The economy is showing signs of recovery, and property values ticked up in February—but not all markets are moving the same way. For active investors, the real advantage lies in understanding where the biggest shifts are happening. This week, we break down price trends, emerging opportunities, and strategies to stay ahead.

Economic Growth Resumes: Implications for Property Investors

Australia’s economy has shown signs of recovery, with the December 2024 quarter marking a 0.6% increase in Gross Domestic Product (GDP). This uptick ends a 21-month period of per capita recession, as GDP per person rose by 0.1% during the same quarter.

Key Drivers of Growth

• Household Spending: A 0.4% rise in household discretionary spending was observed, attributed to increased participation in retail events and hospitality sectors.
• Government Expenditure: Public sector spending, particularly in defense, healthcare, and the Pharmaceutical Benefits Scheme, played a significant role in bolstering economic activity.
• Exports: The quarter benefited from a 2.9% increase in goods exports, driven by favorable commodity prices and temporary tariff agreements, notably boosting chickpea sales to India.

Considerations for Property Investors

While the recent GDP figures are encouraging, it’s essential to approach them with a measured perspective:

• Reliance on Government Spending: A substantial portion of the growth stems from government expenditure. Without a corresponding increase in private sector investment, the sustainability of this growth remains uncertain.
• Productivity Concerns: Former Reserve Bank Governor Philip Lowe has highlighted that cost-of-living challenges are more closely linked to stagnant productivity growth than to high interest rates. This underscores the need for structural reforms to enhance economic efficiency.

Implications for the Property Market

Property investors should consider the following:

• Market Stability: The end of the per capita recession may signal increased consumer confidence, potentially leading to heightened demand in the property market.
• Interest Rate Outlook: With the economy showing signs of recovery, the Reserve Bank of Australia’s monetary policy decisions will be pivotal. Investors should monitor potential interest rate adjustments that could impact borrowing costs.
• Long-Term Strategies: Given the current reliance on government spending for economic growth, investors might consider focusing on regions with robust infrastructure projects or areas poised for private sector expansion.

In summary, while the recent GDP growth offers a positive outlook, property investors should remain vigilant, considering both the opportunities and underlying challenges within the broader economic landscape.

Housing Market Rebounds in February: CoreLogic’s Latest Data

In February 2025, CoreLogic’s national Home Value Index (HVI) recorded a 0.3% increase, signaling a potential turnaround after a brief three-month downturn. This rise adjusted the national measure of home values to a slight 0.4% decrease.

Capital City Highlights

• Melbourne and Hobart: Both cities experienced a 0.4% monthly increase. For Melbourne, this uptick ended a ten-month streak of declining home values.
• Sydney: Home values grew by 0.3%, with a median value now at 1,186,459.
• Brisbane, Adelaide, and Perth: These mid-sized capitals saw more modest growth, each recording a 0.3% rise.

Regional Trends

Regional housing markets continued to show resilience, with the combined regional index rising 0.4% over the month and 1.0% over the rolling quarter. This contrasts with the capital cities, which saw a 0.3% monthly rise but a 0.4% quarterly decline.

Market Dynamics

The improved conditions may be partly due to a slowdown in new property listings, suggesting a tightening in supply. However, inventory levels remain elevated in certain areas:

• Sydney: Listings are up 6.9% compared to the previous five-year average.
• Melbourne: A 3.9% increase in listings.
• Hobart: Listings have surged by 25.2%.
• ACT: A 6.8% rise in listings.

These elevated inventory levels indicate that, while some markets may favour buyers, conditions vary significantly across regions.

Median Values Snapshot

Looking Ahead

While the recent data indicates a positive shift in the housing market, trends remain diverse across different cities and regions. Factors such as consumer sentiment, interest rates, and housing supply will continue to play crucial roles in shaping the market’s trajectory in the coming months.

Consider the suburbs that have experienced the most extreme price swings—both up and down—as potential value opportunities. Areas with sharp declines may offer buying potential, while those with strong upward momentum could signal emerging hotspots.

How to Play a Slower Market: Opportunities for Active Property Entrepreneurs

With forecasts pointing to modest property price growth in 2025—Westpac is predicting around 3% nationally—some investors may see this as a sign to slow down. But for active flippers, small developers, and renovators, a slower market presents unique opportunities that more passive, long-term buy-and-hold investors might miss.

Where to Look for Deals in a Slower Market

• Rising Days on Market = More Negotiation Power

  When the market slows, properties take longer to sell, which means sellers are more motivated—particularly those under financial pressure. Look for listings that have been sitting longer than average and push for price reductions or favourable terms (extended settlements, vendor financing, etc.).

• Stock Buildup Creates Off-Market Potential

  When listings increase and buyers hesitate, agents become desperate to move stock. This is the time to build relationships with agents and access off-market deals before they hit the portals.

• Knockdown Rebuilds in Undersupplied Areas

  With new housing supply constrained, suburbs with growing populations but limited new development will continue to perform well. Older houses on large blocks in these areas present strong knockdown-rebuild opportunities—especially if you can create a premium product that stands out.

• Renovate for Profit, Not Just Capital Growth

  When market-wide growth is slower, the best way to create value is through strategic renovations. Look for properties with configurational inefficiencies—poor layouts, extra bedrooms that can be added, or underutilised spaces—where you can force capital uplift even in a flat market.

• Watch for Suburb Price Swings

  Suburbs with the biggest price fluctuations can signal opportunities. Areas that have seen sharp drops may offer undervalued buys, while those still climbing could reveal emerging hotspots.

Final Word

Slower markets don’t mean less opportunity—they just require a more active approach. The investors who adapt their strategies, get creative with deals, and take calculated risks will be the ones making the most profit while others sit on the sidelines.

Momentum is building, but smart investors don’t just ride the wave—they position themselves ahead of it. Stay sharp, take action, and we’ll see you next week.

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