Dispelling 20 common myths about property investment in Australia

While many Australians are keen to invest in property to secure their financial future, the statistics clearly show that most investors fail to achieve their goals.

More than half of those who buy an investment property sell up in the first 5 years and only around 20,000 investors have joined the 1% club who own 6 or more properties.

Maybe that’s because the market is rife with myths and misconceptions that mislead not only beginning but also many seasoned investors.

So let’s unpack some of these myths and get a clearer picture of what property investment really entails.

Myth 1: Property investment is simple

Reality: While property investment is simple, it’s not easy and that’s not a play on words.

Many people start investing in property thinking it's straightforward, but the high attrition rates within the first five years, and the fact that 92% of investors never get past their first or second property, reveals the true picture.

Myth 2: You make money when you buy your property

Reality: That’s partially true, but not because you buy your property cheaply which is how most investors interpret this myth.

Buying a “bargain” is a one-off bonus.

On the other hand, the key to making money in the long term is purchasing an investment-grade property in a top location that will outperform the market in the long term with robust capital growth.

Myth 3: Properties increase in value every year

Reality: While over the long term, properties have historically risen in value, in some years might certain locations see flat growth or even a decrease in property values.

And different states and even suburbs can have vastly different property cycles.

That’s why it's essential for investors to understand how the property cycle works and have financial buffers in place to buy themselves time (to ride out the cycle), not just a property.

Myth 4: Property values double every 7-10 years

Reality: This generalization may look good on paper, but it's far from universally true.

While some properties might double in value within this timeframe, this is an average figure based on ABS stats over the last 45 years.

However, many properties, in fact over half, don’t grow in value so fast – I guess that’s how averages work.

I know that regional properties have outperformed recently, but over the long term, they have not grown as strongly as most capital city properties.

This leads to the next myth…

Myth 5: All properties make a good investment

Reality: This is a big one. Many people enter the property market with the assumption that any property can become a golden goose, churning out financial rewards.

That's far from the truth.

There are 11.4 million dwellings in Australia with a total value of over $12.8 trillion, and yes, any of these can become an investment – just kick the landlord out and put a tenant in, and you’ve got an investment – but that doesn’t make it "investment grade."

An investment-grade property is one that's likely to outperform averages in terms of capital growth because of its location, intrinsic value, or scarcity.

These are properties that are in high demand but low supply, appeal to a wide range of affluent owner-occupiers, are in the right location, and are close to lifestyle amenities such as water, cafes, shops, restaurants, and parks.

This type of property also appeals to a wide range of tenants and is resilient during market downturns.

On the flip side, a non-investment-grade property – what some would call “investment stock” might have the opposite characteristics: located in an area with fewer growth drivers, less demand, or oversupply issues.

Many apartments in those Lego land high-rise towers fall into this category.

Investing in such properties can lead to stagnant capital growth and higher risks.

So, it's not just about owning a property; it's about owning the right property.

Don't just grab a property because it's within your budget; make sure it has the features and location that will make it a solid long-term investment.

Myth 6: Property investment is fun

Reality: The idea that property investment is an exciting venture can often lead to emotional decision-making.

In reality, property investment should be boring so that it can make your life exciting.

Your investment decisions should be evidence-based, numbers-driven and focused on the long-term gains.

Emotion has little place in a successful investment strategy.

Myth 7: Invest in your comfort zone

Reality: Emotional familiarity can lead to poor investment decisions.

Just because you live, holiday, or plan to retire in a particular area doesn't mean it's a good place to invest.

Myth 8: Property investment is a get-rich-quick scheme

Reality: Building a robust portfolio takes time and discipline.

It's usually a journey of 25-30 years to reach financial independence through property investment. It's a marathon, not a sprint.

Often the first 5- 10 years are when investors make mistakes and learn what not to do until they find a strategy that suits their goals, budget and risk profile.

The next stage is the asset-building phase of their investment journey, and this takes at least two full property cycles.

In this stage, you borrow and gear to build a large asset base of income-producing properties, and then eventually you slowly lower your Loan to Value Ratio so you can live off the Cash Flow from your property portfolio.

Myth 9: There's one "Australian" property market

Reality: While the media frequently talks about “the Australian property market”, each state has its own cycle, and even within states, there are sub-markets based on property types, locations, and price points.

It's a mosaic, not a monolith.

Myth 10: All properties increase in value over time

Reality: Unfortunately, some properties can stagnate or even depreciate in value.

Markets in regional Australia or mining towns can be highly volatile and more risky for long-term investment.

And even some capital city locations have stagnant growth for long periods of time.

Myth 11: Negative gearing is a surefire way to profit

Reality: When it comes to property investment, you'll often hear two conflicting philosophies advocated.

Some suggest you should invest in property to achieve positive cash flow, that's when rental returns are higher than your mortgage repayments and expenses, leaving money in your pocket each month.

Others suggest you should invest for capital growth, looking for an increase in the value of your property.

This second strategy usually leads to negative cash flow, or negative gearing, in the early years because properties with higher capital growth usually come with lower rental returns.

But there is a third element to investment that many commentators forget to mention, and that is risk.

Considering cash flow, capital growth, and risk when investing in residential property, you can typically only have two out of the three.

If you want a property investment that is low risk and has high cash flow, you'll have to forgo high capital growth.

If you are looking for a low risk investment with strong capital growth, which remains my preferred strategy, you'll usually have to forgo high rental returns.

Now the 2026 federal budget has added a new layer to this myth, and it's one every investor needs to understand properly rather than react to emotionally.

From 1 July 2027, negative gearing will no longer be available on established residential properties purchased after 7.30pm on budget night, 12 May 2026.

If you already owned a property before that moment, or had exchanged contracts and were waiting on settlement, you're grandfathered under the old rules for as long as you hold that property.

If you buy an established property between budget night and 30 June 2027, you can still negatively gear it during that window, but the ability to offset losses against your salary disappears once the new rules kick in.

New builds are treated differently and remain exempt, so investors buying newly constructed dwellings can continue to negatively gear and access capital gains tax concessions as before.

I've seen plenty of commentary suggesting this change will crush the property investment industry, and I think that reaction misses the point I've been making for years.

My preferred strategy has always been to buy investment grade properties that grow in value and bring in increasing rent over time, because those two factors together are what let me buy more properties.

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Whether the resulting cash flow position is negative, neutral or positive has always been a consequence of that growth strategy, not the goal of it.

So while this budget change will genuinely affect the numbers for investors buying established property after the cutoff date, and I'd encourage anyone in that position to run the figures properly with their accountant, it doesn't change the underlying logic of why you invest in the first place.

If anything, it sharpens the case for buying investment grade properties in undersupplied, high demand locations, because the tax settings are now nudging capital toward new supply while the fundamentals that drive long term growth in established, well located property haven't gone anywhere.

The lesson from this myth remains exactly what it's always been. Don't invest for the tax treatment, invest for the asset, and let the finance strategy follow from there.

Myth 12: Cash flow is King

Reality: It is important to understand that property investment is a game of finance with some houses thrown in the middle, which means cash flow is critical to keeping the property investment game, but it's really capital growth that will get you out of the rat race.

Residential real estate is really a high-growth, relatively low-yield investment, so your aim as an investor should be to build a substantial asset base over time and this will eventually become your cash machine.

But things must be done in the right order – capital growth first, then you can “buy” cash flow once you have a substantial asset base.

Many investors are looking for cash flow because they're thinking about the here and now, rather than the long term.

They are buying properties that may solve a short-term problem but won't give them the long-term financial freedom they're hoping for.

The whole point of any investment is to see an increase in the asset value, but in order to hold your assets long-term, you will obviously need to service your debt, which strong rental yields and good cash flow can help you achieve.

This pack of free suburb reports can help you target high cash flow and growth suburbs and can get your next property search off to the perfect start.

Myth 13: You should follow the crowd

Reality: When you get caught up in the hype and follow the crowd, parking your hard-earned dollars where others are investing, you are often playing a risky game

In fact, FOMO (Fear Of Missing Out) can be a dangerous motivator in investment.

Just because another investor – or a crowd of investors – is flocking to a particular suburb, town or development, that doesn’t necessarily mean it’s safe or suitable for you to invest there, too.

You can’t assume that just because plenty of people are doing it, the research and due diligence has been done.

Due diligence and personal financial goals should dictate your property investment strategy.

Myth 14: You should invest for tax deductions

Reality: Investing solely for tax benefits is a misguided strategy.

Tax deductions like depreciation or negative gearing can be attractive, but they shouldn't be the primary reason for your investment.

In essence, they are side benefits that come along with a solid investment, not the end goal.

An investment should stand on its own merits, providing strong capital growth and rental yields over time.

Tax benefits are the icing on the cake, not the cake itself.

Investing for tax reasons could lead you to make sub-optimal choices that don't align with your long-term financial objectives.

Sure, you might get a tax break today, but if the property doesn’t appreciate well, you could find yourself lagging behind in the long term.

The real wealth comes from long-term capital growth and not short-term tax advantages.

Don't just grab a property because it's within your budget; make sure it has the features and location that will make it a solid long-term investment.

Understanding the difference between investment-grade properties and the rest is a cornerstone of successful property investing.

Myth 15: Debt is bad

Reality: There has never been as much information about how to become financially fluent as there is today, however, there is just as much financial misinformation isn't there?

Like debt is bad!

Bad debt is bad, but using productive debt that allows you to buy income-producing properties that increase in value is the strategy smart investors use.

They recognise that debt is not a problem, not being able to repay it is.

The poor are scared of debt because they're not financially fluent and aren’t money savvy- but the rich know how to use debt wisely - it's been that way for hundreds of years.

Myth 16: Real estate agents are on your side

Reality: Agents primarily represent the seller's interests, not yours.

While they can provide valuable information, remember that their primary goal is to secure the highest possible price for the seller.

However, you can level the playing field and in fact, tip the scales in your favour by engaging a buyer's agent to represent you.

Myth 17: New and off-the-plan properties make good investments

Reality: The allure of shiny new apartments or homes can be incredibly tempting. They come with the latest features, modern designs, and often, some tax depreciation benefits. However, these factors alone don't necessarily make them good investments.

First, with new and off-the-plan properties, you're often paying a premium for the privilege of being the first owner.

That premium doesn't necessarily translate into immediate capital growth. In fact, these properties often depreciate in value faster than older, established properties.

Second, the risk of oversupply is a big concern, especially in high-density areas where multiple new developments might be going up simultaneously.

This can lead to rental competition, potentially pushing your yields lower.

Third, the actual value of the property once completed may not meet the sales pitch or the glossy brochures, affecting your loan-to-value ratio and thus requiring you to chip in more money than initially planned.

Finally, there's the "what you see isn't necessarily what you get" factor.

Until the property is built, you're mainly investing in a concept, which might look vastly different from the final product.

Myth 18: Older properties are always a money pit

Reality: While older properties may require more maintenance, they often come with distinct advantages like larger land size, established neighbourhoods, and unique architectural features.

With the right updates and proper care, an older property can offer excellent investment potential.

Myth 19: Always go for the lowest interest rate

Reality: Property investment is a game of finance with some houses thrown in the middle.

All strategic investors protect their portfolios by having a rainy-day financial buffer in place to see them through the ups and downs of the property cycle.

Sure a lower interest rate can save you money in the short term, but it's essential to consider other factors like loan features and flexibility.

Myth 20: I’m too old - it’s too late for me to invest

Reality: Sure it’s tougher to reap the rewards of property growth if you’re older, but it’s never too late.

Even in your 60s, there’s still the opportunity to amplify your retirement funds – and don’t forget the legacy you’re building for your own children and grandchildren.

Nowadays, the option to utilise a self-managed super fund also means you’ve got extra leverage to purchase a property that can potentially generate more weekly cash flow than your superannuation fund, particularly if you don’t have the finances to carry you through all of your twilight years.

Never assume you’re out of the game because of age or finances.

Cut through the noise and focus on what really works

As you can see, many of the common beliefs about property investing simply don’t hold up once you examine the facts.

Unfortunately, misinformation spreads easily. Media headlines often focus on short-term market movements, social media amplifies extreme opinions, and many commentators speak with great confidence despite having little real investing experience.

The result is that many potential investors become confused, cautious, and sometimes paralysed by all the conflicting advice.

Yet when you look at those who have successfully built significant wealth through property, you’ll notice something interesting.

They don’t rely on headlines or myths. Instead, they surround themselves with experienced advisors, continually educate themselves, and spend time with other investors who are serious about long-term wealth creation.

Because in the end, successful investing is not about chasing tips or shortcuts.

It’s about developing the right strategy, thinking long term, and learning from people who have already walked the path.

If you'd like to understand the right strategy for you at your stage in your property journey, why not have a wealth discovery chat with one of Metropole's wealth strategists? Just click here to lock in a time.