The question “Is buy-to-let still worth it?” is becoming more and more relevant year after year – and not in favor of landlords. Many owners of rental properties complain about declining income over half a decade, others talk about switching to short-term rentals. So how true is the thesis that buy-to-let is a dead end?
In fact, income from rental properties has indeed decreased (which we will show in more detail in the comparison table below). But the question of the effectiveness of the buy-to-let scheme rests on a larger topic — are people still willing to invest in property?
And in fact, investors are still doing this.
Yes, taxes have changed over the past 10 years. Yes, interest rates are rising. But people are still buying houses, and to maximize the investment from such a purchase, it needs to be rented out.
It is also important to understand that the 2023-2025 interest rate hike has slowed down the housing market significantly, and when people do not buy their own homes, they are forced to rent someone else’s. All this imposes its own nuances on the question of the effectiveness of the buy-to-let scheme.
One way or another, if you are looking for where to buy investment property in Australia, we recommend that you first look at the analytics below.
What new taxes for landlords have appeared over the past 10 years?
Over the last decade, Australian states have introduced new taxes and increased existing ones to regulate the property market.
- Victoria: A Vacant Residential Land Tax (VRLT) was introduced in 2018, affecting empty properties in Melbourne’s inner and middle suburbs.
- New South Wales: From 2023, NSW offers an option to pay an annual property tax instead of upfront stamp duty for certain investors.
- Queensland: In 2022, changes were proposed to land tax laws to consider properties owned in other states, but they were later withdrawn due to backlash.
- General Increases: Land taxes and foreign investor surcharges have risen across multiple states.
How profitable is it to rent out a property compared to 10 years ago?
| Year | Average Apartment Price (Sydney) | Mortgage Rate (%) | Land Tax & Stamp Duty | Average Rental Yield (%) |
| 2013 | $550,000 | 5.5% | Moderate | 4.5% |
| 2018 | $720,000 | 4.0% | Increased | 3.8% |
| 2023 | $950,000 | 6.5% | Higher | 3.5% |
An average landlord who bought a Sydney apartment in 2013 had a mortgage rate of 5.5%, but rental yields were higher. In 2023, higher mortgage rates and increased land taxes reduced profitability.
How have short-term rentals and services like Airbnb affected the long-term rental market over the past 10 years?
Short-term rentals have reshaped rental availability and pricing:
- Higher rental prices: Many landlords switched to Airbnb, reducing long-term rental supply.
- New regulations: Victoria and NSW introduced rules limiting the number of days a property can be rented short-term.
- Tourist hotspots affected: Coastal and city areas saw dramatic rent increases.
For example, in Sydney’s CBD, a one-bedroom unit listed on Airbnb can earn $250 per night, while a long-term tenant pays $700 per week—incentivizing landlords to choose short-term leases.
How has the increase in interest rates in 2023-2025 affected the rental market?
Higher interest rates have led to:
- Higher rents: Landlords pass mortgage cost increases onto tenants.
- Reduced investment activity: Fewer investors are buying new rental properties.
- More renters staying put: Tenants delay purchasing homes due to expensive loans.
An average Melbourne investor paying $3,500 per month on a mortgage in 2022 saw payments jump to $4,500 in 2024, leading to rent increases for tenants.
Is buy-to-let still a worthwhile investment?
| Pros | Cons |
| Stable rental income: Demand for rentals remains high, particularly in major cities. | Higher entry costs: Property prices and taxes continue to rise. |
| Long-term capital growth: Properties in well-located areas appreciate over time. | Mortgage cost pressure: Higher rates make financing challenging. |
| Tax benefits: Negative gearing can reduce taxable income. | Tax benefits: Negative gearing can reduce taxable income.
Increased regulations: More landlord restrictions and taxes in some states. |
Example: A Brisbane investor who bought a $500,000 townhouse in 2015 saw its value grow to $750,000 by 2025, despite rising land taxes. However, their mortgage repayments increased, impacting overall profitability.