Why Trying to Positively Gear Properties Has Always Been the Smart Play

The shift that was already happening

Even before the budget, focusing on long term cash-flow positive properties was always the optimal investment strategy. Rising interest rates over the past few years had already squeezed negative gearing as a tactic, because higher borrowing costs meant larger losses that were increasingly difficult to sustain.

The budget changes have accelerated what the market was already signalling. In a world where you can no longer offset rental losses against your salary on newly purchased established properties, the investment case for focusing on long term cash-flow positive property has never been stronger.

What positively geared actually means

A positively geared property is one where the rental income exceeds all holding costs, including mortgage repayments, rates, insurance, and management fees. The property pays for itself and then some, generating income rather than drawing on your wages each month.

This is not the same as high yield in isolation. A property with a 6 percent gross yield can still be negatively geared once all costs are factored in, particularly when strata costs are incurred. The question is whether the net position, after every expense, is positive or negative. That calculation is where most investors lack precision, and where the right analysis makes a significant difference.

Owning a portfolio of positively geared properties can be an excellent strategy in providing an income as part of retirement planning, in addition to any capital gains growth over time. If you are able to pay off the loan over time then you are also left with an asset where the highest holding cost has been paid off, maximising your future income.

Where the best yields are right now

When I first talk to clients I always want to understand their long term goals and why property investment interests them. One of the amazing things about investing in Australia is that there are thousands of markets, all of which have differing fundamentals. I always suggest that our primary focus should be aiming for capital growth. This is the bedrock of property investment and plays an important role in being able to develop a portfolio of properties over time.

In addition, the ability to maximise cash flow over time, through rental increases, plays a very important role in getting a property to be neutrally geared and then ultimately positively geared. Choosing markets that have tight vacancy rates and therefore high demand from tenants is an important factor.

Rental vacancy rates across Australia sit well below the long-term average for a balanced market. Adelaide is recording vacancies as low as 0.6 percent. Brisbane, Perth, and many regional centres are similarly tight. In tight markets, annual rents have risen by more than 10% depending on the location. That rental pressure is what creates the ability to achieve a neutrally geared or positively geared property far quicker than in other markets without the similar demand.

Regional markets are consistently delivering gross yields above 4.5 to 5.5 percent, with select suburbs in regional Queensland, South Australia, and Western Australia pushing higher. The key is not simply finding the highest number on a yield table. It is finding the right combination of rental demand, low vacancy, and population growth that will sustain that yield over time.

Markets that look attractive on yield but have thin underlying demand can deteriorate quickly. A suburb with strong infrastructure investment, employment growth, and genuine housing shortage will hold its yield far more reliably than one where the headline number is driven by temporarily low prices.

The long game always wins

The investors who have built substantial property portfolios in Australia have done so by acquiring assets that work financially without requiring a tax subsidy to justify the purchase. That discipline is not new. The budget changes have simply made it the only viable framework for purchasing established properties going forward.

brickstowealth uses data to identify markets and properties where there is strong capital growth and rental demand, which is supported by real fundamentals. That analysis is what separates a property that performs through different market cycles from one that only looked good on paper at the time of purchase.

Find out which markets and property types offer the strongest future cash-flow opportunities. Book a free consultation with brickstowealth and let the data drive your decision. Visit brickstowealth.com.au.