Busting the five biggest Australian property myths for 2025 so you can avoid costly mistakes. If you’ve heard:
- You must have a 20% deposit
- That capital cities always outperform
- That negative gearing is a smart strategy by itself
- That buying off-the-plan is “safe”
- That all debt is bad
…then this is for you.
Myth #1: You need a 20% deposit to buy a house in Australia
So, myth number one, you need a 20% deposit. With the new 5% scheme for first home buyers, this is less of an issue now, but some people still think you need to avoid lenders mortgage insurance (LMI) at all costs.
If you do some simple maths, if you bought at $800,000 and it had a 10% per annum growth, that’s $80,000 in a year. And if that cost you $35,000 in mortgage insurance, you’re still going to be breaking even.
So when I hear people say you need a 20% deposit because lenders mortgage insurance is sort of dead dead fees, it doesn’t make sense. It’s just a cost of purchase. The other thing i s that the LMI gets added onto your mortgage, so you don’t have to cover it up front.
Myth #2: Australian capital cities always outperform
Myth number two, capital cities always outperform. It used to be the 101 of investing: You have to buy within 5-10ks of a major capital city, but good luck doing that with the current prices.
Buying in these capital cities, it’s not necessarily blue chip at all because what’s the asset that you’re purchasing and who’s your resale buyer? I’m very biased, but Newcastle has some very blue chip suburbs and it’s not a major capital.
If you actually look at the historical growth, Newcastle is a great investment opportunity. The Junction, for example, did 160% growth over the past decade. North Curl Curl, which is the Northern Beach’s top performer in Sydney, did 120% growth. So there’s a 40% difference in growth over a 10-year period for a Newcastle market. And that’s largely across the board for Newcastle. We are seeing a lot of wealth shift up the coast to Newcastle from Sydney as well, which is going to drive those prices up as well.
I wouldn’t be surprised if a developer wants to develop The Junction as the next Double Bay. There’s a lot of money getting spent in Newcastle.
So, you can’t just bundle it up and say that capital cities will always outperform. If you go and ask a lot of top buyers agents out there where they own their properties, a lot of them own in regional areas.
As of April 2025, regional dwelling values climbed 1.5% which outpaced 1% for the combined capital cities. So, the numbers are there as well. Again, don’t buy in a completely rural town where there’s no growth, no population increase, but a regional major capital city that has its own economy, not reliant on a single industry, places like Newcastle or Bendigo.
Myth #3: Negative gearing is a smart strategy by itself
So number three is again something I see all the time and I think it’s people listening to podcasts or going to some investment seminars. But if you’re buying an investment property just with the sole purpose to save on tax, then I question whether it’s going to be a good long-term investment.
You’ve got to remember saving tax and earning money are two different things. You can’t do them combined. A lot of people who don’t invest in property or don’t own property hate that whole idea of negative gearing for tax benefits for property investors.
Don’t get us wrong, there is some benefit to it if you’re a really high income earner, but the simple fact to just lose money to try and not pay tax doesn’t make sense.
If you’re a high income earner that’s going to buy a $4 million luxury property with a 2% yield or 1% yield, you have to negatively gear that. But it still doesn’t make sense in some situations to get a newer property with depreciation to make up that difference in shortfall of your yearly expenses. You’re better off being near cash flow positive for sure.
I always say to people, if you want to save money on tax, get a shit job. Go work at Macca’s and you’ll pay stuff all tax. It’s as simple as that.
Myth #4: Buying off the plan is always safe
So, myth number four. This is a big one. I’ve just gone on 10 years now as a mortgage broker, but people still think buying off the plan is a safe bet. When I first started, and I still see it a lot, people will buy off the plan thinking that they’re buying at today’s prices and they’re going to benefit in two years time because today’s prices are now worth 20% more.
But from what I see, a lot of developers are pricing it for two years’ time, not for today’s prices. You actually run a huge risk of hitting a shortfall if it doesn’t track how they’re predicting it’s going to track. I think the only times it can work is if it’s a very short off the plan period. You know, you’re buying a block of land and it settles a few months later.
In that case, the risk is quite short, but if you’re buying an apartment in a high density development that’s due to settle in three years, you’re risking a lot.
Marsden Park has been a good example where people did make money if they bought off a plan, but there’s other areas where the supply is matching the increase in population for that area.
And what’s the stats? Around 20% of off-the-plan purchases are falling short of contract price, which is a lot.
Myth #5: All debt is bad
Number five, and our final myth about Australian property, is that all debt is bad. I see this a lot on social media. There’s certain people out there who think that you have to pay off your home loan in five years or you have to do this or you have to do that.
Yes, you can do that. But it’s not the end of the world if you don’t. When you buy a property and you own it as an owner occupied, yes, it’s nice to make the extra payments and bring it down, but that doesn’t need to be your sole focus.
I think a lot of people, a lot of these influencers, they take away the human aspect of it and they purely look at it from an investment lens and say, “Yeah, an owner-occ dwelling might not be the best approach and and you should put your money towards an investment.”
I know the benefit personally of having my own property; I couldn’t rent again. So, you know, you take away that personal lens. If security and having a family home or your own property is important to you, who cares about whether it’s good or not?
And you’ve got debt on it. Who cares? Like you’re making money on the capital growth, not on exactly the debt itself. Yes, we understand that it’s non-tax-deductible debt, but you’re also holding an appreciating asset, which is cost exempt.
I bought in Catherine Hill Bay, I think I made close to $900k in about 18 months. Sold that debt-free, moved on to the next place in Merewether.
So, holding debt isn’t always bad, but I guess the long-term goal is to have zero non-tax-deductible and then all tax-deductible, but that’s not always the case. You can’t always do that.
I’d never feel bad about buying a house for you and your family to live in. If it’s important, get one and then you can leverage that or use the equity in that property further down the track to be able to buy something to invest in.
Final Thoughts: Avoiding these five myths
That’s the five Australian property myths for today. These are things that I see daily. If you can try and avoid these, you will save a lot of time and money.