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How fear creates opportunity in property markets

4 min read

May 21, 2026 2:17:21 PM

This blog is provided by Mecca Property Group.

There haven't been many budget announcements that have rattled the property market quite like this one.

With negative gearing and the 50 per cent CGT discount set to be scrapped, buyers aren't sure what to do. Uncertainty has crept into conversations that, not long ago, were focused entirely on opportunity.

Right now, that fear is centred on proposed changes to negative gearing, capital gains tax concessions, borrowing capacity pressures and broader economic uncertainty.

Over the past several weeks, the question appearing most often in conversations with investors, accountants and brokers has been the same.

Is property still worth investing in?

The short answer is yes. Because fear in markets has always created conditions that favour disciplined buyers.

The real source of loss

Most investors do not lose money in property because of tax policy. They lose money by purchasing poor-quality assets, overpaying under emotional pressure, or allowing uncertainty to keep them out of the market entirely.

While much of the current commentary focuses on whether investors may lose a tax benefit, very little attention is being paid to the actual long-term financial outcome.

The numbers are worth examining closely.

Running the numbers

Consider a property purchased today for $650,000, generating approximately $500 per week in rent. Assume average annual capital growth of 6 per cent over ten years, consistent with long-term rates in strong Australian markets. Inflation runs at 3 per cent annually, and the investor sits on a 37 per cent marginal tax rate.

The table below compares three scenarios: an established property under the old rules, the same property under the proposed new rules, and a new build under the new rules.

Under the proposed new rules, the established property investor is approximately $14,000 worse off compared to the current settings, a meaningful but modest difference. More important is the gap between the established property scenarios and the new build, which is a shortfall of roughly $90,000 in net after-tax profit, driven primarily by weaker capital growth and lower sale proceeds.

At face value, the policy change sounds significant.

But even under the new rules, the established property investor is still approximately $283,000 better off overall after tax.

The more useful question, then, is whether a marginally less favourable tax outcome justifies avoiding nearly $283,000 in wealth creation.

For most rational investors, it does not.

What fear actually produces

Uncertainty tends to reduce competition in property markets. Emotion cools, and negotiating power shifts toward buyers. Quality assets that would ordinarily attract multiple competing offers become more accessible.

This dynamic has repeated itself consistently throughout Australian property history. During COVID, buyers feared collapse. During rapid interest rate rises, sentiment deteriorated sharply. After the banking royal commission tightened lending conditions, many retreated entirely.

Each time, fear temporarily paralysed activity. And each time, quality markets recovered and continued their long-term trajectory.

Growth, not tax, drives wealth

The most persistent misconception in Australian property investing is that tax benefits are the primary driver of wealth creation.

They are not. Capital growth is.

A well-located asset in a fundamentally undersupplied market will outperform almost every short-term policy concern across a ten-to-twenty-year horizon. Tax settings can be legislated and reversed. Supply and demand fundamentals are far more durable.

This distinction also matters when comparing established properties against new developments. Many off-the-plan apartments and house-and-land packages carry embedded developer margins, marketing costs and inflated initial valuations. The result is that long-term growth often underperforms comparable established stock.

The difference between 4.5 per cent and 6 per cent annual growth may appear modest in isolation. Over a decade, the compounding gap becomes material, and the table above illustrates exactly that.

Sophisticated investors tend to focus less on maximising depreciation schedules and more on securing scarce, high-demand assets in locations with strong economic fundamentals. Because the former can change with a budget announcement. The latter rarely does.

Investors who have built meaningful wealth through property were rarely the ones who waited for conditions to feel certain.

They were the ones who remained analytical while sentiment deteriorated around them.

Tax settings may shift. Negative gearing concessions may tighten. Capital gains outcomes may become marginally less attractive. But the underlying drivers of residential property performance in Australia have not changed.

And once the current uncertainty passes, most investors will likely find that the actual impact was considerably smaller than the headlines suggested.

Abdullah Nouh is the founder of Mecca Property Group and a Melbourne-based buyers' advocate specialising in long-term, fundamentals-driven property strategy. He works with families and investors to build sustainable wealth through strategic residential and commercial acquisitions. He holds a Master's in Property from the University of Technology Sydney.

This blog is provided by Mecca Property Group.

To learn more about Mecca Property Group and their services, please visit their website.

The information contained in this article has been prepared by Mecca Property Group for general informational purposes only. It does not take into account your personal objectives, financial situation, or individual needs. Nothing in this article should be interpreted as financial advice, investment advice, legal advice, or a recommendation to buy, sell, or invest in any property or property-related product.

While every effort has been made to ensure the accuracy and reliability of the information provided, Salaam and Mecca Property Group make no representations or warranties as to the completeness, accuracy, or suitability of the content. Property markets are subject to risks, fluctuations, and regulatory changes, and past performance is not indicative of future results.

Readers should seek independent professional advice before making any decisions related to commercial or residential property. Salaam and Mecca Property Group do not accept any liability for loss or damage arising from reliance on the information contained in this article.

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