Should You Invest in Property? A Look at Biases and Balanced Advice
Property investing has been a hot topic in Australia for decades. With nearly 25 years of consistent growth driven by government intervention and historically low interest rates, it’s no wonder so many people have jumped on the bandwagon. But as I scroll through social media ads promising the next housing boom or the ‘best suburb to invest in,’ I can’t help but think: who is giving unbiased advice to property investors? And how can people make balanced decisions that consider risks, diversification, and alternative strategies—beyond property, debt, negative gearing, and risk?
It’s a complex question, and the answer lies in understanding the biases of the people we turn to for advice.
Who’s Really Giving You Balanced Advice?
When it comes to property investment, everyone seems to have an opinion. But let’s break down the common sources of advice and their likely motivations:
1. Family and Friends
Your well-meaning friend at the barbecue might rave about their property investment success. They’ll point to their principal place of residence or an investment property that’s risen in value over the years. While their story might be true, it’s based on their personal experience within a unique market cycle. They’re not going to discourage you—why would they, when property has worked well for them? But that doesn’t mean their advice is balanced or informed.
2. Property Spruikers and Real Estate Agents
Zero chance of objectivity here. Property spruikers and real estate agents only make money when someone buys property, so of course, they’ll tell you it’s a great idea. Their entire livelihood depends on transactions, not on whether the investment is the right fit for you.
3. Accountants
Accountants are professionals and degree-qualified, which makes them a popular choice for advice. But even they can be swayed by their training. Often, they focus on depreciation and tax deductibility—key aspects of property investment that may look great on paper. A tax-deductible loan might seem like a win, but this perspective often overlooks broader considerations, such as the quality of the asset or alternative investment strategies.
4. Mortgage Brokers
Mortgage brokers, much like real estate agents, have one product to sell: loans. They’re there to help you secure financing, not necessarily to evaluate whether property is the best investment strategy for your circumstances.
5. Governments
While you can’t ask the government directly, their stance is clear: property investment is good for them. They collect stamp duty, benefit from the economic activity tied to property, and have a vested interest in keeping housing markets buoyant. Historically, they’ve used grants and incentives to prop up the property market during financial crises, keeping builders working and people employed. Add to that the fact that many politicians own negatively geared properties themselves, and it’s clear why the government is unlikely to discourage property investment.
Is Property the Right Strategy for You?
Here’s the truth: property investment is just one strategy among many. While it’s often marketed as a safe, wealth-building option, it comes with real risks—especially in today’s market. High debt levels and cash flow pressures can expose investors to significant financial risk.
Real estate agents and property promoters often tout the idea that ‘property only ever goes up’ or ‘it doubles every 10 years.’ But that narrative is overly simplistic. The past 24 years of growth, fueled by incentives and low interest rates, offer no guarantees about the future. In fact, with current debt levels and market conditions, there’s a real possibility that property values in some areas could stagnate or even decline.
Think About Biases and Conflicts of Interest
Before jumping into property investment, ask yourself:
- Who am I seeking advice from, and what do they stand to gain if I go through with a purchase?
- Are they providing a balanced view of the risks and alternatives, or are they selling me a one-size-fits-all solution?
There’s no one-size-fits-all answer to investing, and property may not be the best fit for your financial goals. Diversification is key, and considering other asset classes, such as shares, listed property, or cash and fixed interest, could help reduce risk and improve returns over time.
Final Thoughts
Property investment has been a successful strategy for many Australians, but it’s not without risks, and it’s certainly not the only option. Before making a decision, take the time to evaluate the motivations and biases of those offering advice. A balanced perspective—free from conflicts of interest—will help you make smarter, more informed investment choices.
Remember, it’s not just about chasing the next ‘boom.’ It’s about building a strategy that works for you, your goals, and your financial future.
The information provided in this article is general in nature only and does not constitute personal financial advice.
