Your trusted voice for property investing. Anywhere, anytime.

Play

The have’s and the have not’s + Our experts ‘check in’ on their 2016 predictions

Play

 

Again this week, we will back track and hear what some of our experts had to say at this time last year about what was ahead. Chris Gray predicted that the major markets would continue to improve – correct – but was he surprised about what happened in Sydney?

Jan Somers – another one of our experts whose opinion we sought this time last year is saying that this year will be much the same as what she said about 2016.

The proportion of Aussies who own their own homes is falling, creating a chasm of wealth between the housing “haves” and the housing “have nots”. Michael Yardney from Metropole Property Strategists has been watching this closely and he has some advice for would be investors and indeed for young first time buyers as well.

Last year when Pete Wargent took out his crystal ball, he said to ‘expect the unexpected’.  Also he highlighted the impact international students would have. He was spot on – so what has he got to say about 2017?

When we asked John Lindeman this time last year what he thought was ahead for 2016, he predicted that Sydney would slow down and we would see a more defined 2 market situation.  So, how has he reacted to that?

You will find us at iTunes under podcasts as Real Estate Talk. Listen there for free, leave a review which helps us grow and tells us what you like and how we can improve the show. Don’t forget to subscribe at the site as well – even if you do get the show through iTunes – so that we can tell you about the bonus offers we make to subscribers. Your questions are welcome through the site as well.

 

Transcripts:

More unexpected situations on the way - Pete Wargent

Kevin:  As you’re probably aware, about this time last year, I spoke to a number of our guests and asked them what they thought about 2016, what we’d be saying about the year. One of those was Pete Wargent, who joins me once again. This time, he’s in the U.K.

Good day, Pete. Thanks for giving us your time again.

Pete:  Hi, Kevin.

Kevin:  Just to remind you, this is what you said this time last year.

Pete:  I think during some of this year’s exuberance, I believe a significant number of investors would have bought off-the-plan properties with only small deposits to hand. So, I think 2016 could be a year when APRA’s tightening measures towards the investor lending could pose problems for some of those off-the-plan buyers who’ll end up with a deposit shortfall at settlement. So, there could be some fallout from that.

I think that 2016 will also be the year the media latches on that going forward it will be the immigration of international students rather than arrivals on 457 visas that is actually driving Australia’s immigration and population growth. Enrolments and grants for students are starting to ratchet up, so with hundreds of thousands of student arrivals over the next few years, mainly headed to Sydney and Melbourne, that’s going to create a lot of demand for rental property close to the city centers, just at the same time that APRA is hosing down the investor sector.

Finally, I think 2016 could be a year to expect the unexpected. A lot of market commentary revolves around the notion that this can’t happen or that can’t happen. Well, I’ve been in Britain this month, and a lot of things that weren’t supposed to happen have happened, particularly in the investor space.

Back in Australia, we’ve seen APRA introduce macro-prudential measures this year, and I wouldn’t be surprised if there are more tweaks in 2016 in the wake of [1:40 inaudible] resulting in tighter capital requirements and lower loan-to-value ratios. So, in terms of what this means for investors in 2016, they’re likely to require substantial deposits.

Kevin:  Pete, I think of all the people I’m talking to in this program, you were pretty well spot on with a number of your predictions. A number of people did talk about APRA. How big of an impact was that on the market during the year?

Pete:  There’s always stuff going on behind the scenes with ARPA in terms of the macro-prudential tools that they deploy and some tightening in 2016. I talked about off-the-plan challenges. One of the things that happened last year was a tightening of lending to non-resident buyers.

We talked about off-the-plan challenges and whether some of the tightening could lead to defaults. Well, listed developers did report some defaults and some delayed settlements, but overall, defaults weren’t too far out of long-run averages, and the impact was relatively benign last year.

That said, vacancy rates are now rising pretty hard in some areas, so there’s more to come in 2017, I think.

Kevin:  Your comment was actually quite insightful, the one you mentioned about expecting the unexpected. And gee, didn’t we see some unexpected results? To name a couple on the world scene, Brexit is one, which would be very close to where you are right now, and also the U.S. elections.

Pete:  Yes, that’s right. I think definitely political upheaval, and we may well see more where that came from in 2017, as well. Looking back closer to home, the PM is struggling a bit in the polls, so it wouldn’t be a surprise to see more along those lines next year, too.

Kevin:  What’s the outlook for investors in 2017, Pete?

Pete:  One of the other things I talked about last year was international students pumping up Sydney and Melbourne population growth, and certainly, the most recent figures have shown that Melbourne in particular is going very strongly on a lot of criteria.

Population growth rates in Victoria or the absolute population growth has never been higher. We’ve talked for a long time about overbuilding of apartments in Melbourne, but I think actually, Melbourne could be another strong performer again this year.

But yes, it’s a bit of a mixed bag around the traps, and investors would need to be pretty careful about where they choose to invest.

Kevin:  Are you concerned about the talk about oversupply of units in Melbourne and also in Brisbane?

Pete:  We’ve been talking about it for a heck of a long time now. We can see the market has had a downturn in approvals, a slowdown in construction in Melbourne and some projects. So, the market is starting to correct itself, but there are still lots of completions to come in 2017.

There’s still a bit more to play out, particularly in inner city Brisbane. Vacancy rates around the Valley and Newstead, South Brisbane, and West End all rising about 6%, so we can expect to see rents falling, probably some correction in prices. Yes, there’s still some more fallout to come from there next year.

Kevin:  Do you see any trouble on the horizon by way of defaults, people not being able to get into the apartments they’ve purchased because their finance won’t stack up?

Pete:  Yes, I think in particular for non-resident buyers, there have been challenges. Some domestic lenders pretty much stopped lending to non-residents during 2016, so there are still some challenges there.

I think even for domestic investors, there will be another potential challenge later this year as interest rates maybe start to rise again. We’re seeing now what they’ve been labeling Trumpflation in the U.S., and bond yields in Australia were already rising before the U.S. election result. There could be some challenges there for people who have overstretched themselves as mortgage rates start to tick a bit higher.

Kevin:  What do you think interest rates will be like at this time next year?

Pete:  I don’t think we’ll see too many changes in the cash rates if I’m reading things right. The new Reserve Bank Governor seems quite reluctant to cut rates any further than they’ve already gone, but we might just start to see some mortgage rates just ticking higher as some of those funding costs start to tick up. That’s just something to watch in the background there.

Kevin:  These are the banks moving independently of the RBA?

Pete:  Yes, potentially. In fact, it’s already starting to happen with some lenders. It’s difficult to predict interest rates at the best of times, but there’s definitely a risk there that this time next year, we could be talking about mortgage rates being a bit higher than they are today.

Kevin:  Fast-forward to this time next year; give me a summary of what you think we’ll say about 2017.

Pete:  I think we’ve touched on some of the key points there. Apartment supply, potentially rising interest rates. Commodity prices are always something to watch in Australia. There was a spectacular rebound in coal and iron ore prices last year, and then in the LNG prices, too. I think we might see some downward pressure returning there.

In terms of where the economy is growing, Sydney and Melbourne have been dominating growth in the last year or two, but there’s still some downturn to come for Western Australia.

In terms of demographic trends, there is some good news there nationally. Population growth seems to have flattened out or steadied at around 1.4%. But there’s definitely some migration trend interstate, away from Western Australia and Adelaide and from Sydney, and generally towards Melbourne and South East Queensland. I’d say those two markets will be where the opportunities most likely are.

Kevin:  Very good. Joining us from the U.K. once again, very insightful comments from Pete Wargent. Pete, thanks very much for your time.

Pete:  Pleasure, Kevin.

 

“Sydney caught me by surprise” - John Lindeman

Kevin:  As we check in with another one of our experts who we asked this time last year about what they thought about 2016, my next guest is John Lindeman.

John, welcome to the show and thanks again for giving us your time.

John:  That’s fine, Kevin. Hello, everyone.

Kevin:  John, just to refresh your memory, I’m just going to play a small portion of what you said this time last year. Here’s what you had to say then.

John:  I think in some parts of the country, it will be very, very healthy indeed and in others there will be a time of continuing price correction, so I really see two markets going in different directions.

I think that the good one will continue to be New South Wales. I think Sydney is pretty much over its high growth / record growth it’s had over the last few years, but I don’t think it’s going to be a bubble, so the growth will probably slow down there. But I think New South Wales is where the money is.

It’s a budget that’s very healthy, a booming economy, and there’s a lot of infrastructure development occurring in Sydney and New South Wales generally, which are some of the biggest infrastructure development projects we have got going at the moment. I think they’ll continue to drive the regional house markets in New South Wales upwards over the next few years.

Kevin:  John, just looking at your comments there, what happened in Sydney? Did that surprise you, that that growth continued the way it did do during 2016?

John:  Yes. I didn’t think it would continue that sort of momentum for another year. That I think surprised everyone.

Kevin:  It certainly did.

John:  And of course, the fact that Brisbane hasn’t really done much, that was another prediction that I think was a bit unexpected.

In general, I think 2016 was just a year of unexpected results. We had Footscray winning the AFL and Cronulla winning the NRL. And then we had poor old Malcom nearly losing the election and then of course, David Cameron losing Brexit and poor old Hillary losing the presidential election.

I think it’s just really thrown everything into disarray and people are quite worried about what’s going to happen in terms of the property market in the future.

Kevin:  Do you think we can expect more of the unexpected this year?

John:  I think so, but I don’t think it’s going to be in the property market. Certainly the Trump effect, that’s a big unknown. China and the USA seem to be heading for some sort of trade war. And there could be a financial crisis unfolding in Europe.

But when I look at what’s happened over the last, say, 10 years, we’ve had one crisis after another – there was Iceland and then Ireland and then Spain and Portugal, Italy, Greece, Britain voted to leave the European Union – and yet all that time our property markets continued to grow, especially Sydney and Melbourne. So it hasn’t really affected us in any substantial way at all.

Kevin:  Your comment that I played just a moment or two ago, you mentioned there that there would be two markets. Is it exactly two markets, and is that capital city and regional? How do you define that?

John:  I think the two markets, you have Sydney and Melbourne and then you have pretty much the other capital cities. The other capital cities are suffering mainly because of the ending of the mining boom. Brisbane and Perth in particular have been hurt by that.

It’s interesting when you look at Melbourne’s growth, and I mentioned the 10-year growth was about 125% growth in 10 years, and that was the best performer of any capital city. When you look at what the average growth is, it was 8.3%, which is exactly what the annual average growth rate for Australian property has been since 1901. So even that growth is not exceptional.

Kevin:  Did any surprises come out of the regional markets for you, John?

John:  I predicted that there would be a lot of regional growth in New South Wales because of the huge amount of money that the state government has from stamp duty, and they’re spending it all on duplicating the Pacific and Prince’s Highways. That’s reducing your traveling time. It’s making it a lot safer for tourists and retirees. I predicted that that growth would occur, and it has been quite substantial both north and south of Sydney.

I think the same sort of thing is likely to happen in Melbourne. With the huge growth we’ve had in Melbourne, it’ll start to ripple out. It’s already hit Geelong and it’ll probably go to Bendigo and Ballarat, as well. They would be the areas I’d be looking at.

Kevin:  John, what are your predictions for New South Wales and I guess more particularly for Sydney for 2017? Do you see that continuing to grow?

John:  I think it has to slow down. I also said in that last comment that it wasn’t a bubble, it wasn’t going to bust, and I still hold to that. This growth is not exceptional. As I said, it’s about the average long-term growth rate for Australian housing, so there’s no cause for panic. But it is a bit of cause for concern in the other states because that growth hasn’t flowed through in a way that it has in previous booms, so I think that they’ll catch up over the next few years.

Kevin:  Do you think that outstanding growth in Sydney has overshadowed somewhat some reasonable growth in Brisbane? I know you said that it was a bit disappointing, but it did grow; it didn’t come back. Do you think that we expect too much out of Brisbane?

John:  No I don’t. I think everyone just expected that Brisbane would be the next city to boom, and it hasn’t done that. But it’s very much due to the fact that there’s an oversupply of properties at the low price end of the market. You have all the mining construction workers are now busy building houses in the outskirts of Brisbane. We’ve seen some huge developments occurring there. You can buy a new house in a place like near Bribie Island for just over $300,000. It’s an extraordinary opportunity for first-home buyers to move into the market, and the same goes for Perth.

But at the high end of the market, it’s fine. There’s no oversupply and there’s growth occurring in both Brisbane and Perth when you look at the higher priced properties.

Kevin:  John, look forward now to this time next year. What do you think we’re going to say about 2017? Maybe just a summary of some of the points you’ve made today.

John:  I think we’ll see that there’ll be a strong ripple effect coming out of both Sydney and Melbourne, that that’ll continue, so there will be a lot of growth in the regional areas in Victoria and New South Wales. Also there’s a good chance that the mining boom could start up again, and so there could be a bit of a bounce back in some of these areas that have been disparaged, like Moranbah and so on. I think that they’ve hit the bottom and it’s time for them to start moving up.

Kevin:  John, always great talking to you. Thank you very much for your time. John is from Property Power Partners. We look forward to catching up with you during the year, John.

John:  Yes, I look forward to that, too. Thanks very much, Kevin.

 

Home ownership on the decline - Michael Yardney

Kevin:  Something is rotten in the state of the Australian housing market. The land of the fair go has given rise to – reportedly – some of the most unaffordable homes in the world. The proportion of Aussies who own their own homes is falling, creating a chasm of wealth between the housing haves and the housing have-nots. But even for those lucky enough to afford to buy their homes, home ownership is no longer the guaranteed path to riches that it once was – at least not for everyone.

Michael Yardney from Metropole Property Strategists has been watching this closely.

Michael, thank you for your time. Is it as bad as that – the haves and the have-nots?

Michael:  Well, Kevin, let’s put some things into perspective. First of all, we know that true wealth is much more than how much money you have or how many properties you own, but recently, Credit Suisse’s Annual Global Wealth Report showed that Australians have the highest median wealth in the world, and we also have the lowest percentage of poor people in the world.

We also know that in this lucky country, it doesn’t take education or your country of birth or your parents to put you in the BRW Rich 200 list. Anyone can become wealthy in Australia. So yes, there are some disparities in the housing markets, but we still live in one of the best places in the world, Kevin.

Kevin:  Michael, in the opening, I did mention that there are fewer homeowners. Is that actually the case?

Michael:  Yes, it has dropped from about 69% of the population owning their home or having a mortgage on their home to about 67%, but it still is one of the highest percentages in the world.

And I remember years ago – when it was around 70% – people said, “Houses are unaffordable. Our kids are never going to be able to afford properties, and it will drop to 50% ownership.” That really hasn’t been the case, Kevin.

Kevin:  Is the gap widening?

Michael:  There is a smaller percentage of people owning their own home, but it’s not a big drop. One of the interesting changes though is that more people have a mortgage against their home, and that’s because they borrow against it. A lot of baby boomers and Gen X-ers are borrowing against equity in their home to buy an investment.

But the other point that you made in your opening is very relevant – that some areas outperform others. Not all land is created equal, and that is going to make a difference to homeowners and particularly to property investors over the next decade.

Kevin:  So it is a matter of where you buy, Michael?

Michael:  It’s a matter of where you buy. A study by the AHURI – the educational organization run by the government – showed that properties closer to the CBD had substantially more capital growth than properties in the outer suburbs. But Kevin, it wasn’t always that way.

Kevin:  What do you mean, Michael?

Michael:  Interestingly, prior to 1980, houses in outer suburbs cost much the same as equivalent houses in inner suburbs, but over the last couple of decades, things have changed. Properties close to the CBD and close to the water have increased in value, in part related to the way we live, demographics, and the gentrification of the inner suburbs.

Kevin:  What opportunities exist for young people to get into the market now?

Michael:  There are still opportunities. Just like when you and I started, houses were unaffordable for us. They’re unaffordable for some young people, but what they have to do is get a deposit, get a saving discipline, save up some money, and get their foot on the property ladder.

The other big thing people are doing now is because of the change of lifestyle, many young people are buying properties in those more upcoming areas – those that have better capital growth – by swapping their backyards for balconies. And that fits in with today’s lifestyle in many ways, Kevin.

Kevin:  Yes, it has to be adaptable. Do you think it could be a generalization that our generation – yours and mine, because we’re both about the same age – was more fortunate when it comes to home ownership?

Michael:  There’s no doubt that we lived through a period of time when our homes increased in value considerably, but it was also a time of high inflation. When I bought my first property, it cost $18,000 and I got $12 a week rent. But the average family car cost about $1000, as well.

In fact, things have gone up proportionately. Inflation has been one of the things that has driven the value of our property. But with inflation today at 2%, you don’t have to have double-digit capital growth to have real growth of property values or rent.

Kevin:  Yes, I remember when we bought our first property – in fact it cost us $11,500 at the time, I think – and I remember how much of a strain that was then. You look back on it now and think, “Wow, that’s not even a deposit nowadays.”

Michael:  And you probably took a 30-year mortgage and had no idea how you were going to pay it off.

Kevin:  Absolutely. Yes, many sleepless nights. But it’s all relative, isn’t it?

Michael:  It is. So, the message for young people or investors is that you should get in the property market and get going.

Now, for investors, it does mean that not all land is created equal. Some land is going to increase in value more, related to scarcity and amenity and where people want to live. So, in my mind, this study has confirmed what I’ve intuitively known. In fact, I’ve read a similar study about ten years ago from Macquarie Bank that properties closer to our capital cities and closer to amenities and the water, in general, are going to outperform the outer suburbs. Sure, there are always exceptions.

Kevin:  Michael, lovely talking to you. Thank you very much, as usual. Michael Yardney from Metropole Property Strategists. Thanks for your time.

Michael:  My pleasure, Kevin.

 

“More steady as she goes” – Jan Somers

Kevin:  Another update on the market that we had a look at this time last year, and I was joined at that stage by Jan Somers, who joins me.

Good day, Jan. How are you?

Jan:  Hi, Kevin. How are you?

Kevin:  Fantastic. Happy New Year. Great to be talking to you again.

Jan:  Thank you.

Kevin:  Just to refresh your memory, here’s a small grab of what you and I talked about this time last year.

Jan:  I think if you take a long-term view, then my view is we should be looking at the “same as same as.” We don’t need to be looking at the ups and downs of the cycles, although it’s very interesting to observe. But if you’re in it for a seven- or ten-year period, I think next year should be the same as it has been for the last ten years if we’re looking in decade lots of property investment.

Kevin:  Well, Jan, would it be fair to say that your view probably hasn’t changed? Because you do look at the market long term, don’t you?

Jan:  I do. In fact, as I’ve said a few times, Kevin, I’m probably a fairly boring interviewee because I say the same things every year: take the long-term view and hold on, and forget what the market does up and down in between.

Kevin:  Yes, there is a lot of talk – and we’ve been talking about it in the last couple of weeks – about the possibility of a unit oversupply, particularly in Brisbane. We’re seeing a bit of a slowdown in the Brisbane market as we are in the Melbourne market. What would be your advice if someone did want to buy a unit?

Jan:  Probably 20 years ago, it was six of one and half a dozen of the other, just depending on your income and what you’re looking for. Now I have to honestly say you need to be careful when you buy a unit.

Not only have the vacancy rates of units in Brisbane increased – I think it’s over 3% now, and that’s added to the vacancy of houses – but the compliance required with body corporate has just gone out of all proportion. It’s just astronomical.

So, my advice would be to be very careful if you are looking at units for those reasons: the high number on the market, which increases the vacancy rate, and what the body corporate costs are.

Kevin:  I guess we’re seeing signs in Brisbane – and in some cases, in Melbourne, as well – of a bit of a slowdown in approvals, which is always a good sign. But it takes a couple of years to catch up.

Jan, what would be your advice if I came to you now and said, “I’m looking at investing into the market in 2017. Where should I be looking and what should I be looking for?”

Jan:  It’s probably the same as I would have said in a book about 25 years ago: look for something in that median price that’s very close to infrastructure or where there’s potential for infrastructure.

As a prime example, our first house in Kippa-Ring we bought 43 years ago, and the Redcliffe train line is now only a hundred meters away. We certainly wouldn’t have anticipated that, but it pays to buy where you think there’s going to be infrastructure or there already is infrastructure in place. That’s what tenants want.

Kevin:  Just to sum up our chat, Jan, some of the highlights that you see coming up for 2017. I know this may be a little bit difficult for you, but do you think the banks are going to make it more difficult, because they’re really tightening up on their lending for investors, aren’t they?

Jan:  They do. I think because bureaucracy means they have to be very careful with their lending now. They don’t want to be caught out, and probably rightly so. It’s a good thing for the market, because people really have to assess their financial situation before they delve into such a large loan. They have to go in with their eyes open.

And that’s the same for borrowing any kind of money. Particularly if you’re buying investment property, you need to be aware of that lending situation.

Kevin:  Is this a time to buy and hold, Jan, or could this be an opportunity if you buy in the right area to do a little bit of flipping and maybe renovation and make some profit?

Jan:  I think it’s a combination. I think buy and hold is good, but there’s no problem in doing a bit of renovation on the way. If you’re buying a property to renovate and then flip it over, that really is a timing thing and it’s fraught with danger. But I think buying and doing a bit of renovation to make it very rentable is a good thing, especially if you can do those things yourself.

Kevin:  Yes, that is really good advice: look for something that you can add some value to, which is going to give you a better return in the long term, as well as add a bit more capital value, which you can then turn around and gear against at sometime in the future.

Jan:  That’s right. It’s a good learning experience. I cut my teeth so to speak pulling kitchens apart and putting them back together again. It’s a great learning experience to know how the building trade works.

Kevin:  Always good talking to you, Jan. Thank you so much for your time.

Jan:  My pleasure, Kevin.

 

“I remain a supporter of innner city investment” – Chris Gray

Kevin:  As we seek the opinion of another one of our experts, Chris Gray from Empire buyer’s agents.

Chris, thank you very much for your time. Just a reflection back: this time last year, we spoke, and I’ll just play a very small portion of what you had to say then.

Chris:  It obviously depends where you are. There are lots of different property markets around Australia, but I think if you’re in the main markets of Sydney, Melbourne, and Brisbane, then I think a lot of people are going to look back and say, “That was another great year. We maybe made 5% or 10% capital growth over the time.” So we should be pretty happy.

Kevin:  Chris, I think you were pretty well spot on there. You highlighted the fact that Sydney and Melbourne were going to be two of the peak markets. Do you see that continuing this year?

Chris:  I think I do. It is a bit boring and it doesn’t make a big media story and those sensationalizing headlines or anything like that. I guess most of your viewers know that my market is more the second-hand, inner-city, 5-to-15 K kind of market at the median price. I’ve always generally thought it is pretty strong. A lot of the other research companies, especially people like Louis Christopher at SQM, think it’s going to be a pretty good year again and thinking anywhere from 5%, 10%, or even 15% growth in some of those areas.

Kevin:  I know you say that you’re a pretty boring type of investor. You’ve said that to me on a couple of occasions. But it’s held you in fairly good stead, hasn’t it? That inner city ring and that median price range has always been pretty good for you, Chris.

Chris:  It’s slow and steady wins the race in my book. It’s quite often too simple for most clever people and so they don’t actually follow through with things. There’s actually a legal and accounting conference in Aspen and again, there are a lot of very senior people, a lot of well-paid people, and they always expect that things are going to be harder. There are lots of fund managers and people like that, trying to find the latest greatest, thing in the stock market.

But in the 22 to 23 years that I’ve been investing, it’s just basically finding something of good quality. You’re not going to get it cheap. It’s going to be fair priced. But just hold on and in the years, then the results follow.

Kevin:  Chris, you’re in Aspen as you said, at an international conference. Are you getting much feedback about what’s happening internationally with the number of changes around the world? What if any impact is there going to be on the Australian market?

Chris:  Obviously quite a few people have mentioned Trump over here, and even sitting on the ski lift you talk to the locals and they all have mixed opinions. There’s obviously scaremongering going on. There are a lot of people who think that the world is still going to come to an end. But I think the main thing with property is unless interest rates really do push up high very, very quickly, I think that for the main markets in Australia, it’s still going to be pretty solid.

But saying that, there are some risky markets out there, and I think that there is some worry that people should be worried about, and a lot of that is the brand new properties, especially in Brisbane. A lot of people have been talking about all the cranes up there. To a lesser extent probably Melbourne and Sydney, as well.

The main thing is the people who buy those things quite often are speculators the, so they try and buy off the plan and try and make an instant profit with virtually no money down. And then you’re getting all the foreigners. I think our Foreign Investment Review Board laws in Australia are pretty good, so foreigners can only buy brand new. Obviously, a lot of banks and APRA have cracked down on the lending to foreigners, and so a lot of people won’t be able to settle on those brand new properties.

I think if anyone has to worry, that’s where you need to worry in Australia in 2017.

Kevin:  Are you seeing some of that coming into effect right now in terms of what APRA has done and with some of that new product, as well?

Chris:  Even in the last 6 to 12 months, we have had clients where they’d bought off the plan before [3:55 inaudible] 6 or 12 months ago. And even the local agents up there, when the properties are settled, they say, “Let’s dump it now, because you might drop $30,000 or $40,000 now but if you hang onto it you might be dropping $50,000 or $100,000 later on.” I think that has been good advice for those clients.

Now, I’m not an advocate of selling, but if you listen to all the stories – and most people are pretty consistent on these kinds of things… The CBD markets have always been scary anyway because there’s almost no limit to supply because you can keep building higher and higher towers and there’s a limit of how many Australians actually want to live in a CBD. I think if you’ve got into some of that stuff and are maybe looking at it and thinking maybe take your losses…

But look, there are always exceptions to the rules. There are always people who will buy off the plan and they’ll make a lot of money. There’s never a “one size fits all” with any of this stuff.

Kevin:  Just before I let you get back to your conference or skiing or whatever it is you’re doing there, Chris… Are you getting a chance to do any skiing by the way?

Chris:  I manage to get a few runs in during the day. The conference is in the evening. But the body is not the same as it was when I started investing back when I was 22.

Kevin:  Yes, we all know that feeling, Chris.

Chris, before I let you go, crystal ball for me: this time next year what do you think we’re going to say about 2017?

Chris:  I think we’re going to have exactly the same conversation. The people who have bought in Sydney, Melbourne, and a bit of the Brisbane in the second hand market, I think they’re going to be pretty happy. Whether we get 5%, 10%, or 15%, who knows?

Perth is obviously a bit of a mixture. Obviously it’s mainly around one industry sector, so I think that’ll be a bit tougher. And then the rest of Australia, I’ll leave to the local experts. But I think if you bought good-quality property for the median price so that lots of people couldn’t afford to rent it or to buy it, I think you’re in pretty solid ground.

I guess the only worry I have is the banks. I think the banks will still tighten lending criteria, which squeezes a lot of people. But as long as they’re not doing anything too drastic, I think it will be a pretty happy year for a lot of people.

Kevin:  Chris, are you back on Sky again this year?

Chris:  Yes. We’re back. The show actually started last week while I was [6:12 inaudible] and I’ll be missing next week’s, but I’m back on from I think about the third Monday in the month.

Kevin:  Beautiful. Always great talking to you, Chris.

Chris:  I think all the other guests will have the same feelings as me – that they’re pretty positive, as well.

Kevin:  Always great talking to you. Thank you.

You can contact Chris. Your website, Chris, is YourEmpire.com.au.

Chris:  Wonderful. Thanks a lot.

Kevin:  Chris Gray has been my guest. Thanks, Chris. Talk to you again soon. Enjoy that skiing, mate.

Chris:  Will do.

Leave a Reply

Your email address will not be published. Required fields are marked *


*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>