Top tips for property investing in 2025

Recently, the Australian Financial Review newspaper asked for my top 5 tips for investing in residential property in 2025.

I thought it would be worth sharing them with Australian Property Update readers and explaining the rationale behind each tip in more depth. 

Top Tip One: Affordability, amenity and the best asset class for the location

If you are an investor, the formula is pretty simple.

First, you’re going to want a property that you can actually afford.

It sounds obvious, but I have come across dozens of people over the last 18 months who bought expensive investment properties when interest rates were extremely low during the pandemic and then found themselves bleeding cash and forced into selling at a loss when rates went up.

The problem was that a lot of these people didn’t do their research properly.

They either bought in areas they thought they knew or properties they thought were a “bargain” - but, on closer inspection, these properties were only a “bargain” because the interest repayments on them were low during the pandemic.

Most pundits agree we have reached the peak of the current interest rate cycle, although economists believe we will only see 2 or 3 small interest rate cuts this year.

With the official cash rate currently at 4.35%, that means retail mortgage rates of about 6-7.5%.

So, before even worrying about whether you will qualify for a loan given the current APRA lending rules - which mandate a 3% serviceability “buffer” on top of your repayments - you must be confident that your incoming rent on that property will enable you to service a mortgage when retail interest rates will be around 7% for the foreseeable future.

The next thing is amenity and appeal for a prospective tenant.

There’s no point buying an investment property that looks great but is miles from the nearest public transport interchange, or in an area where there are no parks, shops, cafes, gyms or sporting facilities.

Tenants want a great property, but they also want a life.

Being stuck in traffic for hours commuting is not most people’s idea of quality living.

There’s also the best form of housing for that location to consider.

A well-located townhouse or apartment might provide a better rental yield in a particular suburb than a free-standing house.

And there’s a good chance that ideal property in that ideal suburb may not even be in your home city or even the state you live in.

So, do your homework.

Look at what’s on offer in suburbs across Australia, look at what properties are commanding the best rent, and invest accordingly.

Top Tip Two: High rental demand and low vacancy rates

If you are buying into an area that has already seen considerable value growth in its median home price, you may well have already missed the “growth train”.

Consider surrounding suburbs that have proximity to areas that have recently seen strong growth.

Ensure there’s high demand for rental properties and rental vacancy rates are low, preferably below 3%.

Top Tip Three: Look for “growth” locations

If a suburb already has considerable infrastructure, like schools and hospitals, you may find that you are essentially paying an “entry premium” to buy there.

So, look for suburbs where there is a big infrastructure spend planned in the near to medium term.

This information is available from a variety of public sources, including council, state and federal government websites.

You’ll also want to look for areas where there is already strong population growth that shows no signs of slowing down.

Another factor to look for is constraints to more housing development.

So, a sought-after suburb where new housing subdivisions might be limited by terrain, infrastructure development or national parks is worth considering.

Top Tip Four: New property

I’m an unashamed fan of buying new property.

This maximises tax concessions for investors like depreciation on buildings, as well as providing a premium offering for tenants

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For example, an investment property that might have been built before the pandemic might not have adequate spaces for a tenant to work effectively from home.

Building rules also change.

Many smaller apartments built 15 or 20 years ago were allowed to include bedrooms with no direct access to natural light.

A tenant who has a choice between renting one of those older units and a newer apartment mandated to have a bedroom with natural light and a view will usually always choose the latter option.

Top Tip Five: Don’t wait for an RBA rate cut

If you are considering investing in property in 2025, but are waiting for rates to fall, my advice is simple: don’t wait.

Get in now while the property market is tilted in favour of buyers.

When rate cuts come, prices will re-accelerate.

If you haven’t got a deposit in cash at the moment, talk to a financial advisor or a mortgage broker, because there could be other options that may suit your individual financial circumstances and wealth goals, such as setting up a Self-Managed Superannuation Fund (SMSF) to buy investment property.

But the bottom line is, get some good financial advice.

In conclusion

To recap, you need to be looking for investment locations and properties that have:

1. Affordability, amenity and appeal, and are in the best asset class for the location
2. Surrounding suburbs that are increasing in value, with high rental demand and low vacancy rates
3. Planned big infrastructure spend, strong population growth, and constrained supply
4. New properties, as this maximises tax concessions like depreciation while providing a premium offering for tenants
5. Finally, don’t wait for RBA rate cuts – get in now while the market is tilted in favour of buyers. When rate cuts come, prices will re-accelerate.