How to invest in property when nobody knows what happens next

The Australian property market feels uncomfortable at the moment.

Values are falling, buyers are hesitating, and another interest rate rise remains possible.

If you’re waiting for someone to tell you precisely when the market will turn, you may be waiting for an answer nobody can give you.

Fortunately, successful property investing has never depended on getting that date right.

The uncertainty is real

Cotality reports property values have fallen for a number of months in a row, and the softness has now broadened, with 93% of capital city suburbs recording a fall in value through winter.

Buyer and seller confidence is currently low, much of it traced back to the Reserve Bank, which started lifting interest rates earlier this year.

Add in the budget changes to negative gearing and capital gains tax, and it's understandable that buyers have become more cautious and many investors have pressed pause.

Yet I think this is a useful time to examine how you make decisions, because uncertainty tends to expose weaknesses in a strategy that rising prices can hide.

Learn from history, but be careful with forecasts

Back in April 2020, when the world had shut down and nobody knew how the Covid pandemic would play out, American writer Morgan Housel published a short piece called "When You Have No Idea What Happens Next."

I've gone back to it several times since, because I think it's one of the most useful things anyone has written about investing through uncertainty, and it applies beautifully to where we find ourselves today.

Housel started with a simple observation from Nobel Prize-winning psychologist Daniel Kahneman: "The correct lesson to learn from surprises is that the world is surprising."

His point was that most of what people believed about the future in January 2020 had been proven wrong by April, so there was no reason to feel any more confident about the views they held in April.

Our own property market gave us a perfect illustration of this.

Back in the days of Covid, in May 2020, the Commonwealth Bank released scenarios suggesting house prices could fall 11% in its base case and as much as 32% in a prolonged downturn, while NAB and Westpac modelled falls of up to 30% and 20% respectively.

These were sensible forecasts made by clever people with plenty of data, yet what actually happened was that interest rates were slashed to record lows and national home values rose by more than 20% in 2021.

I'm not pointing this out to poke fun at the banks' economists, because nobody could have forecast that outcome with any confidence.

I'm pointing it out because the same humility should apply to every confident forecast you're reading today about where prices will be in 12 months' time, whether it's gloomy or rosy.

Housel suggested two ways of thinking that help when the future is this uncertain, and I'd like to show you how they translate to property investment in 2026.

Read more history and fewer forecasts

Housel argued that once you accept how fragile our assumptions about the future are, you realise forecasts are the flimsy part of investment research and history is where the real substance lies.

I couldn't agree more, and that's why I've always leaned on process rather than prediction.

Consider what Australian property investors have lived through over the last few decades.

There were mortgage rates of around 17% in 1989, the "recession we had to have" in the early 1990s, the Asian financial crisis, the GFC, the APRA lending crackdown that pushed down Sydney and Melbourne values in 2017 to 2019, the pandemic, and then thirteen rate rises between May 2022 and November 2023.

Each one of those events was accompanied by confident predictions that property would never recover, and each time well-located, quality properties went on to reach new highs.

After the rapid rate rises of 2022, for example, values fell sharply for most of that year, yet by the end of 2023 national values were back at record levels while the RBA was still lifting rates.

History won't tell you exactly what will happen over the next year, but it does show you how people tend to behave when conditions change, and that's the next best thing.

Being an observer of the housing market for over five decades, I have noticed that progress happens too slowly for people to notice while setbacks happen too quickly to ignore.

What I'm getting at is that falls always make headlines, while the recovery tends to creep up quietly. As a result, most people only realise the market has turned once prices are already rising again and the best buying opportunities have passed.

Hold expectations rather than forecasts

The second idea from Housel's article is the difference between a forecast and an expectation, and I think it's one of the most practical tools any investor can have.

Saying "property prices will start rising again in the second half of next year" is a forecast, because it claims to know when something will happen.

Saying "our property markets move in cycles, and a downturn is usually followed by a recovery" is an expectation, because it acknowledges what's likely to happen without pretending to know the timing.

Expectations are healthier because they strip away false precision.

When you expect that interest rates will rise and fall over time, that governments will change the tax rules every so often, that the media will predict a property crash every couple of years, and that a genuine downturn will come along roughly once or twice a decade, none of those events will shock you when they arrive.

On the other hand, investors who believe they know exactly when rates will fall or when the market will bottom tend to take on too much risk, and they're caught out when events don't unfold on their timetable.

I've watched this happen in every cycle, where someone stretches their borrowing because they're sure rates are about to come down, and then they're forced to sell at the worst possible time when that doesn't happen.

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• Also read:This week’s Australian Property Market Update – Latest Data, State by State September 29th 2026

Prepare for a world that breaks every now and then

Housel suggested a useful assumption, which is that the world will break once or twice a decade in a way nobody sees coming.

You can't know where, when or how it will happen, but if you expect it, you prepare for events you can't foresee and you don't need to rip up your plan each time one arrives.

For property investors, this is where cash flow comes in.

As I've said for years, capital growth is what builds your wealth, but cash flow is what keeps you in the game long enough for that growth to do its work.

In practical terms, I'd like to see investors holding a solid cash buffer in an offset account to cover their loan repayments and holding costs if something went wrong.

In my experience, the investors who come through downturns in good shape are the ones who built enough room for error that they were never forced to sell.

If you can hold good assets through the tough patches, time and compounding do most of the heavy lifting for you.

Why uncertain times are good times for prepared investors

Now for the positive side, and there's plenty of it.

Some of the best property decisions I've made were during periods when the headlines were gloomy, and most people were waiting on the sidelines.

When listings are well above average and properties are taking longer to sell, buyers get more choice, more time to do their due diligence, and more room to negotiate on price and terms.

Vendors who need to sell become more realistic, and you're no longer competing against a crowd of emotional buyers at every auction.

Meanwhile, the fundamentals that underpin our major capital city markets haven't gone anywhere, with population growth continuing, a chronic shortfall in new housing supply, and a labour market that has remained remarkably resilient.

Melbourne is a good example of what I mean, with values still below the peak reached in March 2022, which is why I see a window of opportunity there that won't stay open forever.

Of course, none of this means you should rush out and buy the first property you come across.

If you're financially prepared and you have a clear strategy, a softer market like this one can work very much in your favour.

The investor matters more than the investment

In my experience, the biggest cause of failure in property investment is poor decision-making at the wrong times, far more often than a poor choice of property.

They panic when the news is bad, they get greedy when everyone's excited, and they let the latest headline, tax change or forecast override a sound long-term plan.

The 2026 budget changes are a good example, because I've already spoken with investors who want to make big decisions based purely on tax, even though the changes to negative gearing for established properties don't begin until July 2027 and existing arrangements are grandfathered.

Tax benefits can support a good investment, but they'll never rescue a poor one, so location, quality and your long-term plan should still drive every decision you make.

The same goes for interest rates.

Whether the RBA lifts rates again or not, the investors who come out ahead over the next decade will be those who stayed disciplined and patient through the noise.

What I'd be doing right now

If I were sitting across the table from you today, I'd suggest starting with your finances rather than the market.

Check your buffers, stress-test your loans against higher rates, and make sure your structure and cash flow can handle another rate rise or two without keeping you awake at night.

Then take an honest look at your portfolio, because this is a good time to identify any underperforming assets that may be holding you back, and to work out whether they have a place in your long-term plan.

If you're in a strong financial position, use this period to do your homework on the locations and property types that have proven themselves over decades, so you're ready to act when the right opportunity comes along.

And above all, make sure you have a written strategic plan that tells you what to buy, when, how to fund it and how it fits your long-term goals, because a good plan is what allows you to act calmly when everyone around you is guessing.

Final thoughts

Nobody knows exactly what our property markets will do over the next 12 months, and anyone who tells you otherwise is guessing.

What history does tell us is that Australian property has been a remarkable wealth-building machine over the long term, even though the journey has been interrupted by regular downturns that felt permanent at the time.

The world is both a long-term growth machine and a constant string of unexpected setbacks, and successful investors accept both at the same time.

So rather than trying to predict what happens next, prepare for a range of outcomes, focus on quality, build your buffers and keep your eyes on the next decade rather than the next headline.

That's how wealth has always been built through property, and I'm confident it's how it will continue to be built in the years ahead.

If you'd like help working out how today's market fits your own situation, the team at Metropole can help you build a personalised Strategic Wealth Plan that's designed to grow and protect your wealth whatever the market throws at it.

Why not lock in a time to chat with one of our strategists by clicking here.