Federal Budget 2016 and the Future for Property

The budget predicts our GDP or our combined wealth to leap from a 2.5% increase to a 3% increase next year.

Obviously the wealthier we are, the happier we are, the more money we spend and the more jobs we create.  Over two hundred thousand new jobs last year and over three hundred thousand the year before.  It means we are on track.

The $10,000 subsidy for businesses employing people under twenty five or the unemployed is a great move.  The saying is "idle hands are the hands of the devil".  I am sure there are a lot of people in prison now for petty theft who wouldn't be there had this operation started years earlier.

Outlook for Property 

A buoyant, wealthy economy means continually rising property prices.  APRA's foolishness is causing a drop in supply of twenty thousand properties, according to the figures.  For some reason the experts are applauding this move as putting downward pressure on prices.  They obviously don't know about the law of supply and demand.  With a rising population and a falling supply it must feed into prices being bid up.

The supply is even worse than the past five months of downward trend would indicate.  The oversupply of inner city high rise feeds into the figures, but what about the supply of wanted dwellings? Since 2009 the population has risen 8% but the supply of low and medium rise units and townhouses has dropped fifteen and twenty percent respectively. Too few of the right bananas!

I see that the latest monthly figures have Brisbane now leading the country in property price growth. Soon all the media "experts" will be wowing that there is a property boom and bust in Brisbane.

What these "experts" lack is experience, or they deliberately ignore history.  City property prices have always doubled every seven to ten years.  Now we have low inflation that will take longer, probably ten to fourteen years.  However with low inflation you need less capital growth to get to the same wealthy lifestyle.

Choosing a lifestyle for retirement*

What is a wealthy lifestyle? On my figures it is seven to ten investment properties held with interest only loans for this ten to fourteen year period.  You then have a safe bricks and mortar nest egg to carry you through to the now expected ninety-two years old.  Now we will enjoy more years in retirement (if we're wealthy) than we actually spend working!

We have my “Book of tips and traps – 100 Fast Facts".  You will need this to avoid the traps in property that ninety percent of property investors fall in to.  This stops them moving past one or two properties.  As we have said many a time, one or two properties is only enough to knock you out of getting a full pension down to a part pension yet you are open to the sudden unexpected costs of maintenance and repairs.

Hence, you need seven to ten properties.

Regards,

Kevin Young

Property Club Founder