• Doug Archer

Forget FOMO. Opportunity presents when you go against the grain

The fear of missing out on the property ladder flourished in Australia’s major Eastern capital cities for five years. But in 2018 the talk is “The Bubble has Burst”. Despite fewer properties coming onto the market compared to the same time last year, inspection numbers, auction clearance rates and prices are down. It seems there are plenty who are shying away. The reason? Because ‘Experts’ predict there is more pain to come for homeowners and property investors alike. And they may well be right.

Banks have tightened their lending criteria, interest-only loans are maturing (& not being renewed), residential rents are softening, vacancy rates are up and many developers have been caught holding pipeline stock that they can’t offload. There are reports of developers accepting settlements lower than the off-plan contract prices. Oh, and there is rumblings that interest rates may rise 25-50 points by the end of the year!

But, let’s look at some realities.

Australia’s population just hit 25 million and is the fastest growing population in the western world. Driven mainly by immigration (62% of population growth), this growth seems likely to continue upwards with both major political parties indisposed to curbing it. Our economy remains strong with 3% growth forecast in the coming year, commodity prices are bullish and our government is stable (well .. in world terms anyway).

With all this in mind, the astute home owner/property investor will be trying to look at where the market will be in 5-10 years rather than where it will be in 6-12 months. Trying to pick the bottom of a market cycle is impossible. Better to look for value and opportunity while the rest of the market stands back so you are set when they return (which they inevitably will).

In Sydney, several infrastructure projects will open up opportunities and shape entire regions over the next 5-25 years. Rail works to Sydney’s North West and the second international airport at Badgerys Creek in particular will create opportunities for jobs, communities and businesses alike. The Barangaroo development will eventually complete the western CBD foreshore and link Walsh Bay right through to Darling Harbour.

Meanwhile, GO Hobart! They’ve got MONA + they’re bucking the Capital City housing price trend, albeit from a reasonably low base.

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