Pros & cons of investing in property

The case for property

Leverage: a $100K deposit can control a $500K asset. If the asset appreciates 5%, you've made $25K on your $100K: a 25% return on capital. Few other asset classes give retail investors that ratio.

Tax efficiency: interest on the investment loan, depreciation on the building, and most holding costs are deductible against rental income (and other income, if negatively geared). Long-term capital gains have been taxed at half the marginal rate after 12 months of holding. Note that both settings are changing: negative-gearing of losses against other income is limited for established homes bought after 12 May 2026 (new builds excluded), and the 50% CGT discount is set to be replaced by cost-base indexation from 1 July 2027. Confirm the current treatment with your accountant.

Forced savings: a mortgage acts like a high-commitment savings plan, you pay it off whether you feel like saving that month or not.

The case against (the part finfluencers skip)

Illiquidity: you can't sell half a property to fund a medical emergency. Concentration risk: one property is one suburb in one city in one country, all correlated. Holding costs: strata, council, water, insurance, agent fees, R&M, vacancy, typically 1.5-2.5% of property value per year, eating most of the gross rental yield.

Negative gearing only works if your other income is high enough to absorb the loss. Property is a cash drain in years 1-5 of typical investments: calculate whether you can fund that out of salary.

Who actually does well

ATO data on rental properties: roughly 70% of investors own a single investment property and net under $5K profit/loss per year. The wealth-building image of property investing is concentrated in a small minority who scale to 5+ properties over 15-20 years and time the market well.