Preview Mode Links will not work in preview mode

Michael Yardney Podcast

Insightful, educational and always interesting

Listen and learn from Michael Yardney, Australia’s most trusted property commentator and a group of experts as they discuss Property Investment, Success, Money and Finance to help you multiply your wealth.
While Michael is best known as a property expert, he is also Australia’s leading authority in the psychology of success and wealth creation. You’ll enjoy the way he challenges traditional finance advice with innovative ideas on real estate investing, personal finance and wealth creation. 
SUBSCRIBE NOW so you can learn a few new ideas each week in around 30 minutes.

Apr 22, 2019

Want to know what will make me a better property investor in this difficult market?

I expect that the property market is going to pick up.

And I expect that the Melbourne and Sydney property markets will go gangbusters.

I have no idea when this will happen.

Now just to make things clear…those aren’t contradictory statements.

The first is an expectation, the other is the rejection of a forecast.

And if you want to be a successful property investor, you’re going to have to understand this important difference.

It’s one thing to look at history and see that the property market cycles with some frequency and then form a baseline of what to expect in the future with this knowledge.

However, it’s quite another thing to predict the precise timing of the turning points in the property cycle.

And it’s another thing entirely to devise a strategy that reacts to those predictions.

Property analysis isn’t black and white, yet some people believe they can predict markets and they tell you about (or sell you into) the next property “hot spot.”

There’s an important grey area, which is expecting certain events to occur without having an opinion on exactly when, where, why, or how.

I’ve been investing for over 40 years now and in that time there have been 8 significant property cycles.

I can use this as a very rough rule of thumb for the future, based on the idea that we’ve got even more positive fundamentals to drive our property markets than past generations had.

While there are many sound fundamentals underpinning the long-term prosperity of our property markets, two of the big ones that give me comfort are our significant population growth and the wealth of our nation.

This reassures me that my long term plans are sound and based on what has always worked – rather than trying to pick what is right for the current market.

Now I have an expectation:

If I plan on investing for the next 30 years, I should count on things getting ugly at least six times.

Maybe it’ll be a little more, maybe less.

But I have an expectation, a rough idea of how the game works.

Yet it’s not a forecast.

A forecast is, “The property market will turn in the second half of 2019” or “Australia will have a recession in the first half of 2021.”

That’s precision, with a disregard for both the history of people making such forecasts and the events that cause these turning points which, a lot of the time, is something that can’t be foreseen.

The important difference between an expectation and a forecast is the impact it has on my behaviour.

If I expect property booms and property downturns, I won’t be surprised when they come.

I know they’re a normal part of the game.

But since I’m not sure when they will come, I won’t attempt to do much about it.

Attempting to do something about it – trading, timing, buying and selling – is the root of most investors’ mistakes.

A forecast suggests that you know when something will happen, which is permission to act on it.

There’s little reason for a forecast other than acting on it.

But unfortunately this creates two problems:

  1. The false hope of knowing exactly when the property market will turn. Even the experts keep getting their forecasts wrong.
  2. The high-probability of regret from trading around these forecasts.  Just see the results all the hot spotters have achieved, or the lost opportunity for those who tried to time the market.

In other words…

Expectations rather than forecasts make me a better property investor.

What does the Federal Election mean for our beleaguered housing markets? 

So finally we have the federal election campaign underway – what does this mean for our beleaguered housing markets?

Home values across Australia’s largest capital cities have been falling since they peaked in late 2017.

In fact, it looks like this will be the biggest and longest national decline in home values for almost 40 years (or since records began in 1980).

Consumers have lost confidence, first buyers went on strike now sellers are holding back unless they really have to sell

And while the property markets have started 2019 with a positive note, with more interest from buyers, auction clearance rates rising, the banks chasing more business another hurdle has been put in our way.

A federal election and elections create uncertainty and when there’s uncertainty buyers put their hands in their pockets.

Dr. Andrew Wilson and I discuss the likely implications of the election campaign.

  • Election date is Saturday 18 May
  • This will clearly disrupt a recovering market with agents avoiding auction sales campaigns in the next month
  • At the same time the late Easter and holiday period will see a closing down of the property market at least till the end of April
  • This means the current record decline in seller activity will be amplified over next month
  • Buyers will also be wary given until they know who will win the election
  • The election campaign will end close to the winter market shutdown that commences after Queens Birthday long weekend (June 10)
  • The election will act to distract the property market
  • Buyers and sellers wary of election outcome – so will be sidelined
  • The election result is likely to be closer than previously thought based on latest polls. And the market hates uncertainty
  • The significant Labor Tax policy will be the focus of scare campaign exacerbating all the above

Watch the video of our discussion here: What does the Federal Election mean for our beleaguered housing markets? | Property Insiders Video