31 Jan Rachel Barnes – Australian Property Market 2016
Our guest today: Rachel Barnes from investorfriendlyagents.com
Kevin: So far over the last three weeks, we’ve been inviting a lot of our experts who share some thoughts with us from time to time to tell us what they think about 2015, the year that’s just gone, and have a look at the year of 2016. Of course, we’re already one month into 2016. Joining me this time is Rachel Barnes from investorfriendlyagents.com.
Rachel, thanks for your time.
Rachel: Pleasure, Kevin.
Kevin: Here we are one month into 2016. Let’s reflect back on 2015. Any big surprises last year for you?
Rachel: Not really. I think it was a bit of a bland year in relation to property, but that’s probably because I’m in Adelaide, South Australia, rather than some of the more eastern states. I did go to Brisbane a few times, and I was quite blown away by the prices for some of the properties that were going there. The smallest lot with the oldest house on it with all these restrictions was going for ridiculous prices. I think there’s been a bit of a buying frenzy, people getting a bit scared they wouldn’t get into the market in time.
Kevin: Yes. What about the Adelaide market? How is that looking, Rachel?
Rachel: It’s been fairly flat along certain areas, but it’s the same with anything; you can’t pick just one area and assume that everything goes along that vein. There have been certain pockets that have been doing really well in 2015, and I’m sure they’re still going to grow in 2016.
Obviously some of the unemployment areas in the north cause an issue when it comes to holding prices down in that area. There’s starting to become more infrastructure done down south now, as well, and for other parts, like Port Adelaide.
Especially Port Adelaide, it’s an area that for many years people have talked about it’s going to be the next boom, it’s going to be the next boom, but nothing really has happened. But I wouldn’t be surprised now that I can see more businesses going into the area, the whole place gives you more of a cosmopolitan type of feel and a bit more life in it now. It wouldn’t surprise me if that’s an area that starts to improve in South Australia at least.
Kevin: Gentrification takes some time, and that’s actually what’s happening in that area, I understand. It’s becoming gentrified and a lot more popular. We’ve seen in different parts of Australia, that can take several years, almost up to a decade sometimes.
Rachel: Yes. When you get into property I think sometimes anybody gets in you’re eager to buy property and invest. Then you go out and you hear all these exciting things that are going to happen, all the plans that are there from the council, for example, and you get in. Then as you say, it may be a decade and you can get tired of waiting or if it’s negatively geared, it can be too costly to wait.
Therefore, you start to sometimes slow down the momentum because of people getting out of the market and putting a bit of oversupply in there for a while. I think that’s starting to level out now and starting to look like an improvement for this year.
Kevin: Through your website, investorfriendlyagents.com, you’re talking to a lot of real estate agents and also property managers and helping them understand more about the psyche of working with investors. What would be your advice to anyone who wants to start a portfolio this year, a brand-new investor?
Rachel: I think the main thing is still buying well and working out your strategy first, so then you can decide what area you’re going to be looking for. For example, if you’re going to be a renovator and you want to do something close to home because you want to be doing it yourself, then you wouldn’t be going perhaps further than 50 Ks out, because otherwise it’s going to be too exhausting for you to try and renovate around something else that you’re doing.
Whereas if you’re looking to buy and hold and you just want the yield because you’re looking for positive cash flow, you’re not worried about doing the work yourself, you’re happy to outsource it, then you could look at anywhere around your area, just making your mind. Then you have to look for the yield.
As I said, it really gets down to what is your strategy, what suits you personally? Not what your neighbor or your friend does, but what suits you financially, personally, risk perspective-wise, and everything else. From there, you can decide your strategy, work out where the best place would be from there, and then you can perhaps employ a buyer’s agent, a seller’s agent to help you to find the right property that’s going to suit your needs.
Kevin: Just to round out our chat for today, Rachel, what are the markets that you’re going to be watching in 2016? You’ve mentioned a couple already, Brisbane and also down around Adelaide. Are there any other markets around Australia you’ll be watching?
Rachel: There are a few places in Victoria. We haven’t invested there yet, but some of the outer areas, I’m just keen to see how they go, but I’m not very good with crystal-balling I have to say.
Kevin: That’s okay.
Rachel: As a matter of interest, I’d be looking at some of the areas – not Geelong but around that area, so on the main freeways where’s good communication and commuting from Melbourne.
Kevin: Rachel Barnes, thank you so much for your time.
Rachel: Pleasure. Thanks, Kevin.