Why “You Make Money When You Buy” Is the Most Dangerous Advice in Property

If you’ve spent any time researching property investment in Australia, you’ve heard it a hundred times: “You make your money when you buy.” It sounds smart. It sounds disciplined. And for most investors, it’s quietly steering them in the wrong direction.

The idea is simple enough — negotiate hard, buy below market value, and you’ve “locked in” your profit from day one. It’s the kind of advice that gets repeated on property forums, in investment seminars, and by buyer’s agents who want to justify their fees. The logic seems bulletproof.

But when you actually run the numbers — real transaction costs, real growth data, real market cycles — the picture changes dramatically. In fact, an obsessive focus on buying “under market value” can push investors into weaker markets, inferior locations, and ultimately smaller returns than someone who paid full price in a suburb with genuine growth momentum.

This article isn’t about telling you not to negotiate. Negotiation is a healthy part of any transaction. It’s about reframing where property wealth actually comes from — and it’s not from the deal you struck on settlement day.

The Real Cost of Buying Property in Australia

Before we even talk about growth or discounts, let’s be honest about something most property advice glosses over: the moment you buy a property in Australia, you are immediately underwater.

This isn’t a controversial opinion — it’s arithmetic. Between stamp duty, legal fees, inspections, loan costs, and the other unavoidable expenses of purchasing a property, you’re typically spending between 4% and 7% of the purchase price before you even get the keys. On a $750,000 property, that can easily exceed $40,000.

Here’s what a typical cost breakdown looks like on a $750,000 property purchase in NSW:

And it gets steeper in other states. Victorian stamp duty on that same $750,000 property would be closer to $40,000. In Queensland, you’d be looking at around $18,000 — one of the reasons Brisbane has attracted so much investor interest in recent years.

The point is this: on day one, you haven’t made money. You’ve spent it. The only people who profit the moment a property transaction settles are the real estate agent (who earns their commission), the conveyancer (who earns their fee), the government (which collects stamp duty), and the seller (who walks away with the proceeds).

The buyer? The buyer starts behind. And that’s perfectly fine — as long as they understand that recovering those costs and building wealth happens over time, not at the point of purchase.

“Under Market Value” Sounds Great. But What Does It Actually Mean?

This is where the common advice starts to unravel. When someone says “I bought this property $30,000 under market value,” the question nobody asks is: under whose market value?

Market value isn’t a fixed number stamped on a property like a barcode. It’s an opinion — an estimate of what a willing buyer would pay a willing seller in an arm’s length transaction. Real estate agents have one opinion. Bank valuers have another. Buyer’s agents have another still. And they can all differ by 5–10% on the same property.

There’s also a subtle but critical logical problem: if “buying under market value” were a reliable, repeatable strategy, it would imply that most sellers are consistently leaving money on the table. In reality, vendors have agents, comparable sales data, and their own financial motivations. Genuinely mispriced properties exist, but they’re rare — and when they do appear, they tend to sell fast to experienced buyers with cash or pre-approval ready to go.

For the average investor researching suburbs on a Saturday afternoon, the odds of consistently finding genuinely underpriced stock are slim. And the pursuit of those bargains can lead to a much more dangerous mistake: buying in the wrong location.

Easy Discounts Are Usually a Warning Sign, Not an Opportunity

This is the part that discount-focused investors rarely consider. If you can easily negotiate 5–10% off the asking price in a suburb, you need to ask yourself: why?

In a healthy, growing market, properties attract multiple interested buyers. Agents have leverage. Vendors hold firm. Discounts are hard to come by — and when they happen, they’re modest. This is frustrating as a buyer, but it’s exactly the signal you want to see. Strong competition means strong demand, which means prices are likely heading up.

When discounts are easy — when properties sit on the market for months, when agents are calling you, when vendors are dropping their price before you’ve even made an offer — that’s a very different situation.

Nationally in early 2026, the median days on market across capital cities is around 29 days, with Perth properties moving in as little as 9 days and vendor discounting sitting near record lows at around 2.9%. These are the hallmarks of a market where discounts are hard to find — and where capital growth is doing the heavy lifting for investors who are already in.

The Growth Maths That Changes Everything

Let’s put real numbers on this, because the maths is where the “buy well” argument falls apart most clearly.

In 2025, national dwelling values rose approximately 8.6% according to Cotality (formerly CoreLogic), adding an estimated $71,360 to the median Australian dwelling value. That’s the average. Some markets did significantly more — Perth and Adelaide both delivered double-digit annual growth, while Brisbane pushed decisively past the $1 million median house price mark.

Now consider two scenarios:

The difference is staggering. Investor A “saved” $30,000 on entry but ends up roughly $100,000 behind Investor B, who paid full price but bought into a market with genuine growth momentum. And this gap only widens with time. Over a 10-year hold, the compounding effect of even a 3–4% annual growth difference can represent hundreds of thousands of dollars.

This is the fundamental insight that separates experienced property investors from beginners: property wealth is built in the holding phase, not the buying phase. The entry price matters — but far less than the growth trajectory of the market you’re buying into.

A Real-World Example: Perth vs Regional Victoria

To make this concrete, consider two real market scenarios from the past five years.

An investor who bought a median-priced house in Perth in early 2021 paid around $500,000. By January 2026, Perth median house values had surged past $880,000 — representing growth of roughly 76% in five years. That’s approximately $380,000 in equity created purely by being in a market with powerful demand fundamentals: population growth, a tight rental market, limited new supply, and a strong resources-driven economy.

Meanwhile, an investor who bought a “discounted” property in parts of regional Victoria or regional Tasmania during the same period — markets where prices had been falling or flat and negotiations were easy — may have achieved meaningful growth during the short-lived regional COVID boom of 2021–2022, but many of those gains have since reversed. Some regional markets are now sitting at or below their 2022 peaks.

The Perth buyer didn’t get a bargain. They probably competed against other buyers and paid close to asking price. But the market they chose did the work for them.

What Actually Drives Long-Term Suburb Growth

If the argument is that holding in a strong market matters more than buying at a discount, the obvious follow-up question is: how do you identify a strong market before the growth has already happened?

This is where data-driven research becomes essential. Suburb-level growth isn’t random — it’s driven by a combination of measurable factors that show up in government data well before they show up in property prices.

None of these signals require insider knowledge or paid subscriptions to expensive property platforms. They come from publicly available government data — ABS Census, Valuer General sale records, state crime statistics, building approval figures, and labour market reports. The challenge is that pulling it all together manually is time-consuming and the data sits across dozens of different sources in different formats.

Where This Advice Gets Nuanced

Before anyone accuses us of being overly simplistic, let’s acknowledge the legitimate exceptions.

Renovation and development strategies are different. If you’re buying a run-down property specifically to renovate and add value, the entry price matters enormously. The “you make money when you buy” principle works when you’re manufacturing equity through physical improvements — adding a bedroom, updating a kitchen, subdividing a block. In these cases, you genuinely are creating value at the point of purchase by identifying a property where the gap between current condition and potential value is large enough to cover renovation costs and still leave profit.

Distressed sales and genuine mispricing do exist. Deceased estates, divorce settlements, mortgagee-in-possession sales, and time-pressured vendors can create genuine below-market opportunities. But these are situational, not strategic. You can’t build an entire investment portfolio waiting for distressed sellers to appear in your preferred suburb.

Negotiation still matters. Nobody is suggesting you should overpay or accept the first price quoted. Smart negotiation is about paying a fair price for a property — not about holding out for a discount that may never come while the market moves past you. In a hot market, the cost of waiting for a better deal is often more than the discount you were hoping to get.

A Smarter Framework for Property Decisions

So what should you prioritise instead? Based on the data and the patterns we see across thousands of suburb assessments, here’s the framework that consistently produces better outcomes:

1. Choose the market first, the property second. Start with suburbs that show strong underlying demand signals — population growth, income growth, supply constraints, infrastructure investment, and declining crime. These are the suburbs where holding will do the heavy lifting for you, regardless of what you pay on day one.

2. Accept that strong markets are competitive. If you find a suburb where every indicator is pointing up and you can still negotiate a 10% discount, something is wrong — either with the property or with your analysis. In genuinely high-demand areas, paying close to asking is normal. That’s the price of admission to a growth market.

3. Extend your time horizon. Most property “strategies” that focus on entry price are implicitly short-term strategies. They assume you need to extract value quickly. If your hold period is 7–15 years (which it should be for most investors), the growth trajectory of the suburb matters exponentially more than whether you paid $10,000 above or below “market value.”

4. Use data to find growth, not discounts. The same government data sources that reveal suburb-level growth factors — ABS Census, Valuer General records, building approvals, crime statistics, labour market figures — can tell you whether a suburb’s fundamentals support long-term growth. A bargain in a suburb with declining population and rising crime is not a bargain. A full-price purchase in a suburb with booming population, new infrastructure, and rising incomes is a bargain you just won’t recognise until year three.

5. Don’t let perfect be the enemy of invested. One of the hidden costs of the “buy under market value” mentality is analysis paralysis. Investors spend months — sometimes years — waiting for the perfect deal while the market they should have bought into grows 5%, 10%, 15%. The cost of not being in the market is often far greater than any discount you could have negotiated.

The Bottom Line

The old adage “you make money when you buy” contains a grain of truth — overpaying recklessly for a property in a weak market is obviously a bad idea. But as a guiding investment philosophy, it dramatically overweights entry price and underweights the factor that actually creates property wealth: sustained capital growth driven by strong market fundamentals.

You don’t make money when you buy. You lose money when you buy — to stamp duty, to fees, to inspections, to time. You make money when you hold a well-chosen asset in a market where demand is growing, supply is constrained, incomes are rising, and infrastructure is improving.

Focus on holding well, not just buying well. The data will tell you where.