Insights · Investment Strategy · September 2026
Is Now a Good Time to Invest in Property?
Why Australia needs property investors, and why yield, not price, is what counts
Rates are up again, the Budget has changed the rules and prices have eased in parts of the market. Here’s how we think about it.
It’s the question on most investors’ and buyers’ minds, especially after the Reserve Bank lifted the cash rate again on 29 September, to 4.60%, its fourth rise this year: is now a good time to invest?
To answer it, start with the bigger picture. Australia needs more homes. It also needs more rental homes. And while governments, community housing providers and institutional investors all have a role to play, one group remains fundamental to the rental market: private property investors.
Yet policy increasingly treats residential investors as part of the problem rather than part of the solution, at a time when the country is still short of rental accommodation.
The National Housing Supply and Affordability Council’s State of the Housing System 2026 reports a national median advertised rent of $650 a week in March 2026, up 5.7% over the year and up from $420 in March 2020. Vacancy rates remain below their long-term average across most of the country.
In Melbourne, Domain’s June 2026 Rental Report puts median asking rents for both houses and units at a record $600 a week.
If Australia needs more rental housing, why would we want fewer people investing in it?
But there’s a second, equally important point. Investors shouldn’t buy simply because prices have fallen, and they shouldn’t chase tax benefits. The real question is whether a property delivers the right combination of rental return, scarcity, demand and long-term capital growth.
In this article
- Investors are part of the rental solution
- The rental crisis is a supply problem
- Ask a different question
- Yield matters more than the price tag
- Rents have changed the equation
- What about the 2026 Budget?
- Don’t buy a bad property just because it’s new
- The ten fundamentals
- So, is now a good time to invest?
- Investors need to be selective
Property Investors Are Part of the Rental Solution
Most of Australia’s rental housing isn’t owned by governments or large institutions. It’s owned by ordinary Australians. The ATO’s latest taxation statistics show around 2.34 million individuals with rental property, and about 1.67 million of them own just one.
They use their savings, borrowing capacity and equity to buy properties and make them available to tenants. And they carry the costs and the risks:
- Interest
- Council rates
- Insurance
- Repairs and maintenance
- Property management
- Land tax where applicable
- Compliance costs
- Vacancy
- Unexpected capital expenditure
- The risk the property underperforms
That matters, because when an investor decides the risk and return no longer stack up, they have another option: they can put their money somewhere else.
The Rental Crisis Is Primarily a Supply Problem
This is where the discussion about investors often gets confused. Housing affordability, rental affordability and housing supply are related, but they aren’t the same thing.
The Council expects around 980,000 new homes over the Housing Accord period, short of the 1.2 million target, and says the share of income needed to pay rent on a new lease has hit an all-time high of 33%. When demand for rental accommodation grows faster than supply, rents rise. That’s basic economics.
We look at this in more detail in Australia’s Rental Crisis Is Getting Worse, and Housing Policy Risks Making It Worse.
You can’t solve a shortage of rental properties by making it less attractive to own rental properties. At some point, someone has to provide the dwelling.
“Have Prices Fallen?” Is the Wrong Question
This is where I believe the conversation needs to change. The question shouldn’t simply be:
Not
- “Have property prices fallen?”
But
- “Is this property worth investing in?”
Those are two completely different questions. A property can be $100,000 cheaper than it was and still be a poor investment. Another can hold its value while becoming more attractive, because rents have risen, supply has tightened and the fundamentals have strengthened.
Melbourne shows why. Cotality’s Home Value Index has the wider Melbourne market down 4.7% over the year to August 2026, while rents rose around 5%. But that average hides very different results underneath it. REIV’s June quarter data shows 14 of Victoria’s top 20 growth suburbs over the year were in outer Melbourne, led by Kurunjang in Melton at 14.9%, with 18 suburbs in Melton and nine in Hume recording strong annual growth. Regional Victorian house prices rose 8.3%.
So the headline says Melbourne fell. What actually happened is that some locations kept growing, and a well-chosen investment property across much of the city now earns more rent relative to its value.
Price falls aren’t even. Older apartments in oversupplied locations are an obvious example of a segment that can behave very differently from scarce, well-located property. In our experience, property that is genuinely worthy of your investment dollars hasn’t corrected anywhere near as much as the averages suggest.
Property isn’t one homogenous asset class. A generic apartment in a high-density precinct with substantial competing supply is very different from a well-located property with scarce land, strong owner-occupier demand and limited competing stock. One can fall significantly in value. The other may stay relatively resilient.
So the objective shouldn’t be “wait until prices fall”. It should be “find property that represents value relative to its income, scarcity, demand and long-term fundamentals.”
Estate photo: Philip Mallis, CC BY-SA 2.0, cropped and converted to black and white.
Rental Yield Matters More Than the Price Tag
Imagine two properties. Which is the better investment?
| Property A | Property B | |
|---|---|---|
| Purchase price | $600,000 | $700,000 |
| Weekly rent | $400 | $550 |
| Annual gross rent | $20,800 | $28,600 |
| Gross yield | 3.5% | 4.1% |
You can’t answer the question by saying “the $600,000 property is cheaper”. The more expensive property earns substantially more rent relative to its price. And that’s before considering land value, vacancy, maintenance, depreciation, financing, future supply, owner-occupier demand and potential capital growth.
The purchase price is only one part of the investment equation.
Rents Have Changed the Equation
One of the biggest changes investors have seen in recent years is rental growth. Nationally, Cotality says rents are up 5.7% over the past twelve months, about $38 a week more on the median rent, and the national vacancy rate is still just 1.9%.
Rental growth has moderated from the extraordinary increases of a few years ago, and Melbourne’s has slowed more than most. But rents remain far higher than they were, and an investor’s return isn’t determined by the purchase price alone. It’s determined by the relationship between:
If the price holds steady or eases while the rent rises, the gross yield improves. That’s exactly what has been happening in Melbourne.
What Hotspotting is watching
Terry Ryder’s Hotspotting looks for depth of demand, consistent sales activity and tight rental markets rather than price headlines, and expects Melbourne and parts of regional Victoria to feature more prominently in the next phase of growth.
What About the 2026 Budget?
The 2026 Budget made significant changes to how residential property investment is taxed, and the ATO confirms they are now law:
- Negative gearing: from 1 July 2027, limited to newly built residential property. Properties held at 7:30pm AEST on 12 May 2026 are grandfathered.
- Capital gains tax: for gains accruing after 1 July 2027, the 50% discount is replaced by cost-base indexation and a 30% minimum tax rate. New builds keep access to negative gearing and a choice between the discount and indexation.
The policy is designed to push investor capital towards new construction, and there’s a logical argument for encouraging more supply. As Property Update argues, though, making rental investment less attractive overall risks making the rental shortage worse.
A tax incentive should never be the reason you buy a property. A property doesn’t become investment-grade because it qualifies for a tax concession, and it doesn’t become a poor investment because it doesn’t. Always get advice from your accountant on how the changes apply to you.
Don’t Buy a Bad Property Just Because It’s New
At properT network, we help you identify investment-grade new builds and off-the-plan opportunities.
Our focus is on new property rather than established, and that hasn’t changed. In our experience, a well-chosen new property tends to outperform the older property next door over a ten-year hold: it attracts better tenants, costs less to maintain, offers stronger depreciation benefits and, under the 2026 Budget changes, keeps access to negative gearing.
But “new” on its own isn’t an investment strategy. Every property, new or old, comes with risks and margins built in. The difference is knowing which ones to avoid and which ones make investment sense.
Anyone can buy a property. As an investor, do you know how to identify one worthy of your investment dollars? We do.
That’s where we come in. We assess each new build and off-the-plan opportunity against the fundamentals below, and we’re just as clear about the ones we’d walk away from. Read more in The New Property Premium, our off-the-plan market insights and what the 2027 negative gearing changes mean for cash flow.
The Ten Fundamentals We Assess
At properT network, we believe the conversation needs to move from “How much can I afford?” to “What should I buy with the money I have available?” That means assessing:
01 Rental demand
Is there a genuine shortage of suitable rental accommodation?
02 Rental yield
Does the rent give an appropriate return on the capital invested?
03 Population growth
Are more people expected to live in the area?
04 Employment
Where will those people work?
05 Infrastructure
Is infrastructure keeping up with the growth?
06 Supply
How much competing property is being built?
07 Scarcity
What makes this property hard to replicate?
08 Owner-occupiers
Who will want to buy it when you sell?
09 Land value
How much of your money is in the land, not just the building?
10 Long-term growth
Do the economics and demographics support long-term demand?
It’s not about buying the cheapest property
Cheap doesn’t necessarily mean good value. A $500,000 property can be expensive if it has poor rental demand, weak growth prospects and significant competing supply. A $700,000 property can be better value if it has stronger rental demand, better land fundamentals, more scarcity and deeper owner-occupier demand.
What return am I getting for the capital I’m committing, and what are the prospects for this asset over the next 10 to 20 years?
So, Is Now a Good Time to Invest?
There’s no universal answer, and the latest rate rise makes it a fair question. Higher rates increase holding costs and reduce borrowing capacity, and the Reserve Bank has said it is prepared to raise rates further if needed. Any purchase now should be stress-tested against higher repayments, with a cash buffer for vacancies and repairs.
But waiting for the “perfect” market can be just as costly as buying at the wrong time. Interest rates, tax settings, prices, rents and economic conditions will always change. What doesn’t change is the principle: buy the right asset at a sensible price, and hold it long enough for the investment thesis to play out.
For an investor with available equity, savings, a stable income, borrowing capacity and a long-term horizon, the current environment may offer opportunities worth investigating. Not because property is guaranteed to rise, not because prices can’t fall further, and certainly not because of a tax concession, but because:
- Rental returns have strengthened in many markets
- Housing supply remains constrained
- Softer conditions in parts of the market can mean less competition and more room to negotiate
- The right investment-grade property can still deliver income and long-term growth potential
If you have equity in your home, it may be working harder for you than you realise. Read more about the power of leverage, and the risks that come with it.
Australia Needs Investors, but Investors Need to Be Selective
The answer to Australia’s rental shortage isn’t to demonise property investors. Nor is it to encourage them to buy anything simply because it’s new. Australia needs more housing, it needs more rental housing, and private investors remain an essential source of it.
But investors also need to protect their own capital. That means moving away from the obsession with “Has the price dropped?” and asking instead:
- What am I actually buying?
- What will it rent for?
- How much competing supply is coming?
- Who will want to buy it from me in 10 or 15 years?
- What makes this property investment-grade?
The price you pay matters. The return you generate from the asset matters more.
We start with strategy, not property
Property investment shouldn’t start with a house. It should start with you: your objectives, budget, borrowing capacity, existing portfolio, risk profile and long-term strategy. Then we identify the locations and properties that may fit.
The right way
- Investor → Strategy → Location → Property
Not
- Property → Suburb → Hope
- Australia’s Rental Crisis Is Getting Worse: why housing policy risks making it worse
- Strategy Before Property: why the order matters
- The Power of Leverage: using equity to invest
- Positive Income Property: when cash flow is the priority
- High-Yield Property: co-living and dual-key options
- Melbourne and Victorian Locations: our location research
Is it worthy of your investment dollars?
Put Your Equity and Savings to Work, the Right Way
If you have equity in your home, savings to invest, or a portfolio you’re not sure is working as hard as it could, now may be the right time to review your strategy. We educate. You decide.
- National Housing Supply and Affordability Council, State of the Housing System 2026
- Domain, Rental Report, June 2026
- Cotality, Home Value Index, September 2026 and Monthly Housing Chart Pack
- Australian Taxation Office, Taxation statistics 2023–24 and negative gearing and CGT reforms
- Property Update, Australia needs property investors, so why is the Budget making rental investment less attractive?
- Reserve Bank of Australia, Monetary Policy Decision, 29 September 2026
- REIV, Median price data highlights Victoria’s long-term property market resilience
- API Magazine, The 2026 property hotspots investors should be targeting nationally (Hotspotting)
General information only. properT network does not provide personal financial, legal, tax or lending advice. The yield example is illustrative only. Figures from third-party research relate to the periods stated and may change. Tax outcomes depend on your circumstances: speak to your accountant. Property investment carries risk, including the risk of loss. Do your own due diligence and seek independent professional advice before making any investment decision.
Hero photo: Terrace houses, East Melbourne by Rexness, CC BY-SA 2.0, cropped and converted to black and white.
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