Investors are turning away from markets that were popular in recent years. Picture: Gaye Gerard
Cashed up investors have been increasingly pulling their money out of booming housing markets in Queensland and Western Australia over fears they’re now peaking and offer poor rental returns.
And that money is being spent instead in Victoria and Tasmania.
A new report by research group FoundIt has revealed a major shift in the national property landscape.
The FoundIt Investor Index tracked properties sold and subsequently listed for rent within 180 days, indicating capital was rotating out of markets where growth had peaked and into low priced areas.
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Victoria, where price growth has been sluggish in recent years, emerged as the clear standout for the December quarter of 2025, recording a year-on-year lift of more than 400 investor transactions.
A recent auction in Sydney, which has remained one of the more stable markets for investor demand. Picture: Rohan Kelly
This resurgence marked a significant turnaround for the state, driven by a price reset that has improved rental yields for investors.
FoundIt head of research Kent Lardner said investors had spotted a “rare window” in Victoria where entry prices and tenant demand were aligning.
“What’s drawing investors back is the price reset that owner-occupiers have already felt, which has materially improved rental yields,” Mr Lardner said.
The Wyndham and Tullamarine–Broadmeadows regions in outer Melbourne ranked as the top two investor hotspots nationally, measured by the rise in investment property purchases.
This contrasted Queensland and Western Australia, which experienced a decisive pullback in investor activity.
Port Hedland investor demand has dropped.
“Investors are pausing in states where pricing has moved ahead of fundamentals, and redirecting capital to markets offering better value and yield today,” Mr Lardner said.
Queensland recorded a decline of 751 investor transactions compared to the same quarter in 2024, while Western Australia dropped by 433.
Regional markets that previously led the cycle, such as Townsville and Mackay, recorded some of the sharpest declines.
Investor transactions in Townsville plummeted by 65 per cent, with the report noting that “investors moved on” as yields compressed.
The drop in Queensland mining service centre Mackay was 46.3 per cent, while in WA mining hub Port Hedland it was 55 per cent.
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FoundIt head of research Kent Lardner said investors were spending in markets where they perceived there was better value on offer, including Melbourne.
Previously high growth Perth suburbs Armadale and Baldivis recorded a 30 per cent drop in activity.
The report said this decline was influenced less by rents, which remained elevated in these areas, and more by a shift in the “risk-return equation”.
NSW recorded a flat result, with a negligible increase of just six transactions year-on-year.
Similarly, the Australian Capital Territory remains a “low-volatility” market, recording a modest lift in activity concentrated in Belconnen and Gungahlin.
South Australia continued to perform as a low-volatility market, recording a steady increase in investor activity across metropolitan Adelaide.
The report noted that there were no material declines in any South Australian suburb areas.
Tasmania recorded the strongest proportional lift of any state, signalling a recovery from a low base.
Tom Panos said proposed capital gains tax changes would be catastrophic. Picture: Alison Wynd
Investor transactions surged by 171 year-on-year, with Hobart and regional centres seeing renewed interest as investors seek accessible entry prices.
Falling investor spending in Queensland and WA has come as real estate commentator Tom Panos warns of early signs of “panic selling” by investors due to proposed capital gains tax changes.
He said in a recent YouTube post that calls to change the current discount investors get on the CGT charged on property sales from 50 per cent to 25 per cent had already spooked some investors.
They were now telling agents they wanted to sell, he said.
Mr Panos clarified that he believed any capital gains tax changes would do the opposite over the longer-term: discourage investors from selling.
He predicts that rather than generating wealth for the state, the changes will cause current owners to simply refuse to sell, creating a transactional slump over the long term.
“If you’re going to actually do this, they won’t sell,” Panos explained. “You create a gridlock. When there’s a gridlock, you stop collecting the big money that is paid in stamp duty. They don’t see that there”.
He warned that investors will choose to delay selling to avoid the massive tax bill, reducing turnover and listings.
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