Stuart Wemyss believes property prices can continue to rise despite high-interest rates and low wage growth, and today, we'll be diving deeper into this topic.
In this episode, we’ll explore income, borrowing capacity, migration, inheritance, and other factors and how they intersect in shaping the property market.
Is income linked to property prices?
Or is something else going on? Property prices keep rising, but clearly, they’re affordable to some people.
People have continued to buy property and push prices even higher over the years.
While the percentage of Australians who own their homes has decreased, there are a number of reasons besides affordability that have caused this.
Consider some of the factors that have effects on the price of property.
- Borrowing capacity has increased over time due to several factors:
- Changing credit policies
- Alternative lenders
- The way the banks manage loans
- Investment returns make their way into the property market, so when shares are doing well, property prices are affected
- Migration contributes to the demand for property, and wealthy migrants invest in and improve properties, causing prices to rise
- Inheritances find their way into the property market, though not necessarily in the same places the money came from – children who inherit property might sell it to buy or develop their own properties in different areas
- Profits from business exits and capital gains from business ventures often go into investing or developing property.
- Bonuses and other short-term incentives, as well as career progression, also factor into the property market. Improving their property, upgrading to a new property, or investing in more property are all common choices for people who are seeing more profit
The media insists that property is unaffordable because prices have risen so much.
However, it’s clearly not unaffordable for all Australians, though it may be less affordable for most.
Investing in the property wealthy Australians want is a good way to benefit from prices that will continue to rise in the coming years.
Consider the quality of an investment property first and foremost.
Links and Resources:
Stuart’s Book – Rules of the Lending Game & Investopoly
Some of our favourite quotes from the show:
“Over the last decade, there have been a million new first homeowners.” – Michael Yardney
“The bank of Mum and Dad’s already helping people.” – Michael Yardney
“While it’s important to get things done, it’s equally important to avoid things that stop you getting toward your goals.” – Michael Yardney
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