Media Hype Wrong Again

Almost like clockwork, the “Property Market Will Bust” tagline fills media headlines accompanied by hundreds of pages of newspapers and many hours of television throughout Australia and while this fills the consumers with dread and fear time after time they are wrong!

I have put a few charts in this notice which are my secrets to the property game.

• Property Prices are fluid
• Property Prices react to buyers and sellers in the marketplace
• You should set the goal to get 8 properties before retirement in different areas, “Not putting all Eggs in One Basket”

I would be amiss to tell you that property prices always go up because the truth of the matter is at points they can go down, but this is not linear. The property market is comparable to Willy Wonka’s glass elevator, yes it can go up and down but it also goes sideways (stagnates).

So with that in mind, we need to explore what causes property prices to move? Well, the simple answer is the property market, like most markets, are governed by the law of economics, that being supply and demand.

The law of economics can be observed from the above chart, you will see that the Sydney property market was flat between "A" and "B", but why? The plateau of Sydney property prices is due to the fact that Federal Government and APRA did nothing to stem the flow of houses into the Sydney market after the 2005 property boom, but what happens when the flow of properties to the market is stemmed? Well, this happened in Sydney in 2010 when APRA stepped in and stopped the supply of property, this caused the Sydney property market to foresee a property shortage and subsequently caused the Sydney property boom extended 2 years longer than it should have.

Using the Sydney market as an example it is clear to see that in short periods of time, markets can drastically change, so how do you protect yourself and your investments? Well, the simple solution is diversification.

Sounds simple right but buying an interstate property can be an extremely daunting prospect, but this is where the Club can step in to help you. We have the ability to not only guide you in your purchase but also provide you with continual support with maintaining your property through our extensive infrastructure.

Summary

Every 6 months I open the paper and see another ‘bubbler’ or ‘doomsayer’ has predicted the bursting of Australia’s property bubble. They continually tell us that we are in denial about the impending gloom, blinded by the consistent performance of our property markets over the last few years. However, a true collapse in the housing market would require huge amounts of cheap property flooding the market decreasing the demand. I don’t think we should be worried by headlines, while they are scary they have no substance, except for selling newspapers and improving TV ratings.

However, this does not mean we all need to rush out and buy every property we find. As an investor, you need to be vigilant and kept aware of what’s happening in the world’s economies as Australia does not operate in isolation. The Club will ensure that you take advantage of the opportunities the Australian property markets will offer over the next couple of years maximising your upsides while protecting their downsides through diversification to ensure that you are prepared for retirement.

Are you prepared?

Do you have eight well located and diversified properties? The sad fact is that 90% of people retire without a plan, savings or property except for their own home. If you're concerned about your retirement and want to learn how to protect your future, why not learn from Australia’s number 1 Wealth Creator. Pick up the phone and contact your Property Mentor or go to

enquiries@propertyclub.com.au

Kevin Young