Timing Plays a Big Part in Succesful Property Investment
‘Now’ is the time
by Adrian Stagg
Anyone Got A Crystal Ball?
Well thankfully the election is finally over and we have a clear result. It’s likely that the Liberal national party coalition will provide a steady hand on the ’tiller’. And that is what investors seek especially after the last 5 years of change and turmoil related to the hung Parliament, a Government often in disarray & the GFC.
Continuing with the nautical metaphors there’s an old nautical saying that whilst you cannot control the wind, you can control the set of your sails, meaning that you can always adapt to things that are outside your control to get to your destination – your goal.
So no matter what your politics, if you are interested to invest in property now is the time to set your sails accordingly.
Where to now?
Nobody has a crystal ball to tell us exactly where we are heading in the property market but certainly in the near to medium term it is likely to be property price growth – so get set for Capital gains.
Of course some sectors of the Australian market have already surged quite strongly eg parts of Sydney and Perth, whereas other parts have yet to awaken eg Brisbane.
Interestingly the Reserve Bank is already using one of the tools that it has in it’s arsenal to try and stem that surge. That tool is publicity. Press releases warning banks to maintain lending standards and exercise caution etc., reminding people of the excesses that lead to the GFC.
This is a tool that the RBA rediscovered about 6 or 7 years ago and has increasingly been using since. It’s also referred to as ‘Jawboning’.
Will the RBA use it’s big guns soon? [that means interest rates]
Of course the Reserve doesn’t want to pull out it’s big guns just yet (read Monetary policy – interest rate rises) as it’s playing a balancing game. Now that the mining sector is transitioning from the investment phase to the production phase it needs the Aussie dollar to be lower to enable other sectors of Australian business to be more internationally competitive to pick up the slack left behind by mining; sectors such as tourism, farming & manufacturing.
This is still a long way from happening and increasing interest rates will most certainly boost our dollar, so don’t expect any interest rate rises for awhile yet and then not to the highs we once were used to. The latest unemployment figures released just today showing a small increase to 5.8% just reinforces this. Interest rates here in our increasingly globalised world will in future more closely reflect those in the other major world economies and those of our main trading partners and we are presently still well above them.
Earlier this year I was asked by a well known property investment magazine to write a piece about Australian property cycles. It’s worth re-visiting and you can read it here. Remember it’s over 5 years since Lehman brothers collapsed and things started to head south well before then. What’s that they say about property moving in 7 – 10 year cycles? Read it again and you will get a good understanding of where we are in the cycle and where we’re going.
Very simply, if you think you’ve missed the boat somewhere else Brisbane prices are only just now starting to move so good opportunities are still available. Furthermore, Queensland has traditionally been a popular destination for interstate migration. In prosperous times it was not unusual for Queensland to attract 50,000 + interstate migrants per year. In recent tougher times this has dropped off however as markets down south rebound expect these numbers to jump markedly from these levels if past history is any indicator. It will only be a question of timing as big disparities in housing prices between Brisbane and southern capitals will at some point ease – meaning that Brisbane will start to play catch up – meaning capital growth for property owners. Also, whilst Queensland may not feature as strongly in net migration from overseas as some of our southern neighbours the numbers are also significant. Population growth is an important factor in housing demand and development generally and cannot be ignored.
If you think that the time is now right for you to invest in Queensland please give me a call or drop me a line on 0428157127 or 07-33697779 – I’d be happy to help