Higher rates be damned: 9 property hotspots investors are targeting now

It’s that time in the property cycle again.

Interest rates are rising, macroeconomic uncertainty is creeping in, and tax policy remains up in the air. Unsurprisingly, it’s making buyers nervous.

But in the same way equity markets climb a wall of worry, property experts remain confident that the strength of the Australian economy and robust demand will carry the housing market through the headwinds.

Matthew Hughes, Managing Director at Perth-based Capital Property Advisory, likes to remind investors of an old proverb: “The best time to plant a tree was twenty years ago. The second best time is now.”

“The investors who have built genuine, lasting wealth through property are not the ones who timed the market perfectly. They are the ones who bought the right asset, in the right location, and held it long enough for the fundamentals to do their work,” he says.

Tome Avelovski, Director & Senior Buyer’s Agent at Sydney-based Ready Set Buy, agrees and adds that the property market is expected to remain resilient.

“The fundamentals remain very strong: chronic housing undersupply, rising migration and tight rental markets continue to support long-term price growth and rental demand,” he says.

The 'easy money' is gone

At a 4.1% cash rate, the era of easy money is over. Borrowing is tighter, costs are higher, and the margin for error is smaller. In this market, both experts agree - you can’t afford to get it wrong.

“This is increasingly a segmented, ‘two-speed’ market, where outcomes depend heavily on location, asset type and price point rather than broad national trends,” Avelovski says.

Hughes takes a similar view, arguing investors should focus on areas where demand structurally exceeds supply, where infrastructure is reshaping the local economy, and where the asset itself is genuinely scarce.

With that in mind, we asked both the award-winning buyer's agents to nominate their top picks across the major states, in their own words.

Matthew Hughes’ top picks

Western Australia: The undisputed growth leader

What makes WA particularly compelling right now is the combination of a critically tight rental market and state-backed infrastructure investment, such as the METRONET rail expansion, which is reshaping the economic geography of Perth.

Top pick: Warwick, Perth WA (6024)

Why I like it: Warwick is an established, middle-ring suburb just 14 km north of the Perth CBD. It offers a classic gentrification story, surrounded by significantly more expensive suburbs like Carine and Duncraig.

It benefits from exceptional connectivity via the Mitchell Freeway and its own train station on the Joondalup Line, making it highly attractive to city commuters.

Typical yields: ~4.0% to 4.9%

Expected capital growth: Strong. The suburb has seen 19.1% sales price growth over the last 12 months yet still rates highly on our Capital Affordability Rating scorecard.

Key drivers:

• Strong owner-occupier base
• Excellent connectivity
• Retail amenity (Warwick Grove)
• Ripple effect from neighbouring premium suburbs

Best property type: Established 3–4 bedroom houses on full blocks (~700sqm+)

Queensland: Olympic halo effect continues

The Queensland government has committed over $50 billion in infrastructure spending over the next four years, creating a sustained pipeline of growth.

However, the easy money has largely been made in Brisbane’s inner ring. The opportunity now lies in the middle and outer rings, where affordability remains and infrastructure tailwinds are now being felt.

Top pick: Geebung, Brisbane QLD (4034)

Why I like it: Located just 10 km north of the CBD, Geebung is a highly desirable middle-ring suburb that remains relatively affordable compared to its inner-city neighbours. It has a high owner-occupier rate of over 73%, meaning properties are tightly held and the community is well established.

Typical yields: ~2.8% to 3.4%

Expected capital growth: Strong, with long-term growth supported by infrastructure and sustained demand.

Key drivers:

• Strong connectivity via train and bus networks
• Proximity to major employment hubs like Chermside
• Extremely tight vacancy rate (~0.9%)
• High owner-occupier appeal

Best property type: Post-war or modern houses on 600 sqm blocks, with subdivision potential on larger sites.

New South Wales: Finding value in a premium market

Sydney remains Australia’s most expensive property market, and growth has moderated as affordability constraints bite. 

However, there are still pockets of value, particularly in locations where lifestyle appeal and infrastructure are driving sustained demand.

Top pick: Long Jetty, Central Coast NSW (2261)

Why I like it: Positioned perfectly between Tuggerah Lake and the Pacific Ocean, it has transformed into a vibrant, trendy enclave attracting families, professionals and Sydney escapees seeking a superior lifestyle without sacrificing connectivity.

Typical yields: ~2.4% to 3.3%

Expected capital growth: Very strong, supported by tight supply and strong owner-occupier demand.

Key drivers:

• Strict geographical constraints limiting supply
• Strong lifestyle-driven demand
• Improving connectivity to Sydney (~90 minutes)
• Vibrant café and retail culture

Best property type: Character homes ripe for renovation or established houses with water views

Victoria: The contrarian play

Buying in Melbourne right now is a contrarian strategy. 

Growth has been subdued, but that is often where the best long-term opportunities emerge. Regional Victoria, in particular, presents a compelling case.

Top pick: Geelong, VIC (3220)

Why I like it: Geelong is not a satellite suburb of Melbourne; it is a thriving city with a diversified economy and a population of over 290,000. It offers a significant affordability advantage over Melbourne, making it a magnet for lifestyle migration and demand.

Typical yields: ~4.0% to 4.5%

Expected capital growth: Steady to strong, supported by population growth and improving sentiment.

Key drivers:

• Economic anchors including Deakin University and Barwon Health
• Affordability relative to Melbourne
• Strong migration trends
• Connectivity via V/Line

Best property type: Established family homes in suburbs with strong owner-occupier appeal

South Australia: The state to avoid

While Adelaide's recent historical growth has been exceptional, smaller markets that do not attract sufficient interstate and international migration are to be avoided for long-term hold investors, in our view. 

Furthermore, the state's supply response is finally catching up. Housing approvals in SA recently hit a 40-year high, with over 15,000 dwellings approved in 2025, representing a 22.3% year-on-year increase.

Given the very high recent price growth, the lack of structural population drivers, and the impending surge in new construction, we believe the Adelaide market has the potential to peak earlier than Perth and Brisbane, and potentially soften further after it peaks.

Tome Avelovski’s top picks

New South Wales: The decentralisation trade gains momentum

Top pick: Newcastle/Lake Macquarie region

Why I like it: Newcastle and the broader Lake Macquarie region continues to benefit from a structural shift in buyer demand away from Sydney, driven by affordability, lifestyle and improved connectivity.

With major infrastructure upgrades, a growing local economy and a strong university and health sector, the area is transitioning from a regional centre into a self-sustaining city.

Typical yields: Houses typically generate gross yields of around 3.5–4.5%, while units can achieve 4.5–5.5% depending on proximity to the CBD, beaches and transport.

Expected capital growth: I expect steady growth of around 6–9% over the next 3–5 years, underpinned by population growth, infrastructure investment and ongoing affordability constraints in Sydney pushing demand into the region.

Key drivers:

• Continued migration from Sydney due to affordability pressures
• Major infrastructure and employment hubs including health, education and port/logistics sectors
• Lifestyle appeal (coastal living and access to beaches) attracting both renters and buyers
• Tight rental market with low vacancy rates supporting strong rental growth

Queensland: Sunshine Coast growth corridor still has runway

Top pick: Caloundra West, Sunshine Coast QLD (4551)

Why I like it: Caloundra West is part of the Sunshine Coast growth corridor and remains one of the more affordable entry points into this high-demand region.

It’s still largely under the radar compared to coastal hotspots like Mooloolaba or Maroochydore, but large-scale master planned estates, improving infrastructure, and proximity to new employment hubs are driving strong long-term demand.

Typical yields: Houses generally deliver gross yields of around 4–5%, with newer estates and dual-living options sometimes achieving closer to 5.5%.

Expected capital growth: I anticipate 7–12% growth over the next 3–5 years as the area’s infrastructure matures, population grows, and the Sunshine Coast market continues to attract buyers priced out of Brisbane or the central Sunshine Coast.

Key drivers:

• Master planned estates and population growth driving long-term demand
• Proximity to beaches and lifestyle amenities attracting families and renters
• Infrastructure upgrades, including roads, schools and retail precincts
• Relative affordability compared to central Sunshine Coast suburbs

Western Australia: Inner-city transformation driving the next leg

Top pick: Bayswater, Perth WA (6053)

Why I like it: Bayswater is an inner-eastern suburb of Perth undergoing significant transformation, making it a compelling long-term growth opportunity. It benefits from proximity to Perth CBD (around 6km), strong transport links, and a major urban renewal plan that includes new housing, mixed-use developments and infrastructure upgrades.

Typical yields: Houses typically generate gross yields of around 3.5–4%, while units can achieve 4–4.5%, especially in newer developments close to transport and retail.

Expected capital growth: I expect 5–8% growth over the next 3–5 years, supported by ongoing urban renewal, infrastructure investment and continued demand for inner-metropolitan living in Perth.

Key drivers:

• Urban renewal projects and infill development increasing property value
• Proximity to Perth CBD and transport hubs driving demand
• Limited land supply
• Lifestyle appeal with parks, schools and retail amenities

Victoria: Growth shifting beyond the city fringe

Top pick: Sunbury, VIC (3429)

Why I like it: Sunbury sits about 40 km northwest of Melbourne’s CBD and is increasingly attracting buyers priced out of the inner city. Unlike suburbs like Werribee, it hasn’t been overrun by investors yet, and housing supply remains relatively constrained in key pockets.

Typical yields: Houses typically generate gross yields of around 4–4.5%, with units slightly higher in new developments close to transport and amenities.

Expected capital growth: I anticipate 6–9% growth over the next 3–5 years, driven by population growth, infrastructure upgrades, and steady demand from families and first-home buyers.

Key drivers:

• Improved rail and road connectivity to Melbourne CBD
• Relative affordability compared to inner and middle-ring suburbs
• Ongoing development and infrastructure supporting growth
• Lifestyle appeal for families

South Australia: Regional growth on Adelaide’s doorstep

Top pick: Mount Barker, SA 5251

Why I like it: Mount Barker is a key growth corridor in Adelaide’s Hills region, around 33 km southeast of the CBD. 

It’s one of South Australia’s fastest-growing regional hubs, benefiting from affordable land, new residential developments, and improved road connectivity to Adelaide. The area attracts families seeking larger homes and lifestyle appeal without paying inner-suburb prices.

Typical yields: Houses typically generate gross yields of around 4–5%, with units slightly lower depending on location and size.

Expected capital growth: I expect 6–9% growth over the next 3–5 years, supported by strong population inflows, new housing developments and continued infrastructure upgrades.

Key drivers:

• Rapid population growth in the Adelaide Hills region
• Affordable housing relative to Adelaide
• Infrastructure investment across schools, health and transport
• Lifestyle appeal with semi-rural living

Recap from the experts: What’s driving this market, and what to look for

1. Undersupply and migration are doing the heavy lifting - Avelovski points to “chronic housing undersupply” and strong population growth as the key forces keeping rents tight and supporting long-term price growth.

2. This is no longer a rising tide market - He stresses that unlike the 2010s, buying anything and expecting instant growth is a fool’s errand. Outcomes now depend heavily on location, asset type and price point — making selectivity critical.

3. Infrastructure, infrastructure, infrastructure - “Where governments spend billions, populations follow.” Transport, hospitals and universities continue to be the most reliable leading indicators of future demand.

4. “Prioritise yield without sacrificing growth” - Hughes says the sweet spot is markets offering ~4%+ yields alongside a credible capital growth story — not one or the other.

5. “Buy land, not just bricks” - In a supply-constrained market, land is the scarce asset. “A house on a 600sqm block in a growing suburb will always outperform a unit,” he says.

6. Remember the old adage "time in the market, not timing the market." - The same rule applies as in property as it does equities: long-term wealth comes from holding quality assets, not trying to outguess the cycle, rates and policy changes.

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