All those people with an agenda and in need of airtime are fighting it out to be the ones with the largest and loudest crystal ball. Remember them? Unfortunately, negative media hype can easily scare you away from building your property portfolio.
As the Covid pandemic was taking hold back in 2020 we were being told that property prices would plunge 30% … many, many people put off buying property, fearful of what was to come. And what happened? Almost the exact opposite with stellar capital growth in so many property markets. Those that didn’t buy gave themselves a good talking to not to make the same mistake again. Now we’re all being given new reasons to not buy, to put off that buying and investing decision yet again.
Obviously, no one can in all honestly sit anywhere right now and claim that they know exactly what property prices will do in Australia over the next 18 months or so.
But reporters can sit there and scare the bejeezus out of you because that’s what they’re paid to do and that’s what gets the most clicks. You have to keep in mind that negative, dramatic news headlines make us all click way more than positive, calming and reassuring ones. Go Figure! But that’s why they write them.
While some property prices in some areas may correct to some degree over the coming months, what we do know for sure is that over the past 50 years, in the face of interest rates many times higher than they are now, in the face of wars, pandemics, stock market crashes, world-shattering events, Australian property prices have climbed and climbed and climbed. Not all at the same time, not all at the same rate but with one major thing in common – those that didn’t buy when they had the chance and the opportunity and funds to do so regretted it, without fail!
Those that sat and “waited to see what happens” always, always regretted it.
Why? Because it’s not just the world that can change – it’s also your circumstances; job losses, health issues, more kids, relatives. All of these things are all a reality and only a small selection of many things that can happen to derail your property investment journey.
If you don’t strike while the buying iron is hot, you will regret it.
It’s no secret that currently, interest rate hikes are stemming the tide of property growth in 3 cities, but Brisbane, Adelaide, Perth, regional Victoria and NSW and many other markets are bucking the trend seen in Sydney, Canberra and Melbourne. Although these property markets remain below the peak quarterly rate of growth, the growth trends still lifted in May. In Perth alone, reiwa.com.au data revealed that 64 suburbs recorded median house sale price growth last month.
Many industry experts believe the demand for properties in Brisbane, Adelaide and Perth for example won’t be going away anytime soon. “Demand remains strong despite recent rate changes and price growth will likely stabilise and perhaps go sideways for some months,” they said. “The number of properties on the market in Perth is still relatively low at 8,450 rather than the 11,000 needed to meet demand.” This is a trend we’re also seeing in many other markets.
We at Adviseable are still seeing 40 plus groups through open homes. We are still one of many many offers battling to get our clients the best deal.
The simple supply and demand equation
Factors driving property growth in these markets:
- affordability creates demand
- lack of quality listing stock creates supply issues
- strong business confidence creates demand
- strong overall Australian economy creates demand
- low unemployment creates wage growth and increases borrowing capacity which creates demand
- strong migration figures set to boom as Australia courts international workers to return creating demand
- low construction starts and high material costs mean a low supply number
- lack of investors and lower levels of borrowing capacity create supply issues
All of these factors contribute to the prediction that property prices will in fact stabilise in many areas and then more than likely rise in property markets with all the usual strong market fundamentals that we always look for our clients. During our area research and selection process, we assess 10 key aspects of each area to determine whether it meets our strict criteria and has the best chance to grow in value over the long term, which our investors hold their properties.
So try not to be scared into inaction. We know it’s hard to swim against a jittery herd!
We’ve been there ourselves many times. But interest are still historically SUPER LOW and your borrowing capacity is still better now than it might be later in the year when they go up again – and they will go up again.
…and remember I haven’t even started properly discussing how much rents are going to increase over the next 18-24 months. The housing shortage doesn’t just affect capital growth. You can look forward to more long blogs about THAT one – haha!
In the meantime, watch my videos on Australia’s rental crisis while you’re pumped up and motivated to get started or keep going.
There is never a time like the present to put your property purchasing plans into action.