May 7, 2018
What are Australian
properties going to be worth in a decade?
What’s going to make a good investment
property over the next 10 years?
What are the major trends that are
going to affect our property market?
It’s interesting to look at the
difference between predictions that were made 10 years ago and what
really happened between then and now.
In today’s show, I’ll share a
discussion I had with Ahmad Imam about the major property trends
and influences to expect over the next 10 years. Then I’ll share my
predictions for what will make a top performing investment over the
You’ll hear us
- The major trends that will affect our property
markets over the next decade including.
- Demographic trends
- Population growth – household formation
- How we want to live
- Where we want to live
- Economic trends
- We’re transitioning from a manufacturing country and a
resources led economy to an economy based on service
- What will this do to where job growth will occur – wages growth
will occur – obviously affect housing
- How we’re going to invest in a lower inflationary and
wages growth environment
- How the forecast strong population growth will
affect us – it’s not all good news – there certainly are some
- Population growth and the wealth of the nation will underpin
property values – we need both.
- Over the year to September 2017 the annual growth in
Australia’s estimated resident population picked up to +395,600.
This is the largest annual increase since 2013 in absolute terms,
if not in percentage terms.
- More than half of this growth is due to immigration –
Australia’s permanent migrant intake is capped at around 200,000
per annum, but the overall pace of net overseas migration was
faster than this, partly accounted for by international
- The estimated rate of population increase through net overseas
migration is a bit faster than might be implied by the issuance of
permanent residency visas, with the growth international students
accounting for some of the difference. Where all these people are
- Why population growth alone won’t create economic
growth, and what is really needed.
- A big demographic trend that will shape our
property markets but doesn’t seem to be mentioned much.
- Our ageing population means we have more one and 2 people
households, meaning the type of property that will be in continuous
strong demand will be different in the future with more people
trading backyards for courtyards and balconies. More single older
people, more DINK’s, more empty nesters, more young singles getting
- Smaller average household size means we need more dwellings for
the same number of people
We also discuss Wealth Retreat
2018 which be held on the Gold Coast on June 9th to
Click here to find out more and
register your interest
By the way…
- Wealth Retreat is not really a property seminar, even though we
do spend a lot of time talking about property.
- Wealth Retreat is about creating lifetime wealth and leaving a
- It is aimed at already successful property investors, business
people and entrepreneurs.
- We have Australia’s leading faculty of property, tax, finance,
financial planning economic and business growth experts.
- I’ve found many of the attendees from previous years felt
isolated in their wealth creation journey and by joining us they
suddenly developed a peer group of like-minded people.
- Find out more at com.au image how you will be
different after 5 days immersed with a room full of successful
movers and shakers.
My predictions for the next
- We are in for a period of slower capital growth – can’t count
on the market doing the heavy lifting
- Strong population growth will occur in our capital cities
compared to regional Australia
- We have 2 super star cities, but strong capital growth in big 4
- There will be disproportionate wages growth in some locations
because of the jobs that will be created in the service
- Some commentators have got it wrong saying buy in regional
areas as we’re going to be the food bowl of Asia – I hope we will –
but not high wages growth and tourism leads to part time / casual
- Don’t fight the trends – invest in the 3 big capital
- Learn from the big overseas property markets
- More people will trade space for place – and backyards for
balconies and courtyards
- Location will do 80% of the heavy lifting but you still need
the right property
To ensure they buy an “investment
grade” property that outperforms the market, investors should
consider using my 6-Stranded Strategic Approach,
which means that they would only buy a property:
- That appeals to owner occupiers. Not that they
should plan to sell their property, but because owner occupiers
will buy similar properties pushing up local real estate values.
This will be particularly important in the future as the percentage
of investors in the market is likely to diminish.
- Below intrinsic value – that’s why I would
avoid new and off-the-plan properties which come at a premium
- With a high land to asset ratio – that doesn’t
necessarily mean a large block of land, but one where the land
component makes up a significant part of the asset value.
- In an area that has a long history of strong capital
growth and that will continue to outperform the averages
because of the demographics in the area as mentioned above.
- With a twist – something unique, or special,
different or scarce about the property, and finally;
- Where they can manufacture capital growth
through refurbishment, renovations or redevelopment rather than
waiting for the market to deliver me capital growth.
Some of our favourite quotes
from the show:
“In the last year in Australia,
population growth was almost 400,000 people. It was estimated to
increase by 395,000 people. That’s the largest increase we’ve had
in population growth, in absolute terms, since about 2013.”
“We’re having significant growth, more
than any other developed nation in the world.” Michael
“Don’t fight the trends. Buy in
capital cities.” Michael Yardney
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