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Cash flow is the new growth in this market
For most of the last 10 years, the winning move was simple: buy, hold, wait for growth. It worked because the market did most of the heavy lifting for you, almost no matter what you bought or how you structured it. That’s not the market we’re in anymore, writes Victor Kumar.
We’re in a slowing market now, and the numbers back that up.
Cotality’s Home Value Index has fallen for five straight months, national values are down 3.6 per cent from their March peak, and 93 per cent of capital city suburbs recorded a fall through winter, up from under half in autumn.
Sydney is now down more from its peak than it was at the same stage of the 2022–23 correction. Annual growth is still positive on paper, but that’s a lagging number, and everyone active in the market knows it.
I keep seeing the same mistake from investors, new and experienced alike. They’re still playing last cycle’s game. Buy and hold isn’t dead, but it’s not your default right now. The investors coming out of this cycle in good shape are the ones managing their portfolio for cash flow and staying power, not just sitting back waiting for equity to turn up.
Buffering isn’t something you add later, once things get tight. Every cycle eventually tests whether you can hold your portfolio, not just whether you can buy it.
A rate rise, a vacant property, an unexpected repair bill, insurance going up again – none of that is bad luck. It’s just what owning property costs you over time.
The Reserve Bank of Australia (RBA) has lifted the cash rate by a cumulative 75 basis points this year to 4.35 per cent, and Roy Morgan’s mortgage stress index just hit an 18-year high, with around a third of mortgage holders now considered at risk.
S&P’s ratings data shows arrears drifting up too, still low in absolute terms but moving in the wrong direction as unemployment ticks higher.
The investors who sail through a rough year and the ones who get forced to sell at the worst possible time usually don’t have different properties. They have different buffers.
A buffer isn’t just cash sitting in an offset account, though that helps. It’s serviceable debt, a realistic view of vacancy, and enough gap between your rent and your holding costs that one bad quarter doesn’t force your hand.
And “realistic” now depends on where you own. SQM’s vacancy data shows the national rate steady at 1.3 per cent, but that headline hides a genuine split: Sydney, Melbourne, and Canberra are loosening toward 1.7–1.8 per cent, while Perth, Adelaide, Brisbane and Darwin are still sitting under 1 per cent.
If you can’t tell me right now how many months your portfolio could survive a genuinely bad run without you having to sell something, that’s what needs fixing before your next purchase, not after.
Being active with your portfolio isn’t the same as being speculative with it, and right now that difference matters more than usual.
Active means actually reviewing how each property is performing against the numbers for its market, not the national headline, being willing to move on from one that isn’t pulling its weight, and being deliberate about what you add and when.
It doesn’t mean chasing whatever strategy is loudest on social media this month. Commercial property with promised double-digit yields is a good example of that, and one I’ll come back to another time.
The investors adding to their portfolios well in this market are being more selective, not less. And they’re finding value the old-fashioned way, through negotiation, rather than assuming the market will hand it to them.
Price is only half of what’s negotiable. In a rising market, the vendor holds the cards, and you pay just to be in the game. That’s flipped. Auction clearance rates nationally are sitting in the high 40s, down close to 20 percentage points from this time last year, and that alone tells you who’s negotiating from strength now.
A slowing market hands buyers more genuine negotiating room than we’ve had in years, but only if you know what to look for.
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What actually determines value to you as a buyer isn’t the listed price; it’s the vendor’s motivation, their pain point.
Find that, build your offer around it, and you’re negotiating from the right place. That’s a skill. Learn it, or find someone who already has.
If there’s one thing worth taking from this, it’s that protecting your ability to hold your portfolio is what lets you actually benefit from this market. Get your buffer right. Stay active, not speculative. Treat negotiation as a core skill, not an afterthought.
Do that, and this is a market that rewards you rather than tests you.
Victor Kumar is the director of Right Property Group.
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