Suburbs where property investors are buying cheap houses that rise in value

NSW and Victorian landlords are increasingly turning to other states to buy properties because unaffordable prices at home have made investing in their own states less lucrative, new data reveals.

Some of the suburbs favoured by NSW investors are affordable suburbs on the fringes of Melbourne and Brisbane, which experts say have increased competition and made it harder for local buyers to find a home.

NSW investors were purchasing more in Victoria (14.28 per cent of all investments purchased), Queensland (14.07 per cent) and nearly all other states and territories in 2024 than in previous years; just 59.02 per cent of investment properties were bought in-state, the Lendi Group data show.

Victorian investors were still heavily favouring their home state; 90.72 per cent of properties were bought there. They were showing increasing interest in Queensland, South Australia and Western Australia.

Lendi Group chief distribution officer Brad Cramb said investors from the most populous states were searching for cheaper property.

“That shift is underscored by investors looking for greater affordability,” he said. “As with all investors, they’re looking for greater investment returns and more sustainable long-term growth and so on.”

The Lendi Group data only covers Lendi and Aussie brokerage customers, but CoreLogic head of Australian research Eliza Owen said the figures matched up with an increase in investor loans flowing to more affordable states, as measured by the ABS.

“NSW still accounts for the highest share of investor finance. It was [about] $11 billion secured for investor finance in September and 38 per cent went to NSW, 23 per cent went to Queensland and 20 per cent to Victoria.”

Price growth slowed in Sydney towards the end of last year and was sluggish in Melbourne through 2024, but the capitals have high median prices which became more unaffordable as interest rates rose, and borrowing capacities were slashed.

The data show NSW buyers bought the most property in the 3029 (Hoppers Crossing, Tarneit and Truganina), 3064 (Craigieburn, Roxburgh Park and three others) and 4207 (Queensland’s Beenleigh, Eagleby, Logan Village and 17 others) postcodes.

Victorian investors were favouring the Queensland postcodes of 4211 (Carrara, Nerang and 13 others), 4814 (10 suburbs near Townsville), and 4207.

All suburbs were, or previously were, affordable areas. The Victorian postcodes had medians between $600,000 and $700,000, and recorded no more than 4.2 per cent growth over 2024.

In Queensland, the median house prices varied between as low as $440,000 near Townsville and as high as $1 million in Logan Village, still well below Sydney’s median of $1.65 million. House prices grew between 8.2 per cent on Brisbane’s fringe and 43.5 per cent near Townsville.

Owen said other factors were contributing to huge price increases in some of the suburbs, but added demand from out-of-state investors helped to push prices up.

NSW and Victorian investors are buying out-of-state in greater proportions. Credit: Dion Georgopoulos

“It’s contributing to extraordinary price increases,” she said. “As long as those suburbs are producing growth rates like that, it will pique investor interest and keep the cycle going. But eventually that cycle turns, and it becomes too expensive for investors to get in, and they look for the next emerging area.”

Cramb said investors were looking for capital growth, high rents and positive yields, but in some cases were targeting areas and homes they’d like to live in later in life.

“There’s this lifestyle piece driven by yields in the short term, but investors are also thinking this could be a place they retire to in the future,” he said.

Strategic Brokers founder and Sydney broker Hung Chuy said many of his clients were choosing to invest in cheaper areas because it had become unaffordable to invest at home.

“With interest rates high, the gap between what the repayments are and what the rent’s going to be is substantial. In those [cheaper] markets you’re seeing about 5 per cent yields at the moment.”

Owen said the added demand could be making it harder for local buyers to crack into the market.

“It increases competition for prospective local owner-occupier buyers and contributes to some of the urgency and strong price increases we’ve seen in those markets,” she said. “Having said that ... owner-occupation is less achievable [in some of these areas], and it can have the benefit of reducing rents in the area by adding to rental supply.”

Chuy said locals weren’t always thrilled by the extra attention from out-of-state buyers.

“There is a bit of this thing where if owners could sell to an owner-occupier they would prefer it, right?” he said. “I’ve seen cases where people have made the exact same offer [but couldn’t buy the property] because the owner decided to sell to an owner-occupier over an investor.”