The Australian state attracting savvy investors is not where you think

More property investors are seeking to buy in cheaper capital city markets amid high interest rates and inflationary pressures on holding costs such as insurance, repairs, utilities and strata levies. This is a key finding of Australian Property Investor (API) magazine’s Q1 2024 Sentiment Report, which canvassed the views of more than 600 Australians over the first three weeks of April.

The report also found that just three states are dominating investors’ interest, with 75 percent of survey respondents squarely focused on Queensland, Western Australia and New South Wales, which they say offer the best prospects for capital growth. Queensland is the favoured market, followed by Western Australia, which is soaring in popularity. Interest in Western Australia has doubled with 25 percent of respondents identifying it as the best growth market in 2024.

“Perth is not showing any signs of a slowdown, with population growth, housing supply shortages and high rents driving the capital growth,” said Julie Kelley, Global Sales and Marketing Manager ataussieproperty.com.

“The east coast investor contingent is also hungrily purchasing property at rates we haven’t seen since the mining boom of the 2000s. Buyers recognise Perth is extremely affordable, offers high rental yields, sub-1 percent vacancy rates, has a strong economy, and the fastest housing value growth nationally.”

While Queensland and Western Australia offer relative affordability, investors remain interested in Australia’s most expensive market, New South Wales. It appears Sydney’s ongoing price growth is attracting wealthier investors who have the capacity to pay the highest median house and apartment prices in the country.

Interest rates, access to finance, affordability and rental yields are the four key elements influencing investors’ decisions this year, and likely contributing to the popularity of Queensland and Western Australia. With rents racing higher around the country, there is an opportunity in cheaper markets to purchase properties that are not only rising in value but are positively geared. This means the landlord receives rental income exceeding the costs of holding the property.

Meantime, it seems Victoria has lost its appeal among investors due to weak capital growth over the past year and a perception that government policy is weighted against landlords. Victoria has introduced higher land taxes, enhanced tenants’ rights, and is now considering new minimum energy efficiency standards which may require costly upgrades to insulation and appliances.

Mike Mortlock, Managing Director of MCG Quantity Surveyors, said based on investment loan data, Victoria was likely to lose more than a net 5,000 rental properties (or 1 percent of the state’s rental stock) over the next 12 months as investors sell up and new buyers look elsewhere.

“Landlords are increasingly cautious about entering the Victorian market,” Mr Mortlock said. “It’s not just about those who are leaving. Many potential investors are now avoiding Victoria altogether, seeking opportunities in other states with more favourable conditions.”

Despite high interest rates and inflation making investment holding costs such as insurance, strata levies and repairs higher, more than one in five survey respondents intend to buy an investment property over the next 12 months. This was the most popular investment goal at 22 percent, followed by positioning for retirement at 18 percent, reducing loan debts at 14 percent and benefitting from capital growth and passive income at 8 percent.

High interest rates remain the primary concern of investors. More than half of respondents said a single 25-basis point rate rise would alter their buying and selling intentions.

API says affordability constraints have driven more people to the unit market than ever before. However, 39 percent of survey respondents say they are targeting houses for investments, with 23 percent targeting units and 18 percent seeking to buy a townhouse. Investors are also preferring capital cities to regional areas, even though the regions are outperforming over the year to date.

It appears investors are thinking more strategically over the long term, given their preference for houses in capital cities. Houses typically record higher capital growth than apartments over the long term because of their land value, and capital cities tend to outperform over the long term, too.

More than eight in 10 respondents believe property prices overall will continue to increase. CoreLogic Research Director Tim Lawless says more price rises in most markets are likely due to a lack of stock for sale to meet the strong demand.

“Inventory levels in these markets remain well below average despite vendor activity lifting relative to this time last year,” he said. “Fresh listings are being absorbed rapidly by market demand, keeping stock levels low and upwards pressure on prices.”

For Jack Freeman, a compelling interior should not look as though it was completed in a single shopping trip.

The founder and designer behind FREEMAN & CO prefers rooms that develop through art, travel, commissioned furniture and objects collected over time. It is an approach that treats the home less as a decorative project and more as an evolving portrait of its owner.

“I am a true believer in collecting versus decorating,” Freeman says.

That distinction underpins the international practice he has built across private residences, hotels, property developments, yachts and private aviation. Its projects stretch from Point Piper, Vaucluse, Circular Quay and Toorak to Mayfair, Bel Air and the Caribbean.

Although the locations and architecture vary considerably, the work is connected by a restrained design language. Natural stone, warm timbers and sculptural furniture establish the foundation, while art, bespoke lighting and individual objects give each interior its identity.

The objective is not to overwhelm a room with obvious symbols of expense. It is to create an environment that feels calm, layered and particular to the people living within it.

“The greatest luxury isn’t about excess,” Freeman says. “It’s about creating an oasis where you come home and feel immediately grounded — effortlessly chic and deeply personal.”

Collecting instead of decorating

Decorating can imply the completion of a room: selecting the required furniture, filling the available walls and producing a coherent finished image.

Collecting is less conclusive.

A collected interior has room to change as its owners travel, discover artists, inherit pieces or reassess how they use their home. Its character comes from the relationship between objects rather than adherence to a single brand or season.

That does not mean placing unrelated pieces together without discipline. The designer must understand scale, proportion, material and provenance well enough to create a dialogue between them.

A contemporary artwork might sit beside a historic piece of furniture. A precisely detailed new interior may be interrupted by an irregular object made by hand. Smooth stone can be balanced by timber, textiles or a patinated metal surface that becomes richer with age.

The tension between those elements is part of the appeal.

For Freeman, art is not an accessory to be added once the furniture plan is complete. It forms part of the architecture and atmosphere of the room from the beginning.

Lighting is considered in the same way. Beyond its practical purpose, a bespoke fitting can operate as a suspended sculpture, changing both the room’s composition and the way its materials are experienced after dark.

A design perspective shaped by travel

International travel plays a significant role in Freeman’s creative process.

Design fairs such as PAD Paris and Salone del Mobile in Milan provide opportunities to encounter emerging designers, established galleries, new materials and collectible furniture away from the filter of social media.

More spontaneous discoveries can prove equally important.

“Sometimes it’s the simple things,” Freeman says. “That piece found on a shopping trip with a client in Paris, stumbling across an artisan’s workshop, or a special memory that forms the narrative of the story.”

Objects selected during travel bring more than visual interest into a home. They carry an association with a place, maker or experience, giving the client a connection that cannot be reproduced by ordering an entire interior from a catalogue.

Freeman’s influences are international, but his projects are not conceived as replicas of Parisian, Milanese or Californian style. Each commission responds to its architecture, setting, natural light and the daily lives of its occupants.

A waterfront Sydney residence demands a different treatment from a Mayfair townhouse. A Caribbean estate shaped by brutalist architecture and reflecting pools calls for another response again.

The designer’s role is to absorb those references without allowing them to overwhelm the individual qualities of the property.

Designing the complete experience

FREEMAN & CO extends beyond conventional interior decoration.

The practice’s stated services include interior design and architecture, project management, property acquisition, development advice, concept design, documentation, furniture and lighting design, procurement and art curation.

That breadth allows the team to become involved before a room’s dimensions and finishes are fixed.

Early participation can be important at the top end of the residential market, where architecture, landscape, interiors, technology and art must operate as one environment. Decisions about ceiling heights, wall dimensions, sightlines and lighting can directly affect where art is installed or how custom furniture is proportioned.

The practice can then carry those decisions through to procurement and final installation, maintaining the design narrative as a project moves between architects, builders, specialist craftspeople, dealers and suppliers.

Its residential portfolio includes a South Coast retreat conceived as an escape from urban life, a Caribbean estate with reflecting pools, an East Coast-inspired Palm Beach residence and a Mayfair townhouse organised around an expressive drawing room.

The studio also says it has worked on highly tailored Sydney residences with values exceeding $100 million, although the private nature of such commissions means individual addresses and clients are not always disclosed.

A home that can keep changing

The risk in creating a perfectly resolved interior is that it can become too static — a composition that looks exceptional in photographs but leaves little room for life.

Freeman sees the home as something that should evolve with its owners.

“I love the evolution of design,” he says. “We are talking about people’s lives, and as they evolve, so too should their private sanctuaries.”

That evolution might involve adding art, reupholstering a significant piece, adapting rooms as a family changes or making space for objects gathered through future travels.

The original design needs to be strong enough to accommodate those layers.

This may be the clearest expression of Freeman’s approach to luxury. It is not simply access to rare stone, collectible furniture or commissioned craftsmanship. It is the creation of a personal environment whose meaning deepens rather than diminishes with time.

Fact box

Designer: Jack Freeman

Role: Founder and managing director

Practice: FREEMAN & CO

Base: Australia, with international projects

Project locations named by the practice: Point Piper, Vaucluse, Circular Quay, Toorak, Palm Beach, the NSW South Coast, Mayfair, Bel Air and the Caribbean

Sectors: Private residences, hotels, residential developments, private aviation and superyachts

Services: Interior design and architecture, property development, project management, property acquisition, documentation, furniture and lighting design, FF&E procurement, interior dressing and art curation

Design philosophy: Collected, personal interiors shaped by art, craftsmanship, travel and enduring materials

Website: free-man.co

The Australian state attracting savvy investors is not where you think

Property investors are targeting cheaper markets for capital growth and positive gearing

Jack Freeman believes the most compelling interiors are not decorated, but collected. The FREEMAN & CO founder creates layered, personal spaces shaped by art, travel and craftsmanship.