Key takeaway: Pete Wargent, Co-founder of AllenWargent Property Buyers, says investors should respond to higher interest rates and the Budget’s tax changes by starting with their end goal, a decade or a dozen years out, and working backwards. He favours quality over quantity, warns that high yields often come at the expense of growth, and says reduced competition makes buying easier now.
In this episode of Geared for Growth, Mike Mortlock is joined by Pete Wargent, Co-founder of AllenWargent Property Buyers, property market analyst, finance author and long-time property investor.
Pete brings decades of experience across property, finance and investment, and has spent years analysing Australian housing markets, household debt, construction trends and property cycles. He is also the co-author of The Buy Right Approach to Property Investing, which focuses on the importance of due diligence, risk management, long-term thinking and buying the right property rather than simply chasing the market.
Mike and Pete unpack what is happening in the Australian property market as higher interest rates, housing tax changes, construction costs, rental pressures and changing buyer sentiment all collide. They discuss what these conditions could mean for housing supply, property prices, rents and the broader property industry, as well as where investors are looking for opportunities in a more challenging market.
The conversation then turns to the practical side of property investing. Pete explains why chasing high yields can sometimes come at the expense of growth, why owner-occupier appeal and scarcity still matter, the markets AllenWargent is watching, and why investors should start with their long-term goal rather than a particular property or so-called hotspot.
Pete sees three key Budget changes. A 30% minimum tax on discretionary trust distributions is probably marginal for housing, a minimum 30% capital gains tax rate probably has quite an impact, and limiting negative gearing to new builds is the most significant reform. Combined with interest rates that haven’t yet peaked, he calls it a double whammy. He wouldn’t be surprised if opposition parties position to reverse some or all of the reforms before the 2028 election.
Pete says you don’t buy the whole market. Upper-quartile house prices in Sydney and Melbourne are already down more than 10%, while mid-sized capitals and units have seen smaller falls. With market pricing pointing to interest rates peaking in 2027, he says there could be up to another 12 months of downturn, and given the scale of the tax reforms it wouldn’t be a massive shock to see the biggest nominal price decline on record.
Pete prefers quality over quantity and says chasing yield for its own sake can be short-sighted. As a rule of thumb, a high yield often comes at the expense of growth, just as a high-yield ETF usually grows less over time than the ASX 200. In residential property, 6 or 7% gross yields usually point to a niche property type, and in commercial there’s typically vacancy risk to manage. In his words, there are no free lunches.
Pete looks for owner-occupier appeal and scarcity, such as good school zones, which he expects to be the scarce commodities in Australian real estate. AllenWargent is active in Newcastle, the Central Coast and South East Queensland, including the Gold Coast, Greater Brisbane and the Sunshine Coast. He notes livability becomes harder once cities pass about 5 million people, and working from home has accelerated people taking equity out of Sydney.
This is general information from the podcast, not financial advice.
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