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Budget tax overhaul fuels rise in property advice spruikers
As new tax reforms reshape the property landscape, more investors are now chasing cash flow over capital gains, opening the door for spruikers promoting risky, one-size-fits-all solutions.
The federal budget changes to negative gearing and capital gains tax (CGT) have pushed investors to review their strategies, with many now assessing high-yield properties rather than long-term capital growth.
According to the Property Investment Professionals of Australia (PIPA) chair Cate Bakos, since the budget, the investment landscape has become more complex, creating a bigger knowledge gap between experienced advisors and newcomers.
She said that some inexperienced advisers may start recommending asset classes outside their expertise, while the market may see a surge of spruikers promising outsized returns in a rapidly shifting market.
As investors were increasingly chasing regional, boutique apartment, and commercial assets for higher yields, Bakos urged consumers to question whether their advisers understood these markets or were simply following the yield.
“Spruikers often emerge in times of policy change, promoting properties that may not withstand professional scrutiny.”
“Without proven expertise, investors could be steered into properties that look good on paper but fail to deliver capital appreciation.”
She said some high-risk properties, including small apartments and unconventional title types, could make it harder to secure finance or require buyers to contribute a much larger deposit.
“It’s vital that investors understand that poor advice can have long-lasting financial consequences, with longstanding principles more important than reactionary pivots.”
While positive cash flow can provide stability, Bakos said that investors should not forget the fundamentals of property investments.
“Positive cash flow may appear more valuable now that first-time investors no longer have access to negative gearing tax offsets unless they purchase brand-new property.”
“It helps service debt, provides resilience against rising interest rates, and offers liquidity.”
“But cash flow alone does not build wealth, because capital growth remains the cornerstone of successful property investment over the long term.”
Ideally, Bakos said investors should balance long-term growth for cash flow, urging them to weigh yields alongside fundamentals such as location, demand and supply.
“Cash flow is important for sustainability, but capital growth is what compounds returns and builds wealth over time.”
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