The Property Rules Have Changed for Investors: Where to Buy a High-Yield Investment Property In Australia Right Now

Joshua Meli of CH Secure sat down with Simon Cohen of Cohen Handler and Dr Mat Djolic, chief executive of property data platform HTAG, to work through what an investor should actually do in the market the 2026 Budget created.

The policy detail has been covered everywhere else. This is the part that hasn’t been: what the three of them told investors to do, and how to choose a market when you are buying interstate and need both yield and growth.

The short version

• Select property on supply scarcity, local incomes and owner-occupier depth. Tax treatment sits below all three.
• Affordability is measured against local wages rather than a national price point. Past roughly 40 years to pay off a typical local mortgage, growth tapers.
• The regional yield premium is largely a price difference. Hold price constant and regional and metro yields sit six basis points apart.
• Owner-occupiers are two-thirds of mortgages issued. Markets they dominate carry more protection.
• New build areas need a population growth test before anything else.
• Most investor activity was already concentrated between $550,000 and $750,000. That band has shifted down modestly rather than reorganised.

1. Stop buying for the tax outcome

Josh asked what investors should stop doing this year. Mat answered without hesitating.

“Stop buying property because of a tax refund which is not going to be there anyway.”

He had watched a particular kind of investor build a plan around the deduction. The property lost money by design, and the refund made the loss survivable. The whole thing rested on the tax office rather than on the asset.

“They buy for negative gearing. That’s their strategy. So they’re buying property to invest into just to lose money. So those investors whose strategy is to enter the property market purely from the negative gearing perspective, they will suffer, not the market itself.”

Josh had seen the same thing land with clients.

“We’ve had a couple of high income earners that have pulled out from purchasing all because they can’t claim negative gearing benefits.”

Neither of them treated those buyers as a loss to the market. If the deduction was the reason to buy, there was never a strong enough reason. The ATO’s guidance on the reforms sets out how losses are treated from 1 July 2027.

What Mat put in its place was less exciting and more durable.

“Invest like an economist. Understand where growth comes from and buy in those markets, and stop speculating and expecting the government to subsidise your growth in your assets.”

Supply scarcity, affordability relative to local incomes, socioeconomic position. None of the three changed in May. Anyone working out what to look for in a first investment property is looking at that list.

2. Judge affordability against local wages

Investors who lose borrowing capacity tend to go looking for cheaper postcodes. Mat’s argument was that the price on its own told them very little.

“Affordability is relative. There are different levels of affordability in Double Bay as there are somewhere else in Melton West, and it’s driven by the earnings of the population.”

HTAG measures it with a metric called years to own: how long the average mortgage in a suburb takes to pay off on local incomes. On their numbers the Northern Territory sits around 25 to 30 years, Tasmania 30 to 35, Melbourne 35 to 40, and much of the rest of the country between 50 and 60.

They have found a threshold in it.

“As soon as something climbs over 40 years to own, the growth starts tapering off.”

HTAG’s 2025 correlation work found the capitals sitting below 40 on that measure recorded the strongest growth across both houses and units. A $1.5 million suburb can be affordable where local earnings support it. A $700,000 suburb can be stretched where they don’t.

It was also why Mat rejected the idea that metro had finished as an investment proposition.

“Even in metro markets that $1.5 or $1 million mark, they remain affordable, yields, vacancy rates remain very low which means that yields remain relatively high, there’s supply scarcity. All of those ingredients are not affected by any of these changes.”

The change landed on the holding cost. The growth case stayed where it was. Josh put the consequence to him directly and Mat agreed: those markets would still perform, and what an investor had to establish was whether they could carry one long enough to see it.

3. The regional yield premium most investors chase

Plenty of interstate investors go regional expecting a materially better yield. Mat had the figure in front of him.

“For sub $800k houses, yield at 3.86 regional versus 3.8 metro. It’s a fallacy where you know there’s a yield gap. It’s not a yield gap. It’s actually a price gap.”

Six basis points, once price is held constant. Regional stock looks higher-yielding in aggregate because it costs less. The rent does much the same work in both markets. Josh translated that into a buying decision.

“If you can afford metro and you want metro, it’s still a good play, as long as you’re purchasing in the right patches. But if you can’t afford it, then that’s when you start to consider those regional more affordable assets that are obviously still yielding a very similar amount.”

The case for going regional rests on the lower entry price and the smaller out-of-pocket cost. The yield adds nothing to it. Mat also warned against treating a high yield as a growth signal.

“Going for a high yield market assuming that a high yield market will grow inadvertently should tell you that it’s high yield because it hasn’t grown.”

He added something most investors never check. Yields varied as much inside a single suburb as they did between regions, by one to one and a half percentage points depending on what you bought. That spread never appears on a portal, and it is the sort of thing a local investment property buyer’s agent is paid to know.

4. Follow the owner-occupiers

Most commentary about investor tax settings assumes investors set prices. Mat’s point was that they do not.

“Owner occupiers are two-thirds of mortgages issued, apart from Northern Territory as an outlier. You have two-thirds of the market that nobody’s mentioning.”

Where supply was tight and owner-occupier participation high, Mat argued the downside had more protection under it. Owner-occupiers do not price on after-tax yield. They buy on schools, commute and space. He also expected any lull in pricing to convert renters into buyers, which adds to that pool rather than draining it.

In practice, a suburb dominated by investors carries more exposure to a change in investor economics than one where most buyers live in the house. It is also among the harder things to assess from another state, and one of the main reasons interstate buyers get it wrong.

5. Test new build areas against population growth

The deduction now points at new builds. Mat was careful not to turn that into a recommendation, partly because he owns one that worked.

“I do not subscribe to the opinion that new builds or house and land packages are not a good investment opportunity. Why don’t I subscribe to that? Well, because I bought in Oran Park and made 200% in the last 15 years.”

The test he applies before buying one:

“Count the number of people per household, count the number of building approvals, and then superimpose that against the population growth, and you see whether there is a shortfall.”

“Buying in a new build area because it’s new build, without actually accounting for that, is not a strategy in my view.”

Both inputs are public. The ABS publishes building approvals and population by state and territory monthly and quarterly.

Mat also flagged a timing problem specific to greenfield. Stock lands faster than population absorbs it, which produces a flat period before growth resumes.

“You have to have a long-term investment time horizon. You can’t be counting your beans after every year and expect to see 20% growth.”

On the head-to-head, his maths still favoured established stock once holding costs and eventual sale were accounted for. Josh drew a boundary around the comparison. This was about new land release estates, and it left aside granny flats and townhouses going up in established suburbs.

6. Know where your budget actually lands

Josh raised what brokers had been telling him. Borrowing capacity down 25 to 30% for investors who could no longer count the deduction toward serviceability, pushing a $1.2 million budget toward $800,000.

Simon had not seen it that severely. The buyers who did adjust, in his experience, moved markets rather than leaving.

“I haven’t really noticed that big a drop in their borrowing capacity from the people we’re talking to. But the people who have had to realign their price expectations, they’re just looking at different markets, markets where they can get opportunity, growth and yield, but it just might be different to where they set out looking.”

Mat’s data showed the investor budget distribution had barely reorganised, because it was already concentrated well below the headline numbers.

“Out of the 100 investors that I speak to there’s maybe three that were buying in those ranges above 900, even before the budget.”

He put the typical band at roughly $550,000 to $800,000 before the Budget, and something closer to $550,000 to $700,000 after it. HTAG’s own strategy buys between $700,000 and $800,000 regardless of borrowing capacity, on the basis that those assets carry the highest probability of doubling in a decade.

The pressure lands somewhere narrower than the headlines suggest. Josh worked through a Pyrmont apartment on a 3% gross yield, where holding costs ran to the high $30,000s a year once the deduction disappeared. Metro apartment stock between $1 million and $1.5 million on thin yields, bought by people who needed the refund to make the numbers work.

He also had something for first-home buyers being pushed toward interstate investing. A client weighing an investment purchase away from her home town of Geelong came out ahead buying where she lived and holding it long term. Chasing yield interstate makes less sense when you can own where you already are.

7. Where they’re looking

Victoria came out of the conversation as the clearest positive case. Mat named Melton and Wyndham City as the standout LGAs on HTAG’s methodology, with scope for around 20% over three to four years, and argued their oversupply reputation does not survive contact with their population growth, which is among the highest in the country. Josh added that eight of the ten markets CH Secure rates most highly in the $550,000 to $850,000 band over the next decade sit in Victoria. The trade-off Mat named is that Melbourne takes the hardest hit on yield, so it suits an investor who can carry the holding cost.

Adelaide has the tightest supply of the capitals, which Mat treats as a floor under the market. Defensive rather than high growth.

Brisbane has performed strongly with very low vacancy, though the affordability constraint is now real and may limit how much further it runs.

Perth has the strongest recent growth of the capitals and is also cooling fastest.

Launceston has been appearing on HTAG’s shortlists, with some suburbs recording 15 to 16% over the past year. Mat was careful that this does not apply evenly across the LGA.

The Northern Territory screens extremely well on affordability, though Mat treats it as a one to five year play rather than a decade one, because long-run volatility drags the compounding.

Sydney’s southwest has started producing sub-$800,000 markets on shortlists that had not carried them previously.

Mat put a use-by date on his own list.

“The short list actually changes every 6 months as markets go in and out of heat.”

Perth led three years ago. North Queensland before that. Any list is a snapshot, this one included, which is the argument for buying on the framework rather than the list.

On acting now

Simon’s position was that this is a cycle, and that cycles reward the people who move during them rather than after.

“There have been some of the best deals I’ve seen since I started this business in 2009, which was the height of the GFC. We’re seeing properties selling well below what they sold for years ago and opportunities that I haven’t seen in a long time.”

“It’s no different to Warren Buffett who buys shares when the stock market crashes. He doesn’t buy them when it’s at its peak. And you should be doing the same thing with property.”

We share that view, with one condition attached. Buying into a soft market works when you can be early and still hold the position. The cash rate sits at 4.35% after three increases this year and the RBA has not ruled out another. Mat named that risk himself. His case rests on liquidity staying favourable, and it is a weaker case at 4.35% than it was in January.

So model the holding cost with no deduction, at a rate above today’s, and see whether the asset still stands up. If it does, conditions favour buyers more than they have in years. If it only works on the old tax treatment or on a rate cut that hasn’t arrived, it isn’t the property. That test belongs in the due diligence stage, before anyone is emotionally committed.

Simon closed on it this way.

“Real estate’s all about buying right. And if you buy well, you’ll always have a great asset that will provide you a good yield and good capital growth. Times like these don’t last very long.”

Josh put it more briefly: you make money when you buy, not when you sell.

What is CH Secure?

CH Secure is a specialist buyer’s agency built for property investors. Our focus is not on finding your next home. It’s on identifying and securing investment properties that support a clear, long-term portfolio strategy.

As part of Cohen Handler, CH Secure draws on the reach, market knowledge and relationships of Australia’s leading property buyer’s agency, with more than $13 billion in property purchased for clients.

Through Cohen Handler’s national network of buyer’s agents, we combine local market expertise with investment strategy, research and data to identify opportunities that align with your goals and strengthen your portfolio over time.

CH Secure works with investors buying affordable, high-yielding property across Australia, backed by Cohen Handler’s buyer’s agents in Sydney, Melbourne, Brisbane, the Gold Coast, Adelaide, Perth, Canberra and Newcastle. You can see what recent investor purchases have looked like, or get in touch and tell us what you’re trying to buy.

Cohen Handler and CH Secure act for buyers. HTAG provides property data. Nothing here is financial or tax advice. Speak with a qualified accountant or adviser before making a property decision.

Frequently asked questions