Australian Property Market Outlook 2025: Negative Gearing

The Australian property market has long been a source of stability and growth for investors. In the last 5 years we have seen capital values increase by an average of 4% per annum, with rental rates following closely behind. The outlook for the next 5 years is may seem even more positive, with many experts predicting strong growth across all markets thanks to strong population growth. 

Now is a great time to buy property in Australia, especially if you are looking to take advantage of negative gearing. Negative gearing allows you to offset any losses made on your investment against your taxable income, which can result in significant tax savings. With capital values expected to continue rising, now may be the perfect time to get into the market and start benefiting from negative gearing. 

Outlook For The Next Five Years 

Over the next five years we are expecting to see strong growth across all Australian property markets. This is thanks to a number of factors including strong population growth and decreasing supply levels.

- Strong population growth is currently being driven by both natural increase and net immigration. This increased demand for housing will put upward pressure on prices as people compete for scarce properties. 

- Supply levels are not keeping up with this increased demand, which is pushing prices even higher. This is especially true in Sydney and Melbourne where we are seeing historically low levels of stock available for sale. 

These factors are all coming together to create a unique opportunity for investors in the Australian property market. Over the next five years we may expect to see good capital gains as well as healthy rental returns, making buying an investment property attractive option. 

Should You Buy For Negative Gearing? 

Negative gearing is a great way to reduce your taxable income while also benefiting from any capital gains made on your investment property. When you negatively gear a property, you can offset any losses made (including things like mortgage interest) against your taxable income, which can result in significant tax savings. 

For example, let's say you earn $80,000 per year and you have a $400,000 loan on an investment property that you rent out for $500 per week. Your total annual expenses would be $30,000, which includes $24,000 in mortgage interest and $6,000 in other costs like insurance and repairs. This would leave you with a loss of $10,000 for the year. 

If you were in the 30% tax bracket, this loss would result in a tax saving of $3,000 (30% of $10,000). And if the value of your property increase by 4% over the course of the year (in line with historical averages), you would also make a capital gain of $16,000. When combined with your tax saving, this would give you a total return of 19%! 

Not only are prices expected to rise over the next five years, but you can also benefit from significant tax savings by taking advantage of negative gearing rules. 

So if you're thinking about buying an investment property, this may be a good time.

Within the next 5 years Australian Property Market is looking positive due sitting at good positions such strong population growth which essentially creates more buyers than homes available leading into heavy competition meaning bidding wars and thus pushing up home values . Not only does this bode well for housing values appreciation but also great news for those who already own houses as their houses essentially just went up 5%. Rental yields should stay relatively stagnant however some areas will be better than others so do your research! If you're thinking about dipping your feet into real estate , especially through negative gearing , 2025 looks like its going to be a very prosperous year!

Talk to Tax App on how we can help with negative gearing.