Jun 24, 2020
Today’s podcast is based on your
questions: questions listeners have asked and the questions that
our clients are asking us at Metropole.
There’s still so much
uncertainty about a recession and uncertainty about what’s going to
happen to property values, so today I’m going to give my thoughts
and leave you with more certainty and better direction.
We’ve been hit by a health
crisis that’s led us into the most serious global recession in
almost a century. But there is some good news. Recent events have
left many of us feeling uncertain, but they’re also responsible for
some of the best opportunities in our lifetime. It may be your
opportunity to realize financial independence.
What’s going to happen going forward?
- Recessions are always periods of significant
opportunity because they are a time of transfer of
wealth
- The
technical definition of a recession is two-quarters of negative GDP
and while we’re not there yet, we’re in recessionary
times.
- By
the time we find out we’re officially in a recession, it will all
be over
- I see
a staggered, satircase recovery rather than a V-shaped
recovery
- In
the meantime, many will probably stash their cash waiting for
the news that we’re through the worst of things
- We
entered this recession with a positive balance of trade, an
almost-balanced budget, and a solid banking system in
Australia
- We’re
not seeing many mortgage defaults because in general, debt is in
the hands of those who can afford it
- There
will be higher unemployment for a while, but it’s likely it won’t
be as bad as initially predicted
- Reduced wages will lead to less spending power
for a time
- The
real estate markets have slowed down. There are fewer transactions
and fewer houses on the market.
- The
property market is starting to pick up, and there’s a flight to
quality but there are \ great opportunities for investors prepared
to take a long-term view
- Over
the next few years, interest rates will remain at historic
lows
- There
will be a short-term window for those who want to get into
property, as many are still sitting on the sidelines
- The
Reserve Bank can’t lower interest rates any further, so governments
will have to stimulate the economy with fiscal
policy
- Unemployment will likely be high for a couple
of years
-
- While
some industry sectors will suffer, others will do OK
- Tourism, education, retail, and maybe the
financial sector will suffer
- Government, manufacturing, technology, defense,
agriculture, infrastructure, and healthcare will all do
well
Some Recommendations:
- Don’t overreact. Be careful not to get sucked in by the news and
by the hype. Instead, think long-term.
- Don’t try to time the market, and don’t try to get a
bargain. Just buy the best
property you can in the best location you can in your
budget
- Before you get into property, make sure you have a
solid foundation. Have
financial buffers in place and talk to some experts about the right
ownership structures to maximize your upside and minimize your
risk
Links and Resources:
Michael Yardney
Get the team at Metropole to help build your personal
Strategic Property Plan
Click here and have a chat with
us
Join us at Wealth Retreat 2020
Shownotes plus more here:
Coronavirus, Recession, and Property: Who’s right – the pessimists
or the optimists?
Some of our favourite quotes from the show:
“I see a staggered recovery as
we move out of lockdown in stages.” – Michael Yardney
“Recessions are largely driven
by how the population as a whole is feeling about the economy, more
than what the economy itself is doing.” – Michael
Yardney
“We know from previous downturns
that before unemployment goes down, the property market starts to
pick up. Rising property values always lead us out of recession.” –
Michael Yardney
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