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Best Locations to Invest in Australia’s 2025 Housing Market Boom
12:15 pm, 24th June 2025
I’m rushing to finish this blog before it gets ready for publishing at 2:30 pm. I’ve been getting hammered at work for the last few months. Squeezing it all into four working days has been hard since I don’t work Fridays. Spending time with my kids while they’re young and taking some control back of my time is more important to me these days. But I’ll give you a sneak peek into what I’ve been working on.
Many people claim to have narrowed down the best growth and total return markets in Australia, but almost none of them have looked at each of the 15,000 or so suburbs to be able to narrow down the best ones. I’ve twisted Tony’s arm to spend 10’s of thousands on a dataset and spent at least 300 hours building what is now likely to be the most sophisticated national property price forecasting model in Australia so that we can provide better forecasts and insights for you.
Interesting findings
While I was hoping for a single unifying model to forecast the growth of every suburb in every state or territory in Australia at all times of the cycle, it simply wasn’t the case. As it turns out each market in Australia has a separate set of drivers with separate sensitivities to price growth at any given point in the cycle.
It’s probably more accurate to describe this as a forecasting system rather than a model. After analysing more than 500 million individual data points, the number of significant drivers at any time was also surprisingly small, at around eight per cent, and they are in constant flux over time.
Model accuracy
It took over 100 iterations to get the system right and back-test it, but the results have been even better than expected. The model fit is outstanding, explaining up to 98% of the variation in prices at the suburb level. To put this in perspective, existing real estate models virtually never explain more than 50% of the price variation.
The model is trained to predict prices three years in advance. The blue dots in the chart below are each suburb’s median values, and the orange dots are the expected values.
As good as the backtesting results have been, as forecasters, we still have to live and die by this saying:
“All models are wrong, some models are useful, but most are dangerous”
I’ll put this model firmly in the useful camp.
Image 1. Forecast Accuracy.
The Data Backs Affordable Growth in Sydney
Before we get to the forecasts, let’s have a quick look at the current median prices in Sydney. The warmer colours on the map denote the more expensive suburbs, and the cooler colours are the more affordable ones.
Image 2. Median house prices ($)
We can see two clear corridors of lower prices (in the green) in the west and south-west of Sydney.
Let’s look at where the bulk of the growth in the last 12 months has been. Again, the higher growth is in the warmer colours.
Image 3. Growth in the past 12 months (%)
Median house prices in Sydney (Image 2) highlight a divide. In the last 12 months, growth has been highest in the outer suburbs, which gained 6–25%, while upscale areas stalled at -2–5%.
What is the model telling us about Sydney in 2028?
Unsurprisingly, the fastest-growing regions will continue to be the cheaper suburbs in Sydney, as seen in the heatmap below. Sydney house prices have become the most expensive in the world, surpassing those of Hong Kong at a multiple of 14.7 times median incomes. The proportion of houses the median income earner can comfortably afford Australia-wide fell from 50% in 2020 to 10% in 2024.
All this means that the lower end of the market will receive more buying pressure and competition, driving the prices up. This is particularly true in Sydney, but the other capitals vary from this by quite a lot since they are significantly more affordable.
Image 4. Forecast growth by 2028
Top states to watch
Unfortunately, I can’t reveal the growth figures for every suburb in Australia in this article, but I’ll give you a clue. Currently, our three recommended states/territories are Western Australia and Victoria, and the introduction of the Northern Territory, a market we have not been in for over a decade. While there is a wide variance in growth rates between the three choices over the next three years (between 30% and 75%), we must also consider the long-term growth rates. There will be different properties in different areas within the states to suit different strategies.
Capitalise on the Cycle
Here’s your plan:
- Research: Not every market is the same, reach out to our team to find the best investment property for you
- Invest: Fortune favours action. Buy something!
- Hold: This is by far the most important tip
- Keep Calm: Avoid media hype and stick to your strategy
The world is now uncertain, with the once-in-a-lifetime reordering of the global order, wars, and economic instability accompanying it. Increasing numbers of people are retiring with mortgage debt and not enough super. Getting on board with the best-performing suburbs can be a way out.
What’s your next step? I was hoping you could comment and let me know what you think. Happy investing!
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