Property is the default first investment for a lot of Australians, and residential property consistently rates as one of the most appealing options for younger investors. The reasons people are drawn to it are real. Some of them are also the reasons people get it wrong.
Here is what pulls people in, and where each of those pulls has a catch.
And could these drivers be drawbacks?It’s Tangible
For most people, residential property is an easy first step when looking to get started with investing. This is because of its tangibility.
We can see houses, touch them, have lived in one, likely rented one and might have seen parents get a mortgage and buy one (or two), so we have a better understanding of the process and the investment. That background knowledge gives us extra confidence and comfort with the asset class.
Intangible assets, such as shares, aren’t as familiar, and investors might be more hesitant to invest if they don’t understand the mechanics of how the share market works.
While property might be favoured due to its tangibility and our comfort with the asset type, it might not be the best investment strategy for the individual and their goals.
When getting started with any investment, it’s essential to start with your goals first and then put together an investment strategy that best achieves these.
It’s Trendy
The Block, House Rules, Fixer Upper… there is no shortage of real estate and renovation television series to binge-watch.
And if you’ve ever watched one of these shows, you’ve likely contemplated your own plans to become a property flipper… buy, renovate, sell, cha-ching!
A positive of property as an investment type is that it does provide investors with a level of control over the performance and outcome of their investment. Investors can add capital value through various strategies such as renovation or development.
However, renovations require a lot of hard work, time, and planning, and it’s important to ensure investors don’t overcapitalise in the process.
While it can be financially rewarding when done correctly, property flipping isn’t a foolproof strategy, and, as with any investment, proper due diligence must still be done.
It always goes up in value (and other misconceptions)
There are a number of misconceptions about the level of risk and return relative to property investments.
Investors can tend to have lower levels of perceived risk with regard to property as an asset class and investment. Again, this likely stems from our familiarity with property.
However, investing in property can be quite high risk:
- It typically consists of purchasing one single asset with a significant value. This doesn’t provide diversification within an investor’s portfolio, meaning all the eggs are in one basket. If the investment doesn’t perform as hoped, this represents a significant portion of the portfolio that hasn’t performed.
- Borrowing money to invest, which is often the case for property investing, is known as gearing. A common rule is that while gearing magnifies gains, it also magnifies losses. Again, if the investment doesn’t perform as hoped, you will still be responsible for any borrowings used to fund the purchase.
- Property is a growth asset, which generally means it’s considered to be a higher risk for higher return, potentially over the long term.
Australian housing has grown strongly over the long run, but that growth is cyclical and averages hide enormous variation. All properties do not perform equally.
For example, 4 bed/2 bath properties in the CBD and a house in a booming mining town will have two very different performance trajectories.
While risk is often a necessary part of wealth accumulation, it’s important that risk is appropriately understood and managed through due diligence and a suitable investment strategy.
The rules changed in 2026, and new investors are the ones affected
This matters more to first-time investors than to anyone else, because the reforms grandfathered people who already owned property.
From 1 July 2027, negative gearing against your salary is limited to eligible new builds. If you buy an established property now, you can negatively gear it until 30 June 2027, after which losses can only be offset against rental income or a capital gain from a rental property. Anyone who already owned property before 12 May 2026 keeps the old treatment.
So the generation being told property is the obvious first investment is buying into a different set of rules than the one that told them. That does not make it a bad investment, but it does mean the numbers need to work without the tax benefit doing the heavy lifting. What changed in 2026.
If you’re unsure how to get started, there are a number of professionals you can engage to assist with the property investment process:
- A mortgage broker can compare lenders on your behalf, work out what you can realistically borrow, and structure the loan so the investment interest stays clearly identifiable at tax time.
- An accountant can assist with any relevant tax planning, including income tax and capital gains tax calculations.
- A financial adviser can assist with planning and putting together a purchase and debt management strategy, including forward planning to ensure your investment loan is affordable both now and into the future.
New to property investing? Start with our guide on how to buy an investment property in Australia.