When lifestyle is not part of the equation, performance leads.
The Benchmark Test
Is it Beating the Average
When assessing whether a property is still working for you, the first question is simple: Is it performing relative to the market? In Melbourne, long-term growth averages for apartments and houses can be tracked over decades. Knowing these benchmarks allows you to see whether your asset is keeping pace or falling behind.
Comparing your property’s capital growth to historical averages helps take emotion out of the picture. A property may feel valuable because you like it or are attached to it, but if its growth has lagged behind Melbourne’s long-term averages, it might not be serving its intended role. Understanding where your asset sits against the benchmark sets a practical foundation for any exit decision.
Yield Versus Drag
Cash Flow Reality
When assessing performance, it is essential to look beyond gross rental income and understand the real net position of your property. Rental yield is a useful starting point, but it does not tell the whole story unless you account for ongoing costs and true net return.
Yield is simply the income a property generates, usually expressed as a percentage of its value. But yield without context can be misleading if it ignores costs that erode that income. Your mortgage, owners' corporation fees, insurance, repairs, and other expenses all reduce the actual return you see in your pocket.
A simple example helps make this real:
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Weekly rent: $600
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Mortgage cost: $450
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Owners corporation and maintenance: $70
Net cash flow: $80 per week
At first glance, $80 per week appears positive. But once you overlay the time, effort, risk, and opportunity cost of that equity, the margin may look thin or even unproductive compared to other opportunities in the market.
For a deeper breakdown of how to evaluate your property’s true performance, our blog See the Real Performance walks through exactly this type of analysis. It explains how headline numbers can mask real net results and why it is critical to assess cash flow in context.
Understanding the difference between gross yield and net position helps you decide whether the property continues to justify holding it, or whether it is creating a drag on your capital. When you strip away emotion and focus on performance, you are better placed to make strategic decisions about exit versus retention.
Land Tax Pressure
The Silent Leak
Another factor that quietly erodes property performance is land tax. Over time, rising land tax can significantly reduce your effective return, even if capital growth looks healthy on paper. Many investors underestimate this cost, assuming growth alone will make holding worthwhile.
For example, a property that seems profitable in the short term may see its net cash flow decline as land tax increases with property value or portfolio size. When combined with mortgage repayments, insurance, owners' corporation fees, and repairs, the impact can be substantial.
The blog The Silent Appreciation Strategy for Expats highlights exactly this point. It explains how focusing solely on capital growth while ignoring ongoing costs like tax can quietly reduce net benefit, turning a property that feels like an asset into one that slowly becomes a financial drag (propertyshortlist.com.au/blog/the-silent-appreciation-strategy-for-expats).
Understanding land tax as part of your performance assessment allows you to make informed decisions. Holding a property with rising costs may feel comfortable, but it may not actually be productive. By factoring this into your START review, you ensure that exit decisions are grounded in reality, not assumptions.
Opportunity Cost
What Else Could This Equity Do
Finally, consider opportunity cost. The equity locked in your property could be redeployed into assets with higher yield, faster growth, or better alignment with your lifestyle. Equity sitting idle is like a car idling in the driveway. It feels productive. It is not moving.
Thinking in terms of opportunity cost shifts your perspective from passive ownership to strategic allocation. Even a well-performing property may underperform relative to other investment opportunities available in the market. Reassessing where your money could be put to work allows you to make rational, intentional exit or retention decisions.
This performance lens naturally leads into a discussion about asset type differences, which is the focus of the next article in the series.
START | SMART | 360 Connection
This article relates to START. In The Shortlist Method, START defines what the property is and what role it plays. Exit decisions require the same clarity about identity and purpose before timing or execution is considered. Understanding how your property performs relative to benchmarks, yield, costs, and opportunity costs ensures your actions are practical, intentional, and aligned with your goals.
