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Property Puzzle
Written by Jenese Malone – Founder of PR Australian Properties
So it seems that all the news is once again back to doom and gloom.
What are we reading about now, global credit crunch, mortgage money much more difficult to arrange, stock market down, plummeting house affordability for first home owners, Petrol prices up, food prices up, interest rates up and so on and so on.
I have read all this before. In fact it is common place after there has been heady increases in property. The sub prime situation is a new one but lenders have tightened their belts before and will again.
Some say that the boom has finished and are panicking about the crash that they expect to follow. It dosen’t always follow that a crash comes after a boom. Look at what happened in Melbourne, Brisbane and Adelaide after the 2003 boom, there was no crash there. A slowing down but NO CRASH. Sydney did suffer a severe property slump but I believe that was more to do with the fact that after coming out of the Olympics it had an over supply which happens in all cities that hold the Olympic Games,Expos, World Cups and such.
This is caused with the fever buying that happens when the “Olympics are coming”and it will happen in London, just wait and see!!. We see it when we are there. People flocking to buy in Docklands because the “ Olympics are coming”
I even see people advertising property in South Africa citing the forthcoming “World Cup” as a motivator. These events are not sustainable and will do little for the property market AFTER THE EVENT, in fact in most cases they cause over supply.
Market conditions are very different today than the property correction of 1989 and our research points to sustainable growth in areas that have the conditions needed for property.
To start with, the last crash was in part caused due to an oversupply of property and unemployment was very high which in turn meant families couldn’t afford their mortgages and interest rates were higher than ever before. Governments around the world have learned to manage their economies better now for sure.
This time all reports are of an under supply of properties and that is being proven with the rising rental prices. So now a shortage of available properties is the case not an oversupply. We have a very different employment situation now sitting at the lowest for decades and this time around the country suffering a labour shortage.
There is a growing population with the government increasing the migration numbers significantly annually due to the shortage of skilled people.
It is human nature that when things are going well people believe that they will continue to go well and when things are bad likewise they believe that things will always be bad
I have written in all my past articles that property cycles are always going to happen Property can only be in one of 4 places at any time UPTREND , PEAK , DOWNTURN , CORRECTION
When the market has been going strong and it is at its Peak, People continue to buy in as they think this will continue and don’t believe that there will be a correction.
Likewise when there has been a downturn and it starts to correct people wont go in as they “know the market is bad” and wait too long before they realize” Ooops” the market has turned again Australia does not have 1 PROPERTY CYCLE as there are 6 states and 2 Territories and each has to be taken in isolation.
That is the missing key when one reads all the news and reports, no one addresses this fact.
More people are telling me now that they don’t think they should buy into the Australian market now as the market is flat. Now where do they get that Idea? Yes in some areas that is true, however, there are areas which are anything but flat.
For so many years it was a sellers market. Now in many places it has turned to be the buyers market which is a good time to get in as long as you don’t get in too early and have to wait too long for the bottom to hit.
Property should be bought with the understanding that cycles will occur and their property will be part of them and educated not to panic when it happens. Property will always increase, it is just a matter of the timing. Unfortunately so many of the people who have been investing in property for investment around the world these past 6 years or so have only ever seen GOOD TIMES, and were not prepared for the changes that were inevitable. The sad thing is here that many will sell unnecessarily through fear and allow other people to influence their thinking.
So what should one do about property right now?
DONT’S!!
1) DON’T GET PANICKED BY NEGATIVE REPORTS AND NEWSPAPERS
2) DON’T FOCUS ON INTEREST RATES- LOOK AT THE PRODUCT IN FULL
3) DON’T MIX WITH DOOM SAYERS
4) DON’T CONSULT AMATEURS
5) DON’T LISTEN TO WELL MEANING FRIENDS
6) DON’T SELL!!
DO’S!!
1) FIND OUT WHERE THE MARKET IS UPTRENDING, NOT DOWNTURNING OR PEAKING. BUYING AT THE WRONG TIME, DELAYS THE TIMING OF PROFIT.
2) LOOK FOR TOWNS WITH HIGH POPULATION GROWTH
3) FIND PLACES WITH DEVELOPMENT AND INFRASTRUCUTRE DOLLARS
4) LOOK FOR EMPLOYMENT IN THE AREA
5) ESTABLISH WHAT IS IN DEMAND AND THEN WHAT THE SUPPLY IS
6) ENSURE YOU KNOW HOW TO STRUCTURE IT TO GET FULL TAX BENEFITS
PR Australian Properties continues to research the entire Australian market place on an ongoing basis to identify where the most profitable areas are at any given time. We then source the best properties, Arrange the finance ensuring it is the most flexible loan with 100% tax benefits, Organise the Property Management and keep investors updated with ongoing news letters and reports. For further information please contact:
JENESE MALONE : Email Jenese
Phone: +61 418 752 582
