"Strategic, diversified approaches enable investors to grow property portfolios and outperform in competitive markets." - Alex Kenward, Finance ManagerBreaking into the property market has never been tougher.
Affordability pressures continue to reshape the investment landscape, demanding sharper strategies from those determined to grow their portfolios.
With Sydney’s median house price at almost $1.72 million and Melbourne’s climbing to $1.06 million, investors in these cities face higher entry costs and more intense competition.
Yet confidence is returning.
In August 2025, the national preliminary auction clearance rate hit 75.0 per cent, the strongest result since April 2024. Sydney and Melbourne both recorded clearance rates of 75.0 and 75.5 per cent respectively, while Adelaide led with 78.0 per cent.
This renewed momentum highlights the need for investors to think creatively, act with agility and adopt diversified strategies that can secure opportunities in a high-pressure market.
The following approaches provide a roadmap to help investors overcome affordability challenges, sharpen their competitive edge and expand their portfolios.
High clearance rates in capitals indicate intense competition and pricing pressure.
Many investors are shifting focus to regional towns like Ballarat, Toowoomba and Albury, where vacancy rates frequently sit below 1.0 per cent and population and infrastructure growth remain robust.
Land affordability and larger lots also offer development potential or long-term capital growth tied to local agricultural or farming economies.
Regional investments also diversify portfolios, reducing exposure to metropolitan market volatility.
High auction activity, especially in capital cities, continues to fuel price growth, making home ownership in those markets expensive.
Rentvesting allows investors to live in preferred areas while investing in higher-yield regional or outer suburban markets and still benefiting from negative gearing and depreciation.
Rentvesting involves buying in high-performing, affordable locations while renting in preferred lifestyle suburbs. Investors can enter the market sooner with a lower capital outlay, gain tax deduction benefits and accumulate multiple properties more easily.
This approach sidesteps the high cost of owning in metro areas and may offer higher yields on regional investments, especially with continued price and rental pressure in the capital cities.
In an environment of rising interest rates and fierce competition in core markets, assets that enhance cash flow are increasingly valuable.
Dual income properties, such as duplexes, secondary dwellings or homes with granny flats, provide multiple rental streams from a single title, improving gross yields and offering a buffer against vacancy.
Co-living arrangements like student accommodation and Specialist Disability Accommodation (SDA) under the NDIS scheme also continue to deliver strong performance. Purpose-designed rental properties also offer significant capital works and plant and equipment depreciation to further enhance cash flow.
With borrowing conditions tightening and yields under pressure, tax depreciation becomes a critical lever for improving cash flow.
New builds offer the most substantial benefits, with capital works deductions available at 2.5 per cent per year over 40 years and full plant and equipment depreciation available from day one.
BMT said property owners on average have $12,000 in deductions in the first full financial year alone, significantly reducing holding costs and improving net returns.
These tax advantages are especially valuable for investors pursuing dual-income or co-living strategies, as new purpose-built assets can deliver both strong rental demand and maximised depreciation outcomes, helping to offset tighter financing and rising operational expenses.
Investor mortgage approvals have increased significantly over the past five years, rising from 28 per cent to 37 per cent of new home loans.
Many investors are joining forces through joint ventures, family partnerships or fractional investment platforms to secure well-located or larger assets.
While pooling resources offers numerous advantages, it also introduces complexities that underline the importance of clear, legally sound co-ownership agreements.
These agreements form the backbone of successful partnerships by clearly defining ownership shares, financial responsibilities such as mortgage payments and maintenance costs and protocols for transfer or sale of interests.
Typically set up under tenancy in common, allowing unequal ownership shares and independent transferability, these agreements help cater to the diverse contributions and goals of each investor.
Importantly, comprehensive co-ownership contracts should address dispute resolution, management duties, insurance coverage and exit strategies for parties wishing to leave the arrangement.
Early legal advice is essential to ensure all parties understand their rights and obligations from the outset, minimising the risk of conflict as the investment grows.
Equity extracted from existing properties can help fund new acquisitions.
Yet, investors should look to adopt conservative loan-to-value ratios (LVRs), conduct rigorous stress-testing of repayments and maintain an emergency buffer, particularly as rate cuts remain anticipated but not yet realised.
Investors often target underpriced, cosmetically tired properties in established suburbs, drawn by competitive pricing and strong sales momentum.
Renovations remain a proven value-add, with kitchen and bathroom renovations typically increasing property value by 3 to 5 per cent. Staggering renovations over time allows investors to manage cash flow effectively while capturing ongoing depreciation benefits on eligible capital works, which can reduce taxable income.
From leveraging depreciation on new builds to exploring dual-income assets, rentvesting or co-ownership, investors have a range of options to help them remain competitive in today’s market.
The key is to act strategically, stay informed and structure investments to maximise both income and opportunity.
Source: Australian Property Investor