I truly hope you all had a great break and have re-charged your batteries with a focus on the important things in life to you.
I am not a big fan or new year’s resolutions around finances, as they are a WISH based on a certain date more than anything else. Smart investors set goals followed by a strategy and then actions (sorry if that sounds boring to you but it is fire in the belly for those wanting to be effective in creating the life they choose).
Charbel Kadib wrote an article with interesting data in the Bulletin this week.
Owner occupier lending up $1.4b while investor lending is down $200m.
In brief, he notes the Treasurer is concerned that investor lending has gone backwards and the Australian economy NEEDS lending for housing to be opened up.
He points out the positive outcome for property values will be that once lending opens back up, the previously stalled Southern Capital city house values will be back to trending upwards.
My view on all this is that both Sydney and Melbourne property boom around 2013-2017 was cut short from what would have normally be expected based on both historical data and the economic climate. (Write to me and I will send you that historical data.)
I feel the actions taken were an over-reaction to a rising market by APRA and some in Govt which curtailed normal market outcomes. Panic about Chinese buyers and lots of media hype about ‘housing affordability’ brought lending restrictions in thick and fast. Now, I agree, some areas in lending NEEDED to be tightened as shark like behaviour from property marketeers and opportunistic lenders HAD to go under the microscope BUT, the over-reaction and associated fear mongering have affected the normal course of events.
Historically, Sydney ALWAYS has a 5-7 year lull followed by a 4-6 year boom. Melbourne always follows this classic boom cycle after Sydney and then Brisbane gets a massive upswing in a short, 3-4 year phase. Read my book, How to Jump into Property Investing – without being eaten by Sharks to understand more.
Sydney had and has a HOUSING SHORTAGE CRISIS. Did lending restrictions make this better or worse? Whatever you think, less houses being built with an increase in AU population of 350 000 per year will eventually only increase demand which then increases what? House Prices!
While Sydney had an affordability problem, Melbourne did not (you could still buy a 4br house 30klms from Melbourne for $400 000). Similarly, Hobart didn’t have a problem (now it does), Adelaide, Perth and Brisbane did not have a problem either, yet all have been affected by the changes in lending policies.
My expectation is that while the boom that Brisbane has just started has been slower to take off, conditions are ripe to see a traditional 3 year boom. Historically that has been around 80% but lets say it is only 30% or 40%, what are YOU doing about it?
New years resolution or smart strategy and planning, I know what I am doing investment wise in 2019.
As always, I would love to hear your questions and have a chat about your own strategy.
Please write to me at firstname.lastname@example.org
Hey, Hot cross buns are in the supermarkets already!
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