Depending upon when you’re listening to this, it’s either just about to become a new year, or you’re already into a new year and a new decade.
Today, I’m going to discuss twelve things that are going to change over the next decade and ten things that are not.
This is the end of my fifth decade investing in property and being able to look back and see what’s gone on gives me some great perspective on what’s ahead.
I’ve done a lot of research for this, and whether you’re interested in property as an investor or a homebuyer, you’ll get a lot out of today’s episode.
The difference between Expectations and Forecasts
There is a huge difference between, “I expect another next property downturn sometime in the next decade” and “I expect the next property downturn in the second half of 2024.”
One of the big differences is how I invest.
If I expect another property boom followed by another property bust, I’m not surprised when they come.
But since I don’t know when they’ll come, I won’t make the focus of my property investing trying to time the property cycle.
Because trying to time the property cycle is one of the reasons many property investors fail.
On the other hand, strategic investors maximise their profits during booms and minimise their downside during busts by investing in assets that have always outperformed, rather than looking for the next hot spot or for the type of property strategy that works “now” rather than one that has worked in the long term.
They own investment-grade assets in investment-grade inner and middle ring suburbs of Australia’s three big capital cities. The type of property that keeps growing in value over time without fluctuating wildly in price when the property cycle slows down.
What will stay the same:
- Australia’s population will keep growing and adding around 400,000 people per annum. We’ll have the requirement for 170 -190,000 new dwellings each year
- More congestion on our roads.
- Property prices will continue to increase –
- The property cycle will continue,
- Ordinary Australians will try to secure their financial future through property investment
- The property pessimists will still be out there telling us our property markets are going to crash
- Property spruikers and get rich quick artists will still be there taking money from naïve property investors looking to get rich quick
- More will move to medium and high-density living – apartments and townhouses – the dream of owning a quarter acre block will be nearly gone
- The property pessimists will still be there telling us we’re in a bubble that will burst
- We will be living in the best country in the world at the best time in history
What will be different:
- We will have a long period of low-interest rates and we’ll be in a low inflation environment for much of the decade. This means we won’t get the same level of capital growth as we have in the past
- In line with the low inflationary environment, most Australians will experience limited wage growth over the next years and this will impact on their ability to afford property.
- Lower levels of homeownership
- Future property cycles may be flatter because of the above – you will still be cycles but lower highs and higher lows.
- Household size is increasing according to the census.
- More people are living in blended households.
- At the other extreme, there is an increase in those living alone or as a couple, plus an increase in blended households as noted above – coupled with a drop in what many still think is the standard Aussie household, mum and dad and 2.5 kids.
- The proportion of those living alone or as a couple over 60 years of age will have increased too, especially women over 60 years; sadly, most with limited financial means.
- Plus, the mix from overseas has changed, with more migrants now coming from those countries with large family units.
- 30-40% of the jobs we know could disappear in the next decade and there will be casualisation of the workforce
- Most Baby Boomers will have retired and Gex X will be coming up to retirement age
- Pension system won’t be able to cope and super won’t be enough to support your longer life
- China will become more powerful
- Maybe a cashless society
- New technology we haven’t even dreamed of
Links and Resources:
Some of our favourite quotes from the show:
“In my mind, there’s a big difference between expectations and a forecast.” – Michael Yardney
“I’ve found it’s more practical to have expectations without forecasts.” – Michael Yardney
“The rich are getting richer, and that’s because they own assets. So even though their incomes haven’t gone up, their assets have increased in value.” – Michael Yardney
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