Australian property no longer a 'bad investment,' says finance expert

Australian property has become a 'bad investment' and should cease to be the primary method for building personal wealth, according to ABC finance commentator Alan Kohler.

Speaking on the Equity Mates podcast, Kohler stated that for the first time since at least 2024, he is optimistic about housing affordability. He attributes this shift to recent changes in capital gains tax (CGT) concessions and negative gearing policies, coupled with increased housing construction, moderating immigration, and higher interest rates.

"I do think property is a bad investment now - real estate," Kohler said. "This is really what we're talking about when we talk about housing becoming more affordable: we're talking about it becoming a bad investment. Housing has to stop being the way that people build wealth and just become a place to live."

Kohler welcomed the Albanese government's May budget announcements, which included limiting negative gearing for new builds and replacing the 50 per cent CGT discount with a flat 30 per cent tax indexed to inflation. While he views these as "good symbolic changes," he noted they are unlikely to resolve Australia's housing crisis on their own.

"They're worth doing, but really what has to happen is a lot more houses get built," Kohler emphasized.

He predicted a decline in house prices for the remainder of 2026, citing the disappearance of conditions that fueled the property boom. "They're already falling in Melbourne and Sydney," he observed. "The national average in May was flat and I think for the rest of the year we're going to see house prices fall across the country."

Data from Cotality indicates that major Australian housing markets experienced declines in July. Sydney saw dwelling values drop by 1.4 percent, while Melbourne decreased by 1.2 percent. Brisbane and Adelaide posted reductions of 0.6 percent and 0.2 percent, respectively. Perth was the only major capital to record a slight increase of 0.1 percent.

Kohler pointed to several factors contributing to downward price pressure. "I think the days of super-low interest rates that caused house prices to really surge over the past 10 years or so are over," he stated. Current interest rates, around 4.35 percent, are not expected to rise further but are unlikely to decrease significantly.

Despite his cautious optimism regarding affordability, Kohler acknowledged the substantial challenge in increasing housing supply to meet the National Housing Accord's target of 1.2 million new homes by 2029. Recent Australian Bureau of Statistics data showed just 18,328 homes were approved nationwide in June, a figure comparable to June 2016 despite significant population growth over the intervening decade.