Jun 26, 2019
Do you want to know when our
property markets are going to bottom out?
Think about it…it wasn’t that
long ago that the media was telling us that we’re in for even
further property price falls.
But look what’s in the media
Many people are asking how to
pick the turning point in the property market. Is it too early to
get in and buy countercyclically? Is this the right
In this episode, we’ll talk
about what to look for to pick the turning point in the property
Also, I’ll share my views on
buying counter cyclically.
I’ll also share some of the
lessons that we’ve learned from past property downturns, and in my
mindset moment, we’ll have a chat about fears.
How to pick the turning point in our property
Even the smartest economists
armed with all the data can’t pick the exact moment the market
turns. But there are some signals you can look
- The macro economics
– The property market doesn’t work
in a vacuum, so the world economy and the country’s economy matter.
Keep an eye on inflation and wages growth as well.
- Finance – Property markets are driven by the
availability and affordability of finance. Keep track of data on
credit growth. Credit growth is a leading indicator – it turns
positive before the markets do.
- Market sentiment
– Increased consumer and business
confidence are good signs for the future.
- Supply and demand
– The population is growing faster
in Australia than any other country, and this fuels demand for
- Vendor discounts
-- When sellers don’t have to give
as much of a discount to sell their home, that’s a sign that
property markets are starting to turn, and that will come before
property values start to increase.
- Increase in the number of
transactions – This will
happen as buyers and sellers return to the markets
- Asking prices
– Asking price is an accurate
real-time indicator of what’s happening in the market
- Option clearance
rate – This is a good
indicator of market confidence.
Now is a good time to make a
countercyclic purchase in Sydney or Melbourne or ride the property
wave that started a while ago in Brisbane.
Lessons learned from past property
I’ve been investing since the
early 1970s, so as you can imagine, I’ve seen the ups, the downs,
the stabilisation phases, and the booms come and go and repeat
themselves. I’d like to share with you ten lessons I’ve learned
from previous cycles.
- Booms never last
forever – Every boom sets
us up for the next downturn, so be prepared when it
- Adhere to the
strategy – Don’t change
your long-term strategy because of short-term factors.
- Getting rich quick is getting
poor quick – Successful
property investing takes time. There are no shortcuts.
- You need a long-term
perspective – Keep your
eye on the long-term horizon.
- Property investment is a game
of finance with some houses thrown in the middle
– Strategic investors buy time by
having financial structures in place to ride through the
- Invest in locations with a
future, not a past – Find
a location where the local economic growth will lead to jobs and
- You know less than you
think – An overinflated
ego will leave you worse off than you started. Surround yourself
with mentors and experts who can teach you things you didn’t
- Don’t mistake money for
wealth – True wealth
hasn’t got to do with how much money or property you have. It’s
what you have left when you lose it all.
- When good times seemingly
turn bad, property pessimists and doomsayers come forward
– Sophisticated investors ignore
the white noise and focus on the long term.
- Opportunity is
knocking – Take action
when those around you are talking doom and gloom.
Links and Resources:
Metropole Property Strategists
Metropole’s Strategic Property Plan – to help both beginning and experienced
Some of our favourite quotes from the
“As I see it, there really
hasn’t been as good a time to buy counter cyclically for over a
“A world without fear would be
simultaneously more dangerous, less rewarding – just plain flat.”
“Don’t be scared of bad things
happening. Do your homework, do your research, and get on with
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