about the property market in general.
It also shows concerns about interest rates and the state of the economy are declining.
“There remains a sense that the property market will remain robust for the foreseeable future,” Mr Francis says.
Shifting buyer patterns
However, when it comes to perception versus where investors are actually putting their money, an interesting split emerges.
When asked which state offered the best investment prospects for the next 12 months, 30% of respondents opted for Queensland, followed by Victoria with 25%, New South Wales with 17% and Western Australia with 15%.
But when asked where they actually bought an investment property recently, Victoria dominated.
25% of respondents who’d bought a property in the last three months said they had bought in the southern state, with Queensland and New South Wales tied for second place with 16% each.
“Victoria, which has developed a reputation for being less welcoming to property investors, may have benefited from improved affordability as a result,” Craig Francis says.
“Its potential for overdue capital growth has made it a rival to Queensland as the preferred state for investors, surpassing it in buying activity in the last quarter.”
Price sensitivity
The boost in national property prices since the Reserve Bank of Australia started cutting rates in February this year seems to have had a two-fold effect among property investors.
Craig Francis says, for those considering selling up, “these high property prices are proving too tempting to ignore.”
For sellers, profit-taking was the number one motivation, followed by reducing debt and diversifying financial portfolios.
Conversely, Craig Francis says that “affordability is a central theme for buyers.”
As price pressure mounts, API’s survey found there’s been a significant change in the proportion of buyers looking to buy a townhouse or villa (up from 14% to 19%).
“As house prices climb and bite harder, this property type becomes the compromise many are willing to make in buying in their desired location, while still retaining some courtyard space,” Craig Francis says.
While investors still favour houses, their popularity has eased from 42% to 40%, while units also slipped (from 24% to 20%).
Landlords moderate expectations
As rent growth slows after the post-pandemic spike, an overwhelming majority of landlords say they would not be willing to lose a good tenant just to secure a higher rental return.
A rental yield of 4.6% to 5.5% remains the range most property investors regard as offering a decent return.
Property investors looking to buy
With ABS lending figures showing a large jump in the number of loans issued to property investors, the API survey shows its respondents are not sitting on the sidelines either.
“For the first time since the measure was recorded in 2022, the proportion of respondents saying nothing was holding them back from buying an investment property was the leading response at 23%,” Craig Francis says.
“It reflects the property market’s reignition in the latter part of 2025, as investors are jumping back in before prices surge further.”
Mr Francis says fewer respondents said they couldn’t obtain credit or weren’t in the market in this survey than in the previous quarter.
“Concerns about the direction of the economy also fell as more positive sentiment towards the market took hold,” he says.
“It all points to an already hot property market turning the dial up even further in the coming 12 months,” he concludes.