Why Property is a Great Long-Term Investment
Before we address whether this is the time, it's interesting to note why so many Australians buy property in the first place. As opposed to shares or cryptocurrency, property offers physical security, rental returns, tax advantages, and long-term prospects for capital growth. It's less volatile than other asset classes and always does well in the long term - even recessions.
If you buy sensibly, hold in the long term, and treat the property well, property can also be a source of passive income along with wealth creation. But timing is critical - especially when interest rates, inflation, and buying sentiment are shifting.
Where the Market Stands in 2025
By mid-2025, the Australian property market has seen a stabilisation after a period of increasing inflation, rising interest rates, and changing lending conditions. In locations like Melbourne, where I interact with investors on an ongoing basis, we're seeing a return to moderate price growth, higher rental yields, and indicators of more robust buyer competition in top investment-grade areas.
Interest rates, while still higher than the ultra-low figures of 2020-2021, have begun to plateau. Many analysts predict we're now in a period of rate stability, which gives investors greater clarity around loan repayments and borrowing capacity. At the same time, Australia continues to face a housing supply shortage, particularly in rental stock - driving up demand and boosting rental returns in high-growth suburbs.
This combination of firm rental demand, stabilised lending conditions and long-term capital growth possibilities makes now potentially a wise time to enter the market - particularly for those investors who are financially prepared and dedicated to long-term strategy.
Rental Demand Is Driving Investment Potential
One of the strongest arguments in favour of buying an investment property right now is the state of the rental market. Vacancy rates across Melbourne and other capital cities remain historically low. We're seeing increasing pressure on rental supply due to population growth, migration, and limited new housing completions.
As a result, rents have risen solidly across all but a handful of property types. This gives the investor the opportunity to win higher rents, especially in inner and middle-ring suburbs where there is access to good public transport, schools, universities, and employment nodes.
In summary: tenants are fighting over well-located homes, and as an investor, that positions you well to be able to generate sustainable income from day one.
Interest Rates: A Double-Edged Sword?
Interest rates are always a consideration in the investment equation, and yes, the rates now are greater than many buyers have been used to in the past few years. But we've come to the point now where both lenders and borrowers are readjusting expectations and making better decisions.
As payments are larger, the plus side is that property prices have moderated and are more flexible in the majority of markets. Investors today are in a better position to purchase quality assets without resorting to crazy bidding wars, especially if they're pre-approved and ready to proceed.
If you have the money to buy now, see that interest rate cushions are part of your budgeting. But short-term financial expense should not too much dim your long-term vision of opportunity. What you pay today may seem like a bargain in five or ten years' time - especially if your rental income goes up steadily during that time.
Investor Confidence Is Returning
Confidence plays a huge role in property investment decisions, and what we're seeing now is a slow but steady return of investor activity. After a few years of cautious behaviour, many investors are feeling that the worst of the volatility is behind us. More buyers are re-entering the market, looking to take advantage of the combination of rental growth, softening prices, and reduced competition.
This is not a justification to charge in headlong - but it is a sign that today's market is moving. Early movers are snapping up deals before prices rise, and savvy buyers are targeting suburbs with good fundamentals and upside.
Is Buying A Property Right for You Right Now?
Of course, how good a time to buy is, depends on more than the market. The real question is, do your individual circumstances suit an investment strategy. Ask yourself:
- Do you have appropriate deposit and borrowing capacity?
- Are your current debts well under control?
- Can you still afford payments if interest rates rise again?
- Have you talked with your mortgage broker arranging your investment loan?
- Do you comprehend the tax liabilities, upkeep expenses, and dangers of being a landlord?
If the answer to these questions is yes - or you're getting close - then you may be well positioned to buy. But you also have to know your strategy. Do you want positive cash flow? Long-term capital appreciation? A renovation project? Knowing your goal will tell you where and what you buy.
What Makes a Good Investment Property in Today's Market?
In 2025, a good investment property is not just a matter of low price or high profit. It's about buying the right property in the right location, with the right combination of growth, rentability, and desirability. The best opportunities I see for my clients tend to be:
- Homes or apartments in well-connected, established suburbs with good rental markets
- Properties within walking distance to train stations, universities, schools, hospitals, or work precincts
- Homes with potential for renovation to increase value and rental
- Townhouse and boutique apartments with reasonable body corp fees in established areas
- Homes located in an area benefited by government infrastructure investments or growth
Timing is critical, but the choice of assets is critical. A good property will perform well in any market cycle, while a poor one will fail regardless of when you buy it.
Final Thoughts
So is now the time to buy an investment property? If you're ready financially, have a good strategy, and know the context today - yes, it's a wonderful time. The market is stabilizing, rental return is strong, and long-term fundamentals are robust. Holding out for the "perfect" moment generally means missing out altogether, while sensible, informed action today can put you at the front of the pack.
As a real estate agent, my role is not to merely sell you real estate, but to sell you the right one, for the right reasons, at the right time. If you're thinking of investing but not sure where to start, I'd be more than happy to guide you through the journey, offer local suburb insights, or refer you to known mortgage and real estate specialists.
Let's talk about how we can build your property portfolio - strategically and confidently.