Want to know what will make me a better property investor in this difficult market?

I expect that the property market is going to pick up.

And I expect that the Melbourne and Sydney property markets will go gangbusters.

I have no idea when this will happen. Market House

Now just to make things clear…those aren’t contradictory statements.

The first is an expectation, the other is the rejection of a forecast.

And if you want to be a successful property investor, you’re going to have to understand this important difference.

It’s one thing to look at history and see that the property market cycles with some frequency and then form a baseline of what to expect in the future with this knowledge.

However, it’s quite another thing to predict the precise timing of the turning points in the property cycle.

And it’s another thing entirely to devise a strategy that reacts to those predictions.

Property analysis isn’t black and white….

Yet some people believe they can predict markets and they tell you about (or sell you into) the next property “hot spot” or currently there are those telling you not to invest at all.

There’s an important grey area, which is expecting certain events to occur without having an opinion on exactly when, where, why, or how.

I’ve been investing for almost 50 years now and in that time there have been 8 significant property cycles.

I can use this as a very rough rule of thumb for the future, based on the idea that, despite the challenging times the Australian economy is going through at present, we’ve got even more positive fundamentals to drive our property markets than past generations had.

While there are many sound fundamentals underpinning the long-term prosperity of our property markets, two of the big ones that give me comfort are our significant population growth that we will experience once this pandemic is over and the increasing wealth of our nation.

Think about it…

Our government is doing everything it can to minimise the effects of the recession and will be devising a raft of plans to revitalise our economy.

On top of that list must be opening the borders when it is practical and encouraging immigration. Recession Australia Note Money Economy Squeeze Tighten Save Saving Budget Cut 300x200

But it’s likely to be selective immigration of people who bring money into our country and who can do skilled jobs and pay tax.

Immigration will be one of the quickest and easiest ways to bolster our economy, and there won’t be a shortage of people wanting to come and live in the best country in the world

The other methods of increasing GDP are either much harder or more expensive – things such as increasing our productivity, promoting innovation, increasing income from exports or spending more on infrastructure.

And over time our increased prosperity and the Aussie dream of owning our own home will ensure that the value of well located properties will keep increasing.

These factors reassure me that my long term plans are sound and based on what has always worked – rather than trying to pick what is right for the current market.

Now I have an expectation:

If I plan on investing for the next 30 years, I should count on things getting ugly at least another six times.

Maybe it’ll be a little more, maybe less.

But I have an expectation, a rough idea of how the game works.

Yet it’s not a forecast.

A forecast is, “The property market will turn in the second half of 2021” or “Australia will have a recession in the first half of 2025.”

That’s precision, with a disregard for both the history of people making such forecasts and the events that cause these turning points which, a lot of the time, is something that can’t be foreseen.

Here’s the big difference

The important difference between an expectation and a forecast is the impact it has on my behaviour.

If I expect property booms and property downturns I won’t be surprised when they come. Planing Strategy Future

I know they’re a normal part of the game.

But since I’m not sure when they will come, I won’t attempt to do much about it.

Attempting to do something about it – trading, timing, buying and selling – is the root of most investors’ mistakes.

A forecast suggests that you know when something will happen, which is permission to act on it.

There’s little reason for a forecast other than acting on it.

But unfortunately this creates two problems:

  1. The false hope of knowing exactly when the property market will turn. Even the experts keep getting their forecasts wrong.
  2. The high-probability of regret from trading around these forecasts.  Just see the results all the hot spotters have achieved, or the lost opportunity for those who tried to time the market.

In other words…

Expectations rather than forecasts make me a better property investor.

So knowing this, what should a property investor do in these uncertain times?

Metropole

Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on.

But of course, if you’re wondering what will happen to property in 2020–2021 you are not alone.

You can trust the team at Metropole to provide you with direction, guidance and results.

In challenging times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that’s what you exactly what you get from the multi award winning team at Metropole.

If you’re looking at buying your next home or investment property here’s 4 ways we can help you:

  1. Strategic property advice. – Allow us to build a Strategic Property Plan for you and your family.  Planning is bringing the future into the present so you can do something about it now!  This will give you direction, results and more certainty. Click here to learn more
  2. Buyer’s agency – As Australia’s most trusted buyers’ agents we’ve been involved in over $3Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney and Brisbane bring you years of experience and perspective – that’s something money just can’t buy. We’ll help you find your next home or an investment grade property.  Click here to learn how we can help you.
  3. Wealth Advisory – We can provide you with strategic tailored financial planning and wealth advice. Click here to learn more about we can help you.
  4. Property Management – Our stress free property management services help you maximise your property returns. Click here to find out why our clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years and our properties lease 10 days faster than the market average.

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Michael Yardney

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 one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit Metropole.com.au


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