“So this is Christmas, and what have you done?
Another year over,?and a new one just begun”
I’m sure you remember these words from John Lennon’s Christmas song.
And yes, another year has nearly passed and hopefully you took advantage of the opportunities that were on offer because 2009 will be remembered as the year the property boom snuck up on us.
Despite all the doom and gloom in the media, and the GFC affecting our sentiment, a mixture of a booming population growth, an undersupply of new dwellings, record low vacancy rates, low interest rates, increased affordability and an improving economy were a volatile mix that ignited a property boom in some of our eastern capital cities.
Let’s look at the latest growth figures reported by Residex:
No one would have dreamed of these types of increases at the beginning of the year when we were worrying about the Global Financial Crisis.
Even back around Easter time there was a threat that Australia would fall into a recession and many economists were predicting property values would plummet.
By the way… I am on record suggesting that property values were not going to tumble, due to the strong underlying property fundamentals. My forecasts have been proven correct and I am basing by predictions for next year on the same fundamentals.
But as these statistics are just averages, they don’t really show the true strength of the property markets in some parts of Australia where values increased substantially more than those quoted above.
2010 will be another great year for property investors as values and rentals will increase further. But this will not occur equally around Australia – some areas will significantly outperform others – creating a bigger gap between the rich and the average Australian.
There will be less growth in the cheaper suburbs and in the outer suburbs where there are plenty of new houses being built and rising interest rates will bite more as affordability lessens.
In contrast in the inner suburbs, increasing demand from owner occupiers, investors and tenants is likely to maintain the strong market conditions we have enjoyed this year.
You see, current tight lending criteria has meant that developers aren’t able to build the medium density and high density apartments required in these suburbs.
So if you want to increase your wealth through property, and take advantage of the new property cycle, 2010 could be a great year for you, but:
1. You need to buy the right property– one that will increase in value above the averages, in the right location and at the right price; and..
2. You will need to structure your finances correctly and allow for our changing interest rate environment.
I’m sure the ‘Chicken Littles’ will be back again in 2010 yelling the ‘sky is falling’, as interest rates rise and affordability bites, however smart investors will be out buying the right type of property.
Sitting on the sidelines waiting to see how things pan out may seem safe to some, but it is likely to mean they will miss out on great opportunities.
It is easy to do nothing… as Donald Trump says: “Nothing is easy… but who wants nothing”.
The problem is that it is easy for us to find excuses to put off taking action to ensure our future financial future. The timing never seems right – and yet, in fact, the time is always right.
As a way of saying thank you for following my blog, I’d like to give you a gift of learning: an eBook The Science of Getting Rich, plus two tele-seminar downloads, including the Great Property Debate where six Australian property experts give their forecasts for 2010. Just click here now to receive my gift to you.
So, concluding with some more words from John Lennon’s song, my wife Pam and I and the team at SmartCompany wish you:
“A very merry Christmas ?and a happy New Year
Lets hope it’s a good one,?without any fear.”
Michael Yardney is the director of Metropole Property Investment Strategists, a best-selling author and one of Australia’s leading experts in wealth creation through property. For more information about Michael visit www.metropole.com.au and www.PropertyUpdate.com.au.
Look out for the newly updated 3rd edition of his best selling book How to Grow a Multi-Million Dollar Property Portfolio – in your spare time.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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