admin-ajax.php

The changing face of Australian housing – be prepared!

How do you like change? If you’re like most Australians, you probably prefer the certainty of the status quo, but there are some important changes taking place in our property markets that all investors must understand.

You see…there a number of interesting things going on in our property markets at present and a lot has to do with our levels of confidence.

We’re not moving house as often.

The average Australian home owner now stays put for nine years, according to data to RP Data. That’s up from an average of 7.6 years a few decades ago. And it’s much the same for apartments – the average hold period has risen to 7.7 years from about six years in 2000.

RP Data research analyst Cameron Kusher suggests: “It appears that home owners are increasingly likely to keep their current properties rather than upgrade due to the significant cost.”

He believes one reason for the drop in housing turnover is that affordability remains an obstacle for many would-be buyers, curbing potential demand. Mr. Kusher also blamed high stamp duty for making home owners less keen to change their residence.

I think there’s more to it than that.

As I see it, when we feel wealthy many of us like trading up and buying a bigger, more expensive home – even if we don’t really need more space. It’s a great feeling during property booms thinking our home, our castle, is increasing in value.

On the other hand, in our current markets where the price of the average Australian home is in some cases falling and at best remaining flat, we tend to stay put. And if we need to upgrade we’re more likely to renovate our existing dwelling.

According to RPData, Melbourne led the nation in the average time people remain in their houses before selling (10.4 years up from 9.9 years 12 months earlier).

In Sydney, the average holding period was 9.8 years (up from 9.5 years 12 months ago) and over the same period in Brisbane, the average time increased to 9.1 years from 8.4 years. In Perth the hold time extended to an average of 7.9 years from 7.4 years, while in Canberra it extended to 8.7 years from 8.1 years.

We’re saving our pennies.

The other big change happening is that we’re saving, not spending. We’re paying down our credit card debts rather than using our homes like an ATM. And we’re renovating rather than moving house.

Property analyst Michael Matusik put it well when he said we are becoming more prudent.

But such a mindset comes at a cost. Property sales are down by a third against the past decade and property values have fallen a bit.

Matusik explains that in addition to prudence, we are buying different things – services, not goods.

He suggests that maybe we already have many of the goods we really need, but when a society ages it uses more services. This is already happening and is best shown in the health sector, where new employment is up 260,000 since 2008. This is twice as many new jobs as in mining!

It’s affecting our construction industry.

Despite Australia’s population growth increasing by 394,200 people or 1.8 per cent during 2012,  which is higher than most developed countries) our prudence and the fact that we are staying in our homes longer has put our housing construction industry into a tail spin.

It’s also affecting property investment sentiment.

In a recent report entitled ‘Households’ Appetite for Financial Risk’ the Reserve Bank noted a change in household behaviour towards investments, including property.

They commented: “Surveys show a significant increase in the share of people nominating deposits and paying down debt as the ‘wisest place’ for saving and a decline in the share nominating equities and real estate.”

So what should a property investor do?

Property cycles, in fact all economic cycles, are driven by fear and greed. While it’s important not to trivialize the extent of the changes that are occurring, it’s equally important to remember that every cycle brings downturns and times of opportunity.

In my experience, difficult economic times offer outstanding opportunities for those who are prepared.

If the “end of the world as we know it” merchants are wrong – and they always are – then your decision to take prudent action when all around you are fearful, and to invest when everyone else thinks it’s crazy, will prove to be the kind of insight that truly great investors apply.

I don’t see us having a property market crash in Australia because our economy is doing well, our interest rates are relatively low, our population is growing and unemployment is low, we have a sound banking system and we are at the beginning of the mother of all resources booms.

Unfortunately the current world economic problems won’t go away quickly, and we are entering a new era in the financial markets. But this is not a time to panic or make rash emotional decisions. It is a time to learn from history and control your financial future by investing wisely.

And guess what? While the optimists, pessimists and realists will argue whether the glass is half full or empty, the opportunist are going to drink!

Now if you want to really get ahead of the pack and make the most of your property investment, I recommend you join me for 3 days at my annual “Property Renovations and Development Workshop” that I’ll be holding in October.

It’s Australia’s longest running, advanced property training and it will be your chance to invest 3 powerful days and learn renovation and development strategies that experienced property experts are using around Australia to “manufacture” capital growth and generate strong rental returns, so that they can win in today’s challenging property markets.

Take your property investing to a whole new level. Click here now to get full details and read about all the bonuses and my money back guarantee.

[post_ender]



icon-podcast-large

SUBSCRIBE & DON'T MISS A SINGLE EPISODE OF MICHAEL YARDNEY'S PODCAST

Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.

icon-email-large

PREFER TO SUBSCRIBE VIA EMAIL?

Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.


Avatar for Property Update

About

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


'The changing face of Australian housing – be prepared!' have 6 comments

  1. Avatar for Property Update

    September 14, 2012 @ 7:10 pm rainbowusa

    Well I sincerely enjoyed studying it. This subject offered by you is very effective for good planning,hard work and a great team always make a spotless work..i read your article and find that you make nice point on the service..thanks

    Reply

  2. Avatar for Property Update

    September 15, 2012 @ 10:20 pm vasilija wilson

    Thank you Michael
    As enytime I love reciving your emails on properties investment íts great learning carves. I am very happy to share this informations with my friends too.
    You are person … seeing things as it is not what people liket to think as many of as do.
    Thank you Michael
    Vasilija

    Reply

  3. Avatar for Property Update

    July 12, 2013 @ 9:38 pm Ross darling

    Hi Michael I am interested in your comments as to the resources boom.
    Most commentators are saying the boom is over, what makes you think the resources boom is growing.

    Reply

    • Avatar for Property Update

      July 12, 2013 @ 11:57 pm Tezza

      It’s an old rehashed article Ross – the mining boom is over. Check out the date at the top – lazy editing.

      Reply

    • Avatar for Property Update

      July 13, 2013 @ 6:59 am Michael Yardney

      Ross
      As Tezza says this article was written last year when the market was different. I’m not sure it was lazy editing, I didn’t pretend it was a “new article” – there is gold in some of the archives in Property Update.
      Having said that – the first stage – the construction stage – of the mining boom is ending. Th stage of large infrastructure spending. Now we ware moving into the production phase which will bring in export income — albeit at a lowr rate as commodity prices are falling.

      Reply


Would you like to share your thoughts?

Your email address will not be published.
CAPTCHA Image

*

facebook
twitter
google
0
linkedin
0
email

Michael's Daily Insights

Join Michael Yardney's inner circle of daily subscribers.

NOTE: this daily service is a different subscription to our weekly newsletter so...

REGISTER NOW

Subscribe!