What’s ahead for our property markets?
It’s hard to make predictions, especially about the future. It’s even harder to predict the endpoint of a moving target.
Yet there is a palpable change in property sentiment happening.
Earlier this year, there were a number of dire predictions suggesting property values would plummet. But now, most of the pessimists have changed their minds and backtracked on their forecasts.
Australia survived the coronavirus better than many countries, and despite a recession, rising unemployment, and Melbourne’s severe prolonged lockdowns, the property markets have remained resilient.
Recently, there have been 2 significant game changers that have altered my view on what’s ahead for property markets in 2021 and 2022, and that’s what you’re going to hear about in today’s episode, which is an audio recording of my Masterclass.
We’re also going to talk about which areas you should be investing in, and which areas you should avoid.
The Perfect Storm for the Property Market
I believe we’re setting ourselves up for a perfect storm in the property market in 2021 and 2022.
Back in March, I suggested that A grade properties wouldn’t drop much in value during this pandemic – maybe 5%. I was correct.
I suggested that B grade properties – not investment-grade properties – would drop around 5-10%, and that was pretty right also.
And I suggested that C grade properties wouldn’t be moving at all. And, right now, we’re seeing a fallout in off-the-plan market and inner city apartment market.
Only certain segments of the market suffered.
I was able to get those predictions right because I’ve been through many cycles.
Most of the credible economists who had dire predictions at the beginning of the pandemic have changed their stance and gotten more positive at this point. How come?
Why is the coronavirus-induced housing correction coming to an end? There are several reasons.
House prices rise quickly but slide slowly. Property prices rise quickly in a boom, but when buyer demand falls, potential sellers hold on instead of dropping the price and devaluing their property.
There were very few forced sales during the pandemic because the government and banks threw lifelines to owners.
Renters have been harder hit than homeowners.
And finally, we’re not all in the same boat. Unemployment is high, but not everyone is struggling.
While I was always positive that our property markets were going to pick up, recently two major factors have underpinned the property market.
These two factors will lead to the perfect storm that will have property markets performing very strongly in 2021 and 2022.
The first was the announcement of sweeping changes to remove overly restrictive lending rules. This will give more people access to more credit, enabling them to get into the market.
The other big gamechanger is the budget. It’s calibrated to create jobs and promote consumer confidence, which will encourage buying and investing.
Links and Resources:
Watch the Masterclass – get all the details here
Some of our favourite quotes from the show:
“It’s becoming increasingly clear that this modest coronavirus induced housing correction is coming to an end.” – Michael Yardney
“Easier availability of credit is going to flow in through the system and push up property values.” –Michael Yardney
“Hot spots tend to be short-term areas of growth. You’ve got to dig deeper and look for areas of gentrification that give long-term capital growth.” – Michael Yardney
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