Australian Property Investment Strategies Post-Budget

In this week’s Follio Podcast, Reece Bedle and Lachlan Delahunty discuss the recent noise in the Australian property market right now. They cover the post-budget shifts, political changes, and potential alterations to negative gearing and capital gains tax. As investors constantly look for a golden bullet, we discuss why there is no quick fix and how investment success comes down to sticking to an investment strategy tailored to your life stage and risk profile.
 

Key Takeaways & Market Insights 

• Market Shift Toward Cash Flow: After recent changes to the budget and the shift in negative gearing, cash flow has become a huge focal point for investors across all investment strategies.
• There’s No Quick Fix to Get Rich: Everyone on the market is currently looking for the quickest way to get rich (the golden bullet). Long-term success comes from sticking to a disciplined strategy tailored to you and the risks you are able and willing to take.
• Focus on Your Strategy Over Noise: There is a large amount of post-budget commentary from both politicians and commentators. Australian investors need to tune out the noice and focus on the numbers.
• Capital Growth is Still Essential: Property must still deliver capital growth; otherwise, investors will move on to safer income alternatives.

Navigating Post-Budget Noise and Investor Strategies

Property can be a powerful vehicle for creating wealth; however, there is more than one way to approach it, with different people pushing different sales pitches and methods. True industry experts are masters of specific strategies, testing them through multiple market cycles.

“Everyone’s looking for a golden bullet. They want the quickest way to get rich. The reality is there is no quick bullets. It’s sticking the course of a particular strategy that’s suited to you, and I think that’s the most important thing here. Each one of these individuals have got really good insights and understandings into their niche or their market, but that strategy is not necessarily suitable to the masses. It’s typically suited to a personality“ — Lachlan Delahunty – Follio Property Expert

Why Cash Flow Has Taken Centre Stage in Property Investment

Following recent budget changes by the government and political shifts regarding negative gearing and capital gains tax, the investment landscape in Australia has evolved. The long-term fundamentals remain the same; however, the costs of money and the utility of traditional tax concessions mean cash flow can’t be ignored. The overarching rule remains clear: property is fundamentally an asset class meant to generate capital growth.

“You invest to make money, to make equity and to generate capital growth. Otherwise, why are you invested in property to begin with? Right. You can put your money, as we’ve said, in bonds. In government bonds. Arguably risk free at the moment. At a very good return. So if you’re not investing in property to get capital growth, then don’t invest at all. But you can’t ignore the cost of money, and the benefit of negative gearing has been taken away.”  – Lachlan Delahunty – Follio Property Expert

Understanding the Different Paths of Property Investment

Public commentary and media often claim that nothing has changed post-budget; however, speaking with experts reveals that strategies have adjusted to account for the new realities in the Australian investment market. Every investor sees the market through a different lens, meaning what works for a high-net-worth investor or seasoned investor might not work for a first-time investor.

“Property is a beautiful thing, but there’s more than one way to do it. And at the moment, everyone here, it’s like, this is the way you make money in property. There’s another way you make money in property and everyone’s got a different sales pitch, but everyone’s got a different strategy.” – Lachland Delahunty – Follio Property Expert

Future Predictions & Market Outlooks

• Cash Flow Will Be Important: Post-budget outcomes mean investors will no longer be able to ignore cash flow. Strategies must account for the cost of money and the changes to negative gearing.
• You Must Know Your Baseline: With so much uncertainty in the economy at the moment, tracking tools like PropStac are vital to understand your current baseline and position and for planning scenarios prior to buying, selling or holding.
• Matching Strategy to Your Circumstances Will Be Ever More Important: Success in property investment will depend entirely on matching the right strategy to your life stage, financial capacity and your willingness to take risks, as opposed to chasing a golden bullet.

Track Your Strategy and Portfolio with Follio and Propstack

Navigating changes to the property market requires clarity of your numbers. To help investors navigate uncertainty, Follio has officially launched PropStac. PropStac allows you to track potential new investments and monitor how your current property portfolio is performing.

Make sure to tune in every Thursday afternoon on YouTube, Spotify or Apple Music to catch new episodes of the Follio Property Podcast.