The naysayers and the property pessimist were proven wrong – again!
Despite prolonged lockdowns, no immigration, no international students, the threat of high unemployment, and all the pessimistic predictions for our housing markets, the value of many houses around Australia grew by more than 20% in the last year alone.
Obviously, these are unprecedented times, and we can’t blame some of those who made predictions early in the pandemic for getting it so wrong, but now that it seems that we are over the other side – across the bridge that Scott Morrison said he would build for us - what property lessons can we learn from Covid to make it better property investors.
That’s the topic of my chat today with Ken Raiss, Australia’s leading property tax strategist and director of Metropole Wealth Advisory as we share 20 insights we’ve learned from Covid-19
Top property lessons we learned from Covid-19
The last two years have been among the most tumultuous in living memory, and yet Australia looks set to emerge better placed than almost any other country and our property markets have surprised almost every commentator on the upside.
So, what can we learn from this?
- The property market is too big to fail - the government and the banks have a vested interest in the property market, so they stepped in when things got tough.
- The supply of money is important in fuelling our property markets.
- The wealth effect is important for consumer confidence and the government understands this - those who hold assets have benefited from government stimulus - you want to be in the market.
- The government has realized that it can spend its way out of a recession – make people feel wealthy and they will spend money in the wheels of industry go around.
- Those in the knowledge-based economy, who could work from anywhere because they sold what was in their head rather than make money by using their hands, could work anywhere and more and will continue to do so.
- You can't rely on one income stream.
- Cashflow buffers are important – Having plenty of cash savings provides a safety net in case your income unexpectedly falls, or a large expense crops up.
- Financial security gives you a ‘sleep at night’ factor – Building a nest egg outside of the home and compulsory super provides greater financial strength to weather any storms.
- You can expect the markets to correct.
- Don’t try and time the market –You can’t time the market and investment-grade properties gives more options even in periods of downturn.
Links and Resources:
Some of our favorite quotes from the show:
“For most of the investment properties, and for most people’s homes, the bank owns as much as the owner does.” – Michael Yardney
“I think one of the lessons here is get a good education because it’s going to see you through life.” –Michael Yardney
“Of course, in an ideal world, you’d like to be able to forecast, you want to know what’s ahead. But we can’t, there are just too many moving parts.” – Michael Yardney
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