Real Estate

First-time property investors: what to expect

First-time property investors: what to expect

A new year brings with it not just new resolutions but also the start of long-envisioned realities such as a first new property investment.

If this is you, congratulations!

We take a look at what first-time investors should expect.

First-time investment: what should I expect as a 2024 investor?

As we explained this month, last year's property market continued to adjust after the chaotic pandemic years.

Cost-of-living expenses and lower consumer confidence also continued and although there were only five Reserve Bank of Australia (RBA) cash rate rises - as compared to the eight in 2022 - the year's cash rate end of 4.15% is still too high for the RBA's targeted 2-3% figure.

On this note, inflation also dropped to 5.4% in the September 2023 quarter.

Honing in on the property investment market, CoreLogic's final quarterly Rental Review for 2023 in October offered some interesting news for property investors.

"Worsening affordability continues to be a significant factor placing downward pressure on the pace of rental growth," the report stated.

"With the rising cost of living adding additional pressure on renter's balance sheets, it's likely the average household size has continued to rise as tenants seek to share the additional rental burden across larger households."

The report added that the ongoing shortfall in rental listings remains an important factor pushing rents higher.

According to the report, every capital city's dwellings - bar Hobart and Canberra - recorded an annual rental increase in 2023, of between 2.9% in Darwin and 13.2% in Perth.

Annual gross yields in capital city dwellings also increased, except for a minor 0.12% decrease in Sydney - and are now between 2.99% in this same city and 6.55% in Darwin.

Meanwhile, capital city vacancy rates were generally around 1% or below across 2023 with the highest number being 2.5% in Hobart.

At the same time, CoreLogic's January 2024 Home Value Index report noted that across both sales and rentals, 2023 was "punctuated by diversity" in both sales and rental areas.

A good example is Perth - which is a "clear outlier for rental growth, with no signs of easing" - while Hobart and Canberra experienced rental declines across the year.

And importantly, despite a national slowdown in annual rent growth, the 2023 result was still more than four times the pre-COVID decade average of 2% per annum, the report stated.

First-time investment: what should I expect?

As we explained last year, an ideal investment property should give you long-term capital growth and rental yields plus a steady cash flow, secure income and tax benefits.

Don't forget the tax opportunities of positive and negative gearing and other tax deductions you can claim for property agent fees, land tax, council rates, insurance and maintenance and renovation costs.

So, in an ideal world, smart property investors can become "very very rich by growing a multi-million dollar investment property portfolio", said Metropole's Michael Yardney.

Saying this - and as we explained last year - Mr Yardney added that to enjoy such wealth, property investors need a "well-executed plan" and will need to ensure that they:

  • Treat their property investment like a business
  • Understand the cyclical nature of the property market
  • Understand the property investment, finance, and taxation systems
  • Have a cash flow reserve for cycle downtimes and unforeseen expenses
First-time property investors
A successful property investment requires a strategic plan, market understanding, and a financial safety net, especially for first-time property investors.

First-time investment: what should I keep in mind?

  • Growth and security won't happen overnight
  • Property investments aren't a set-and-forget financial plan
  • You will face tough times

The current tough times - which are resulting in investors leaving the market - are due to an uncertain cash rate future; a major turn towards tenant's rights, rather than that of a landlord; and "lacklustre" capital gains, according to a Financial Review article in October 2023.

Metropole national director, Kate Forbes said other reasons include:

  • Land tax increases, particularly in Victoria;
  • Robust property prices, which are encouraging investors to sell their properties to capitalise on their equity; and
  • More baby boomers approaching retirement and re-evaluating their options, including selling their investment properties

The massive number of immigration arrivals since the pandemic is also greatly affecting the property market overall and the investment market in particular, as such high numbers directly mean fewer available properties.

In FY2023, Australia experienced the largest net overseas migration estimate since records began, according to the Australian Bureau of Statistics (ABS) Overseas Migration report, produced in December 2023.

The number of migrant arrivals increased to 737,000 - up from 427,000 the year before - which equates to an annual increase of 73%, the ABS explained.

Temporary visa holders were the largest contributors to arrivals in FY2023 and the largest sector in this group was international students (283,000) - who in turn all need rental housing.

This is a key reason why rental prices are rising fast.

We're here to help

We know we've given first-time property investors a lot to think about - but that doesn't mean you now either have to stress about your New Year plans or scramble to find the best property investment you can on your own.


Lending Loop's new sister company, Hello Haus, can simplify property investment with its Portfolio Builder solution.

Through this product, Hello Haus' team of property experts offer professional buying support and can help both new and experienced property investors find, buy and manage properties.

All of these properties will also offer high returns and low risks.

Plus, whatever home loan road you wish to take, Lending Loop would love to help you travel it!

We’ve brought all the services you need altogether, under one roof, so we can find you the best home loans from more than 40 of Australia’s biggest banks and specialist lenders.

So, give us a call today at Lending Loop.

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