Key takeaways
For the first time, Queensland has surpassed Victoria as the second-largest property investor market, trailing only New South Wales. Investor loans in Queensland are growing at 24% annually, compared to Victoria’s 5%, signaling a significant shift in investor focus.
Queensland’s lower property taxes and higher land value tax-free thresholds make it more attractive for investors.
Queensland leads Australia in net interstate migration, gaining nearly 31,000 new residents in the year to March 2024. Increased population drives housing demand, tightens vacancy rates, and strengthens rental yields, benefiting investors.
Regional Queensland offers affordability and high rental yields (5–20%), attracting investors to areas like Townsville, Cairns, and Mackay. However, these markets are more volatile and lack the long-term growth potential of capital cities. Recent price spikes may have overvalued properties in these regions.
Queensland’s tourism hotspots, such as Noosa, provide lucrative opportunities for short-term rental investments. Investors often adopt dual-income strategies, alternating between long-term leases in off-peak seasons and short-term rentals during peak demand.
Investors should prioritize data-backed decisions and focus on investment-grade properties in A-grade locations rather than chasing trends or hotspots. These areas provide consistent long-term growth and resilience to market fluctuations.
Is Queensland the new darling of Australian property investors?
For the first time in history, Queensland has overtaken Victoria as the second-largest property investor market in Australia, trailing only New South Wales.
According to an analysis by Money.com.au, investor loan numbers in Queensland are growing at nearly five times the pace of Victoria’s—24% annually compared to Victoria’s modest 5%.
If this trend continues, Queensland could outpace Victoria by more than 10,000 investor loans by next year.
What’s behind this dramatic shift?
Let’s explore the six reasons why Money.com.au believe investors are flocking to the Sunshine State and what it means for Australia’s property market.
1. Lower property taxes mean higher returns for investors
Queensland’s investor-friendly tax policies are a significant draw.
For example, the general land tax on properties valued at $800,000 is $2,500 per year in Queensland, compared to $3,450 in Victoria.
Even more advantageous, Queensland offers a tax-free land value threshold of $600,000 for individuals, while Victoria’s limit is a mere $50,00.
Victoria’s COVID Debt Repayment Plan adds additional pressure on investors, imposing a flat tax of up to $975 on second homes.
Queensland’s tax relief creates a more appealing environment for investors looking to maximize their returns.
2. Interstate migration drives demand
Queensland has consistently led Australia in net interstate migration since 2017.
In the year to March 2024, it gained nearly 31,000 new residents, compared to Victoria’s net gain of just 537.
This influx of people increases demand for housing, bolsters rental markets, and supports infrastructure development.
For property investors, these factors translate into lower vacancy rates and stronger rental yields.
3. Regional markets with high yields and affordability
Regional Queensland has become a focus for investors seeking affordability and strong returns.
In areas like Townsville, Cairns, Mackay, and Gladstone, investors can find properties under $500,000 with rental yields climbing 5–20% year-on-year.
These regional markets may stand out as affordable entry points with relatively high yields, but in my mind this is false economy, because regional markets are more volatile and likely to have the strong long-term growth that the capital cities will have.
These regional areas have had substantial growth over the last couple of years driven by inexperienced buyers agents pushing values beyond their fundamentals and paying prices locals would not be prepared to pay.
You know what they say… “a rising tide lifts all ships, but when the tide goes out, you’ll know who’s swimming naked.”
4. Short-term rentals capitalise on tourism appeal
Queensland’s reputation as a premier tourist destination makes it a hotspot for short-term rental investments.
In sought-after locations like Noosa, one-bedroom apartments can fetch up to $1,000 per night during peak seasons.
While these properties incur GST and levies, according to Money.com.au many investors adopt a dual-income strategy—leasing properties long-term during the off-season and switching to short-term rentals during high-demand periods.
5. Infrastructure projects build long-term potential
Queensland is undergoing an infrastructure boom, with over 300 transport projects currently in progress.
Highlights include preparations for Brisbane’s 2032 Olympics, the Cross River Rail, and the Bruce Highway upgrade.
6. Lifestyle appeal of the Sunshine State
Queensland’s relaxed lifestyle, warm climate, and stunning beaches make it one of Australia’s most desirable places to live.
This “Queensland effect” drives demand for properties along the coastline and in regional areas, especially among retirees and sea-changers.
The result?
Stronger demand for both owner-occupied homes and investment properties, further boosting Queensland’s appeal to property investors.
A final note for investors
As I always say, when it comes to property investment, the focus should be on investment-grade properties in A-grade locations.
Never follow a trend or buy in hotspots or growth areas because these won’t give you the long-term growth that you’re looking for.
I’m talking about areas and properties which hold their value over the long term, rather than benefit from an uptick in demand.
There are some break investment opportunities in the Sunshine State, and it’s not because I’m biased and live there, but I would only be investing in the capital city – Brisbane -not regional Queensland.
That’s where the main job growth, population growth and infrastructure growth is going to occur. Especially leading up to the Olympics.
There is no need to fight the big Gorillas – follow where the money is going to be invested in gentrifying Brisbane suburbs.
Next year when interest rates decline, the market is likely to experience a surge in activity.
More buyers will be able to afford larger loans, and as demand escalates, property prices are likely to soar.
Buyers who were previously priced out of the market will start to re-enter, and those on the sidelines will rush to buy before prices climb too high.
This creates a snowball effect that can rapidly drive up property values in growth markets.
However, here’s the key takeaway: waiting for rates to drop might mean missing out.
Even now, with higher interest rates, property prices continue to rise.
There are always markets within markets—while some areas may cool down, others are seeing exceptional growth.
This highlights the importance of looking at data-driven insights and short-term pressure indicators.
