Real estate in Australia is a lot like a rollercoaster ride. There are ups, downs, plateaus, thrills, spills and relief when you finally land in a place you’re comfortable.

To be a successful property investor, you need to navigate each stage of the ride, make the right decisions at the right times and keep your focus on your long term goal of arriving safely at the end, with enough wealth to live life on your own terms.

Here’s what you need to know to do so.

How Australian real estate works

Australia is made up of many different real estate markets. Conditions and economic drivers will vary wildly from one capital city to another; from regional hubs to mining towns; from coastal holiday hotspots to remote farms; from office blocks to shopping complexes; from houses to apartments; and, the list goes on. There are so many different locations and types of property in this country that it doesn’t help much when people talk about the ‘Australian real estate market’.

It’s much handier to look at specific micro-markets, gain an understanding of niches and then look for opportunities in the areas that suit your personal goals and aspirations.

Dips and peaks

We regularly hear about property values just going up and up. Some say they double in value every 10 years. This is kind of true, but market cycles contain dips, peaks and plateaus. If you time your buying and selling well, you can make a lot of money. If you get it wrong, you can actually lose money.

FOMO dictates that people will often try to buy when the market has already grown to a peak and sell when it is on the way down to a trough. Why? Because they fear that prices will never stop going the way they are going at that moment.

During the Covid boom of 2021, the media was full of stories of people paying 30% or more higher than they should have been on some properties, due to the low interest rates and strong competition. The result was that a lot of those folk went backwards for wealth once interest rates rose sharply and caused a steep market correction.

If you take the opposite action to the masses, you can buy their mistakes at a discount and sell your own gains back to them.

Time and a place

As an investor, you don’t need to live where you buy, so you’ve got an advantage over the owner-occupiers who have to choose what’s available in their area and then compete with others for it. They are also unable to choose their timing, but buy and sell when they need to move house for whatever reason.

Therefore, you can invest in properties in different locations and at a time that suits buyers. Everywhere you buy should be somewhere with an upside for growth and strong rental returns, plus good economic fundamentals.

If you are smart enough to buy in troughs, you can experience the fast equity boost of the following growth cycles.

Positive outlook

Many economists believe we have experienced the worst of rate rises and that certain markets will experience strong growth over the next few years. For example, the most recent NAB Residential Property Index claims that confidence among property professionals is at its highest in two years and that national data showed growth of 8% last year, which took us to a recovery from the rate-rise-induced correction.

That data also suggests growth of 5% or more in 2024 and further growth in the years following. This means there are plenty of opportunities out there for investors to buy assets this year and build some wealth.

In addition, rents are predicted to increase across most of the nation, especially in capital cities, as vacancy rates remain tight. So you can expect growth in returns to go with value appreciation if you make savvy investment choices.