With the Reserve Bank of Australia (RBA) holding the cash rate at 3.85 per cent in July, despite softer inflation, weak GDP and sluggish retail spending, all eyes are now on August.
Markets are tipping rates to fall into the low 3 per cent range by year’s end, but tighter lending criteria and serviceability buffers mean borrowing power remains under pressure. In this environment, the real advantage isn’t timing the market, it’s choosing the right asset.
After more than two decades helping Australians build financial peace through property, we’ve seen it time and again: just because a market grows doesn’t mean the property will perform. And just because something rises in value doesn’t mean it was ever worth owning.
Yes, plenty of suburbs post short-term gains. But if you’re aiming for lasting wealth and financial freedom, the real skill lies in property selection: choosing assets that consistently outperform across cycles.
If you already understand the fundamentals like leverage, yield, offsets, and capital growth, your next edge is this: sharpening your asset selection lens in 2025.
Here are a few things to consider:
1. Scarcity that scales with demand
“Buy something scarce” is often repeated, but what does it actually mean in practice? True investment-grade scarcity isn’t just about limited stock, it’s about owning something irreplaceable, in a desirable location, with long-term demand baked in.
Take a freestanding Federation home in Fitzroy North: 500 sqm, tree-lined street, heritage overlay, walking distance to schools, public transport and amenities. Its value doesn’t come from trendiness. It comes from uniqueness.
Cotality’s July update shows national listings are down 16.7 per cent below the five-year average, signalling an undersupplied market, particularly for premium stock. Meanwhile, ABS data confirms average home prices have topped $1 million for the first time. In this low-supply environment, competition is intensifying, and in tightly held pockets, emotionally driven buyers are still paying a premium, even in softer conditions.
2. Owner-occupier appeal in investment-worthy locations
In any market, properties with strong owner-occupier appeal tend to hold their value better and grow faster than those bought purely for rental return. Why? Because when the time comes to sell, emotional homebuyers drive up prices. And in downturns, they’re less likely to pull out of the market than yield-focused investors.
Whether you’re a first-home buyer or property investor, ask yourself: would someone want to live in this long-term? Is the floor plan functional? Does it have light, outdoor space, walkable amenities?
In Brisbane’s inner ring, like Paddington or Red Hill, demand is proving sticky. As we say on our podcast, suburbs like these are in demand because of the lifestyle appeal, school zones and timeless charm they offer. They rarely flood the market, which heightens demand. It is this emotional owner-occupier demand that underwrites long-term performance, even when the market wobbles.
3. Investment fundamentals that support the long game
Even in a hot location, the wrong asset can underperform. That’s why we use our Macro to Micro to Nano framework:
- Macro: Is the city underpinned by population growth, infrastructure, and job creation?
- Micro: What’s happening in the suburb — vacancy rates, gentrification, supply constraints?
- Nano: How’s the land-to-asset ratio, floorplan, renovation potential, and lending structure?
Cotality reports national dwelling values rose 1.4 per cent in Q2. But these gains aren’t evenly distributed. Just 12.9 per cent of Melbourne suburbs are at record highs, compared to 74.8 per cent in Perth. Zoom in. Location isn’t enough; the asset must be investment-grade.
What the pros are watching in 2025
With rates stabilising and borrowing capacity still constrained, here are a few key signals seasoned investors are keeping an eye on:
- A-grade renovators: Construction costs remain elevated, so liveable-but-dated homes in premium suburbs are trading at a discount. That’s an opportunity for those with the capital and vision to add value strategically.
- Low-stock, high-demand suburbs: In certain inner-urban markets, listings have halved, but buyer activity hasn’t. These conditions are driving price rebounds, particularly in the $1.2 to $1.8 million range: a sweet spot for professionals and upgraders.
- Offset-friendly finance set-ups: Properties that allow for smart debt structuring, such as split loans, redraw access or debt recycling, are helping investors manage their cash flow while growing wealth tax-effectively.
Broader market context and borrower behaviour
Following the RBA’s July hold, Commonwealth Bank economist Belinda Allen noted that only 10 per cent of eligible borrowers reduced their mortgage repayments after May’s rate cut. It’s a telling sign of fragile confidence and cautious lending, and the challenge for investors is clear: growth alone isn’t enough; quality matters more than ever.
Final word: Growth ≠ performance
Cotality notes nearly 45 per cent of Australian suburbs are now at peak values, signalling broad market recovery. But even in booming suburbs, not every property performs. A poor floor plan, flight path proximity or lack of owner-occupier appeal can hold back long-term potential.
Investors who zoom out to assess macro trends but zoom in to assess fundamentals and neighbourhood characteristics are the ones who build sustainable portfolios. They layer buffers, clarity and discipline into their approach.
Smart investing isn’t about chasing the next hotspot, it’s about understanding what drives growth and whether that growth is sustainable. And in this current environment of tight credit and cautious lending, choosing the right asset is the real edge in selecting the right property. Because success isn’t about picking the moment – it’s about time in the right asset.
