Best City to Invest in for High Growth! Avoid One City or Risk Everything. [APS103]

It's no secret that house prices across Australia have been climbing steadily in the last few months. More and more people are eager to invest in property, but they're not sure where to start. In this video, we'll break it all down in one go: the current state of the housing market; why prices are on the rise; how each city's market might develop over the next year; and which city makes the most sense for buying for massive capital growth. In the end, I'll share a city where prices are skyrocketing, yet I wouldn't advise our VISION members to buy there. I hope this guides you toward a decision that aligns with your own investment goals.

Supply Side: Tight

To see the big trend clearly, we have to weigh the forces on both supply and demand. Anyone who follows Australia’s housing market knows the Prime Minister’s plan: build 1.2 million dwellings in five years. That’s 240,000 a year. The plan is there—what about reality?

Since 2016, monthly building approvals have topped out at about 23,000, averaging near 18,000. In May, June and July 2025, approvals sat between 15,000 and 17,000 a month. On a yearly basis that’s only around 190,000–200,000 approvals. And approvals aren’t completions—many never get built. Look at 2023–2024: approvals hit a ten-year low, which means completions in 2025–26 won’t be strong either.

After approval comes commencement. Once a project starts, you can roughly guess how many new homes will reach the market in 1–2 years. Housing commencement is a leading indicator. In Q1 2025, total commencements were 46,000—up a touch from the record low in June 2023, but still not “normal” by the past decade’s standards. Even if all four quarters of 2025 matched that pace, we’d see about 185,000 starts—55,000 short of the 240,000 annual target, a 23% gap.

Completions make it clearer. This chart shows rolling annual totals by quarter. Across the four quarters, including Q1 2025, Australia completed only 176,000 residential dwellings. From 2021 to now, not a single year has exceeded 180,000.

You might say, what about public housing? Sure—but it barely moves the needle. Over the past decade, public-housing completions averaged roughly 1,000 per quarter, peaking around 1,400 and dipping to about 650. That’s only 4,000 a year. It doesn’t fix anything. So the gap between the PM’s target and reality is real: each year we’re short by about 50,000 homes.

It’s easy to spot the approvals shortfall, but an overlooked factor matters just as much: not every approved home gets built. Latest data show 34,000 dwellings nationwide are “approved but not commenced,” up 8.3% year on year. What does that tell us? Developers have permits, but construction costs are so high that they won’t break ground. Housing Industry Association figures are shocking: the average build cost has jumped to $480,000—up 52.6% from about $330,000 pre-COVID. The same house now needs an extra $150,000 to deliver.

The real problem is that the materials remain expensive: copper pipes and fittings up 14.4%, electrical cable up 9.5%, even basic clay bricks up 8.3%. The Productivity Commission reports that housing-construction productivity has fallen 53% over 30 years. For the same hours, we now build only half as many homes as in 1995. A bricklayer asks $500–$600 a day—and you still may not get one.

With this cost structure, builders’ margins are squeezed, so they don't want to start building unless prices climb, which is why, against real-world constraints, the goal of 1.2 million homes in five years looks like wishful thinking.

Demand Side: Exploding

Think supply is bad enough? The real crunch is on the demand side. Start with migration: ABS data show that in the first nine months of FY2024–25, net permanent and long-term arrivals reached 366,000 (permanent residents arriving minus leaving, plus arrivals on visas over 12 months minus departures). The full-year is tracking around 340,000–385,000. That’s down from 446,000 in 2023–24, but still well above pre-COVID. What does it mean? In less than a year, roughly 340,000 new residents will need a place to live. 

SQM Research’s July 2025 report puts the national residential vacancy rate at just 1.2%—Sydney 1.0–1.1%, Melbourne about 1.2–1.3%, Brisbane around 1.3–1.4%—all far below the long-run 2.5–3.0%. Looking for a rental? In hot spots, a listing can be gone in under three days; nationwide, it’s only 10–14 days. The outcome is obvious: rents and prices are rising together.

Is that normal? I studied economics and keep a close eye on Australia’s economy, so here’s the classic model: rents and prices usually move in opposite directions. When prices jump, investors enter, supply lifts, rent growth cools. When rents rise, some tenants buy, prices lift, investors add stock, and rents ease.

But there’s an exception—when supply tightens while demand surges, both can climb at once. That’s today. New construction is too slow; in some cases, where a Development Application was approved, five years pass before a single home is finished. Demand is even more intense: government incentives, plus a surge in population. The national vacancy rate is just 1.2%, which means out of every 100 rental homes, barely 1.2 sit empty. At 3% the market is balanced; at 2% rentals are scarce; at 1% you can hardly find anything. Today’s 1.2% is a decade low—no wonder rents are jumping.

Australia has seen price-rent twin surges before. From 2015 to 2017, rising materials and labour costs and longer approval timelines collided with peaks in Chinese and Indian migration, tipping supply and demand out of balance. Sydney’s median prices rose over 10% per year, while rents still grew about 5%. The post-pandemic period is the second example—everyone lived through it. In a balanced market, dual rises are rare; in today’s unbalanced one, they’re likely to stay in the next 12 months.

And it’s not just migration. Multiple rounds of stimulus have juiced the market: the “Help to Buy” shared-equity scheme launched in late 2024 lets first-home buyers put down just 2%, with the government taking 30–40% equity—many jumped in. By mid-2025, the RBA eased gradually—to 4.10% in February, 3.85% in May, and 3.60% in August—while banks discounted mortgages below 3.5%, boosting borrowing power. And an additional 5%-deposit scheme lands on 1 October.

With demand outpacing supply, policy running hot, migration out in front of dwelling growth, and building capacity choked by high costs, heavy regulation and weak productivity, ordinary buyers and renters face fewer choices: rents keep climbing, deposits keep growing. In this cycle, the acceleration has only just begun.

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How Australia’s Cities Are Performing

In August, the national market rose 0.7%. Only Hobart slipped 0.2%. If you look at the trend lines, you’ll see that every city—Hobart included—is either rising or turning up. Sydney is speeding up, Melbourne is easing, mid-sized capitals like Brisbane, Perth and Adelaide are surging, and the smaller cities are also in positive territory. For deeper, city-by-city numbers, check the previous episode.

Digging into the data, the drivers aren’t evenly spread—they’re concentrated in a handful of hot pockets. On Sydney’s North Shore, prices rose 1.2% month-on-month; the Inner West gained 1.3%; while the western suburbs added just 0.4%. Around Melbourne’s CBD, values climbed 0.9%, but the outer suburbs were up only 0.2%. The message: the core’s premium is pushing outward, and the city centre’s “moat” is widening.

There’s also a split by dwelling type: detached houses rose 0.9%, while non-detached lifted 0.3%. ABS data show non-detached new supply has lifted to 31% of additions, yet high-rise apartment completions fell 18% year on year due to offshore labour shortages and delayed materials. In other words, demand for non-detached hasn’t fallen away; tighter supply is setting up more pricing power. That said, I still don’t favour non-detached as an investment. It’s not that they can’t rise—just that, long term, houses tend to outperform.

What the Banks Are Forecasting

Plenty of people ask how long this run can last and when a pullback might start. The major banks and consultancies all have outlooks. For 2025, the big four banks expect Sydney to rise between 3% and 7%. By August, Sydney had already topped 3.3%. I lean toward roughly 6%. For Melbourne, their range is 0%–6%; my estimate is 4.5%. For Perth, most put it at 5%–8%; I’m at 8.5%. For Brisbane, 5%–8%; I’m at 8%. Among the banks, ANZ is the most bullish; NAB the most cautious; KPMG sits medium-to-high. There’s no directional split this time—everyone’s calling gains. Which brings us to the real question: over the next 12 months, if you can only buy one property, which city should it be?

Where to Buy in the Next 12 Months

Brisbane — The Value Gap Is Closing

Brisbane’s performance has been outstanding these past two years—both year-to-date and in August alone, it’s well ahead of the national average. Two forces sit behind it: local Queensland investors returning, and confidence lifted by the major infrastructure. As long as the RBA doesn’t hike sharply, the window to get in is still open—but it’s clearly narrower than in 2024. Many Brisbane houses now sit above $1 million; at that price, you could pick up an entry-level house in Sydney’s growth corridors.

Perth — From Resource City to “Hotspot”

Perth's post-pandemic run has stunned traditional investors: from indifference, to curiosity, to acceptance—and then regret. Regret what? Not buying earlier. While the pre-COVID mining slump weighed on prices, tight labour and scarce supply are now pushing values higher. Our on-the-ground intel shows a rise in “settled land lots, construction not started.” The gap from land settlement to construction start has blown out to roughly six months, signalling supply bottlenecks are back. If you’re entering now and plan to hold long term, it’s a buy. The next 12 months look great; over three to five years, I’m still positive—and longer holds are even safer.

Sydney — Blue-Chip and Steady

Sydney eased in April, then locked into a strong upswing over the following months. CBA says if the RBA trims another 25 bps before year-end, Sydney prices would gain an extra 0.6% in 2025. Right now, buyers are paying about 8.2% above asking to secure listings, which shows there’s still a premium in the market. Sydney is the nation’s most expensive city, and many dismissed it while the mid-sized capitals were roaring. Those who bought near Sydney’s trough are smiling now. But can you still buy it now? In percentage terms, I doubt Sydney outpaces the three mid-sized capitals in the short to medium term—but as the foundation of a property portfolio, I’m comfortable. Historically steady with solid upside, it’s a buy-and-hold city.

Melbourne — Bottoming and Bouncing

Melbourne has drifted sideways. Since February, it has risen every month, but never faster than 0.5%, and August even eased back—unlike other cities that are accelerating. That tells me investors remain split. My take: for investment, look elsewhere first and circle back to Melbourne later. For an owner-occupier, buy now—don’t hesitate. If I had to rank them with budget aside: 1) Brisbane, 2) Perth, 3) Sydney, 4) Melbourne.

Darwin — I Won’t Buy, Even in a Surge

When Darwin’s upcycle became clear early this year, I briefed our team: don’t recommend Darwin. I see it rising and expect it may keep rising for a while, yet we still haven’t advised our VISION members to buy. Not because Darwin properties can’t make money, but because it doesn’t fit. Our philosophy is to find the right property, buy, hold, and not sell. We invest for the long term, not quick flips. Over a 10–20 year hold, I believe Darwin has a high chance of underperforming other cities. If you’re chasing a short-term win, that’s your call. If your goal is quick profit, why buy property at all? If you can’t explain that in three sentences to a 10-year-old, you shouldn’t be buying in Darwin.

Owning a Home: No Longer a Right, but a “Privilege”

It’s a fact: Australian housing is getting expensive. At the current pace, within five years—even with subsidies and lower rates—many ordinary people still won’t be able to buy. For them, owning a home here isn’t a right; it’s a privilege for those who have the money. Is that fair? I’d say no. Is it caused by investors? Partly. Will I keep investing? Absolutely—and I’ll work to help more VISION members reach their wealth goals through property. But for many everyday Australians, the dream of owning will drift further away. Unless you’re outstanding at work or in business, you may have to say goodbye to that dream. The old Aussie Dream—get a job, then buy a home—has become unrealistic. Only those who work hard and build businesses will manage it.

What happens then? New migrants will buy at higher rates, while third-generation-plus locals will buy at lower rates, because a sizable share of long-established locals simply don’t want to push. Their motto: “I’m poor, so I’m right; I’m lazy, so I’m noble. The government must look after me; housing is my right.” The more people who think like this, the less likely Australia is to have a future.

Two kinds of people rarely succeed. First, the timid: when a task appears, they list ten obstacles. This won’t work; that's unsafe. They never see an opportunity and reject it by habit. Doers think differently. They plan, start, then solve any problems — that’s where growth begins. Second, the lazy: no execution. The wealthy people look for projects to do, driven by a sense of urgency. Those lazy people often look down on everything—this job feels beneath them, that one pays too little. To make something happen and make money: 1) have ideas, 2) execute, 3) solve problems. Just thinking without doing is empty talk. Just pick something and start; if you don’t know how, learn.

If you don't have money and still won’t push, you won’t get a shot. Marching with unions, joining protests, venting online—then going back to the same timidity and laziness—won’t change anything. If you want a home, you’ll need to earn it.

Watch the video version of the blog on YouTube.

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