I’ve been looking back at the last 60 years, through history, analysing data, projections and information regarding the Australian Property Market, how it has been affected and how it has reacted to global events. It is clear now that the media are inflicting fear and unnecessary angst amongst us, when really, all we need to do is look at the facts to reassure us.
In case the media have succeeded in their plan to deter you from your goals, and give up on securing a better life for you and your family, I implore you to read on.
Here is one of the most important history lessons you might ever read:
PART I – HISTORY DURING TIMES OF CRISIS
► 1987 – The stock market crashed
In Sydney, property prices rose by about 17% in a year and 42% in two years.
In Melbourne, property prices rose by about 22% in a year and 47% in two years.
In Brisbane, property prices rose by over 12% in a year and 51% in two years.
► 2001 – Sep 11 event sparked the war on terrorism
In Sydney, property prices rose by about 20% in a year and 41% in two years.
In Melbourne, property prices rose by about 15% in a year and 23% in two years.
In Brisbane, property prices rose by over 15% in a year and 39% in two years.
► 2008 – Global Financial Crisis (GFC) hit.
In Sydney, property prices decreased by about -5% in a year but rose by about 18% two years later.
In Melbourne, property prices remained roughly the same the first year and rose by about 25% two years later.
In Brisbane, property prices decreased by about -1% in a year but rose by about 9% two years later.
In summary, history is telling us that property continues to grow, regardless if it has a slow year here or there. I understand though that with all that is going on, you can still wake up once a week feeling nervous and unsure about what is happening in the world. Don’t worry, I have had those days too!
One thing I’ve learned is to block out the negative noise by replacing it with more effort, action and positive education (not listening to the news all day) than I ever have before.
I have upped the ante with my own consumption of information by listening to audiobooks and watching inspiring webinars on MasterClass.
My key lessons over the past month or so have been bundled together into something easy to follow. Something that any Australian can access and know their finances are protected. Better still, a low risk – high certainty roadmap to advance and conquer for the remainder of 2020.
PART II – CURRENT TRENDS IN AUSTRALIA
Now let’s look at some of the underlying long-term fundamentals supporting our property markets in the short, medium and long term.
- Population growth
Each year, Australia’s population is growing by around 360,000, meaning we need to build over 150,000 new dwellings per year to accommodate the increasing population.
It’s important to note that 60% of the above-mentioned growth is dependent on immigration. As a result, population growth is falling in the short term but will skyrocket the second our borders are open.
- Declining housing supply
We can expect an undersupply of well-located properties in our capital cities because:
– The supply of dwellings in many Australian locations is dramatically softening
– There are very few new large projects on the drawing board and considering how long it takes to build new estates or large apartment complexes, we are going to experience an undersupply of housing momentarily.
- Low interest rates
It’s never been cheaper for investors to own a property with the “net outlay” – the out-of-pocket expenses – being the lowest they’ve been for decades considering how cheap finance is today. What does this mean for you as the investor?
Substantially more rental income directly into your bank account to live off, or hold more investments.
An additional major benefit for prices is flocking first home buyers, with stronger savings and borrowing ability, determined to get into the property market and secure their great Australian dream.
- The Aussie dollar (AUD) is a bargain right now for international investors and soon to come travelers
Our dollar is cheap. For other developed countries, there hasn’t been a time like now to stimulate foreign investment, trade and business. For example, China has received a 25-30% discount on our dollar and our properties in the past 6 weeks. Money being injected into our economy right now is a good thing.
When our borders re-open again, we will see the masses visiting our amazing country for both leisure and business. The same goes for our highly respected educational system (uni) for foreign students. We will see a surge in industries like these.
- More renters
Soon 40% of our population will be renters, partly because of affordability issues but also because of lifestyle choices. These residents will need somewhere to live – better it be your wealth creating asset than someone else’s I say!
- Investors are moving away from shares to invest in property
The share market volatility will make some investors look to real estate as an alternative secure investment vehicle – underpinned by 7 million homeowners in Australia. Australian real estate can’t drop 30% in the space of a week! Unlike the share market.
I really hope that these lessons give you a good understanding of both the microeconomic and macroeconomic levers that all indicate a positive outlook for property moving forward. While we may be in a small stalemate at the moment when it comes to what to do, realistically, if you can afford to hold a property, there is absolutely no reason to sell and realise a capital loss.
“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”
Warren Buffett – American Billionaire Investor
Sources: Corelogic RP Data, realestate.com.au, The A Team Property