New data indicates that Australian investors are setting their sights further north

The Sunshine State is beginning to cast a long shadow over Victoria as it snatches an increasingly large share of the investment market from its southern rival, which is traditionally always in second place after NSW.

Queensland now accounts for 23 per cent of all investor loans over the past year, according to new data analysed by Money.com.au, as Victoria only just managed to edge to the fore with 23.3 per cent of investor loans through the same period.

“Queensland is on the verge of dethroning Victoria as the nation’s second-biggest investor market,” said Money.com.au’s research expert Peter Drennan. “There were 48,531 investor loans issued in Queensland, just shy of the 48,812 loans issued in Victoria, and the odds are that these numbers will flip next month and put the Sunshine State ahead.”

The average investor loan in Queensland has also grown by 14 per cent year-on-year to $560,104, while Victoria’s average has grown by just 5.3 per cent over the same period to $563,632.

A major reason investors are starting to shy away from Victoria is the more oppressive tax landscape, believes Christine Williams of Smarter Property Investing.

“The government there has increased land tax and started to increase probate tax so it’s the highest tax regime in Australia now,” she says. “As a result, people are starting to look elsewhere. And during COVID, we saw a large exodus out of Victoria into Queensland, especially with people able to work remotely.”

That surge in population, while slowing now, has re-energised many local economies in Queensland and provided good returns for investors, with rental yields rising as high as 10 per cent – or more – in areas like Bundaberg and Gladstone.

Paul Arthur of Queensland Sotheby says he’s still seeing a strong appetite for investing in the state, and as a result, a number of investors are planning to move there to live one day.

“It just has so much to offer with an unrivalled lifestyle, the sun, beaches and very relaxed living,” he says. “The Gold Coast is now the second highest-priced city for real estate in Australia.

“But the state still represents good value for money relative to the southern capitals, with areas like the Sunshine Coast, the Whitsundays and Airlie Beach exploding. It’s showing no sign of slowing down, either.”

As well as the interstate migration, there’s also been massive infrastructure development, particularly in Brisbane with the Cross River Rail and preparations for the 2032 Olympics.

Along with that has come a rise in employment opportunities, as well as new housing developments both in the city and in many regional towns.

However, whether Queensland will manage to continue the growth momentum to overtake Victoria and fulfil its potential as “the new promised land” – so dubbed by Money.com.au – is yet to be seen. Williams doubts it.

“Victoria is now at the bottom of its property cycle so it will see strong capital growth and investors chase capital growth,” she says. “We’re now starting to see attention shift back to Victoria.”