Weekend Australian

James Kirby

They’re the infrastructure gems most property investors chase to deliver better returns – train stations, schools and shopping centres. But there’s a new and often overlooked piece of infrastructure that is delivering outsized returns in many locations.

Australia’s unprecedented $42bn hospital building boom is generating investment opportunities that are delivering double the national property price growth, yet it’s flying largely under the radar of mainstream buyers.

Terry Ryder, the director of specialist research agency Hotspotting, says the hospital building program is the standout opportunity in the market. “You almost never hear anything about it,” Ryder tells The Australian’s The Money Puzzle podcast. “But we have never seen anything like this hospital building program and it translates into high demand for real estate.

“When you build a billion-dollar hospital, you create a lot of jobs in the construction phase. But when it’s finished, then you have 5000 or 6000 jobs right there – and those people really want to live close to where they work.”

Ryder, who has spent decades researching the Australian residential market, says if investors are seeking “a simple but workable formula for buying in areas that outperform, then I would say look at where they are building these big hospital projects and act accordingly.”

He says hospital catchment areas show strong property price growth and rental returns. “We are seeing it in major cities such as Melbourne, where you have a suburb such as Frankston, where the market is very hot. Then you have hospitals in regional centres where there is even better affordability – I’m thinking of places such as Toowoomba and Bundaberg in Queensland.”

Unlike student accommodation, where rental patterns can be seasonal, hospital catchment zones offer buyer and renter demand 12 months a year – while the around-the-clock nature of hospital shifts means that proximity is crucial. “Major hospital projects are game changers – they take their surrounding markets to another level,” Ryder says.

Ryder’s remarks come on the back of a strong year across the nation, with overall house prices having risen by about 7.8 per cent over the year to date. In contrast, regional centres boasting major hospitals have been twice as strong. In Toowoomba, which has a new $1.3bn hospital project, prices rose 17 per cent over the year.

House prices were strongest in the entry-level segment of the market, which is dominated by first-home buyers. In turn, many homebuyers are now armed with deposit grants from the federal government. The Albanese government’s improved first-home deposit scheme, whereby any first-time buyer can make a home acquisition with a 5 per cent deposit, was made universally available in October. Reaction to the deposit scheme has been immediate, with a strong uplift in entry-level prices and a rush of investors into the action.

With a 70 per cent increase in demand from first-home buyers applying for loans, credit data agency Equifax recently reported soaring mortgage demand, with “inquiry levels reaching highs not seen since the September 2021 record low rate environment.” Many analysts believe the wider market could be challenged in the year ahead if interest rates were to rise. Money markets are already pricing in up to two rate rises early in 2026.

“I really don’t think the momentum we are seeing across the market is going to be greatly affected by a change in interest rates,” Ryder says. He is also sceptical that a reported slowdown in auction activity and price momentum in the major cities in recent weeks will lead to a nationwide slowdown early next year. “I think some local analysts always overrate short-term data too much,” he says.