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By Michael Yardney

2024: A year of confusion, concern and consternation. The perfect environment for strategic property investors

key takeaways

Key takeaways

The economic landscape in 2024 has been marked by confusion and mixed messages, creating an ideal environment for strategic long-term real estate investors.

Recognizing that different locations are at different stages of their property cycles, investors can capitalize on emerging opportunities by understanding local market dynamics.

National or state-based property statistics may not accurately reflect specific target markets. It's crucial to delve into microeconomic factors of target suburbs to make informed investment decisions.

I see the current market offering a window of opportunity for property investors with a long-term focus. You see…we are one year into a new property cycle, something that doesn’t happen very often. Not that I suggest you try and time the market- this is just too difficult, and in truth, you’ve missed the bottom which occurred in early 2023. But if the market hands you an opportunity like this, why not take advantage of it?

2023 was really a year of confusing economic signals, mixed real estate messages and bewildered investors.

And 2024 is turning out to be much the same.

In other words: the perfect environment for strategic long-term real estate investors.

And just like those who took advantage of the property markets 12 months ago found their properties have increased in value by up to 10%, this year will also offer similar tremendous opportunities for those who know where to look.

But as I'm about to explain, I don't look at the same statistics, data or information at many other people do.

property economy market

You see...over the last 30 years or so, I‘ve been analysing the Australian property markets from a unique point of view – I don’t look at the real estate numbers.

To be honest, I wasn’t doing it this way for the first 20 years or so of my investing career, but since I’ve changed what I look for, it’s made a huge difference to my results and those of my clients.

This approach has allowed me and the strategic investors who understood this methodology to move forward when the property signals were mixed and confusing.

For mine, using this approach is now more important than ever with the ongoing issues in the world’s economy, and the very varied forecasts for what's ahead for Australia’s economy and our property markets.

Think about did all those predications many of the forecasters made this time last year turn out?

Most were wrong, and if history repeats itself, and it most likely will, many of the forecasters will be wrong again this time round .

Clearly we are about a year into a new property cycle – an opportunity like this does not occur very often.

Of course there is not one real estate market, so  different locations are at different stages of their own property cycle, and moving forward some markets will strongly outperform others.

Don't be surprised by the many mixed signals.

At turning points in the property cycle mixed messages are normal, and of course despite lots of good news our property markets are still facing certain headwinds.

So here are four insights to help you cut through a lot of the confusion and to take a strategic approach for the rest of this year, into  2024 and beyond:

1. Ignore the Property Statistics

If you are trying to predict what's coming in the property market, don’t look at the real estate statistics – they only represent the past.

It’s a bit like trying to drive while only looking in the rear view mirror.

Strategic investors understand that what is going to occur in the future is more important than what has already happened.

Sounds simple, doesn’t it?

Yet, people still allow the headlines to dictate how and where they invest.

Currently too many investors are making their investment decisions based on the media and not on the fundamentals.

In fact they're making 30 year decisions based on the last 30 minutes of news.

An if you think logically (and not emotionally) that doesn't make sense.

Just to make things clear... what I’m getting at is that to accurately predict where the property market is going, an investor must understand the macroeconomic big picture and pay close attention to demographics as well as  economic, population and wages growth to accurately predict the direction of a local property market 18 months in advance of its move.

If you’re only analysing the market using the commonly quoted property stats you’re at least 18 months behind these strategic investors.

And that's really what most of the data driven experts and the new breed of data driven buyers' agents are doing.

They're all looking in the wrong place.

By the way...that's why many of them got it so wrong over the last few years.

Some of the statistics that give me confidence in not only the long term property market fundamentals, but the short and medium term outlook include:

  • Record population growth will continue to generate strong housing demand.
  • We are starting the year with an undersupply of over 120,000 dwellings and the supply crunch is not going away any time soon. A sluggish construction sector and bureaucratic hurdles means the gap between the dwellings we need and what is likely to be delivered is unlikely to vanish overnight.
  • All new dwelling will cost considerably more to build, particularly medium and high density apartments. In fact, very few new developments will come out of the ground until market prices increase sufficiently to make new projects financially viable. This means established properties have inherent equity in them because they are currently valued substantially below replacement cost.
  • Rents will continue to skyrocket as we experience record-low vacancy rates.
  • Consumer confidence will increase as more people realise that inflation is under control and interest rates are likely at their peak.
  • Interest rates are likely to fall in the second half of 2024, and that together, with a loosening of serviceability, buffers, and stage three tax cuts will increase borrowing capacity and positively impact buyer sentiment .
  • Wages and salary growth will also promote a return to confidence.
  • While the world's economy is sluggish a global recession remains unlikely, and many major economies are picking up.
  • Our banking system is in good shape with a very low level of defaults.
  • There is significant government spending on infrastructure - this creates jobs and uses local resources and leaves a legacy for future generations.

Don't get me wrong...

There are plenty of headwinds ahead - I'm haven't missed them. Some of these include:

  • Interest rates will remain at the current levels for a few months yet.
  • Many households are hurting financially.
  • Subdued retail spending
  • Inflation will remain above the RBA’s target range for another 2 year.
  • Minimal “real” wages growth, as wages growth is not keeping up with inflation
  • A housing construction slowdown which is the opposite of what we need
  • High energy costs and petrol prices.

2. Ignore Median Property Prices

If you’re like me, you regularly get the property statistics like auction clearance rates; median house price growth, etc.

However, it is important to not try to predict your specific target market’s performance using these national or state based numbers.

For instance, it is impossible to predict Brisbane’s property market when only looking at GDP or job stats for Australia as a whole.

You see…averages don’t matter.

Firstly I’ve never seen our property markets as fragmented as they are – each state is at a different stage of it’s property cycle, and within each state there are various markets (some geographic, other by price point and yet others by property type) each at their own stage of their property cycles.

Also… different research houses come up with different stats because of how they collect and interpret the data.

Have you noticed how there are 3 or 4 different median prices for each city?

This means that some of these stats produce an inaccurate indication of what is actually happening in the “real world”, yet you’ll often find them quoted as a representation of what’s happening in the market.

Fact is: these figures often present a distorted view of a market’s performance.

For instance, when there is a disproportionately high level of sales activity of high end real estate, as  is happening in our burgeoning Sydney and Melbourne property  markets, it may appear that values in the whole region are increasing purely because the median price will look higher than it had previously.

location map house suburb area find

The reverse is also true.

Over the recent winter months when fewer high end prestigious home sales were transacting,  it looked like median figures were declining in some locations, while the value  of certain properties in those locations were still increasing.

In order to cut through the confusing signals, rather than just analysing the real estate market numbers (which are obviously important), it is also important to look at your target location’s specific micro economic factors

A great place to begin would be to get answers to the following questions on your target suburbs:

  1. What are the demographics in this location?
  2. Are wages growing here faster than the national averages?
  3. Who’s moving into the suburb? What’s their income level? Are they more affluent and gentrifying the suburb?
  4. What are the long term job prospects in the surrounding suburbs?
  5. What is the unemployment rate?
  6.  What is the supply and demand ratio like in that suburb.

Real estate investing involves a whole lot of variables, so minimising your risk is imperative.

The best offence is a good defence, and making sure you’re informed and on top of the latest trends and research is going to keep you ahead of the curve.

By the way...that's one of the many detailed topics we cover at Wealth Retreat 2024  in April.

So click here now and get all the details and register your interest to join us.

3. Be Aware of Key Influencers

Key influencers differ from key drivers of the property cycle in that they often have a shorter-term, yet dramatic, impact on specific markets.

These key influencers (which can be economic or government-based) can confuse a property investor as they make it look like a boom or bust is occurring when it really isn’t.

property cycle

For example, a few years ago we were witnessing an influx of foreign investors putting their money into Australian real estate because they saw it as a safe haven.

This influencer pushed property demand in our inner CBD apartment markets beyond the true intrinsic demand, making them over-priced.

How long this influencer would be in effect was more difficult to predict at the time, but like other influencers their life span was limited, and this one dried up pretty quickly didn't it?

I’ve seen this happen in the past, particularly in the late 1980’s, when due to economic changes on the other side of the world, money was repatriated to higher yield economies.

And when that happened, certain property markets plummeted.

Remember: influencers can push property markets higher their real value and can lead to a false sense of security to those investors who don’t understand that they are temporary.

At Wealth Retreat 2024 our faculty of experts will explain the other influencers currently affecting the markets and which you need next few years to understand how to be successful in property.

So click here now and get all the details and register your interest to join us.

4. Always Invest Based on Capital Growth

We’re at the early stages of a new property cycle and those investors who follow a strategic plan (of course it must be the right strategy) are likely to come out ahead.

For mine, capital growth is the most important reason to buy residential real estate.

I know not everyone agrees with me, but all the wealthy people I know have built themselves a large asset base first and then transitioned to the cash flow phase of their investing.

Of course we would all like to buy properties that have both great capital growth and high rental yields, but if you purchase an “investment grade” property, that’s just not how it works.

property market

In Australia properties with higher capital growth usually have lower rental returns.

In many regional centres and secondary locations you could achieve a high rental return on your investment but, in general, you would get lower long-term capital growth.

I understand why investors prefer a high yield.

They feel they need the high rental return to pay the mortgage.

They also believe they cannot buy many properties because they can’t afford to service additional loans.

I guess that’s why many beginning investors make the mistake of viewing their property investments as income driven.

Of course cash flow is critical – you need it to stay in the market.

But it’s really capital growth that will get you out of the rat race.

Having said that, in these times of tighter lending practices, cash flow is even more important than ever and at Wealth Retreat 2024 I’ll be explaining how you can get the best of both worlds – both high capital growth and strong cash flow – and the answer is probably not what you think.

So click here now and get all the details and register your interest to join us.

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Tips: As we move through 2024 it is important to think and plan for the long term and not get ambushed by the short-term mixed messages in the media.

At times of confusion it will be more important than ever to seek advice and counsel from advisors who are independent and who’ve experienced times like this before.

So please join me and the best faculty of property experts I could put together at Wealth Retreat 2024

Because …once a year I spill my guts about how I built the very substantial property portfolio I own.

At my annual Wealth Retreat, I give you the blueprint that I have used for successfully building a multi-million dollar property portfolio.

This is a training event - there is nothing to sell in the back of the room - no expensive courses and definitely no properties for sale.

We'll be holding Wealth Retreat 2024 on the Gold Coast on April 27th to May 1st.

Click here now and get all the details, express your interest in joining us and we'll be in contact with you to have a qualification interview with me.

If you are serious about finding your passion, and...

If you want to learn how to grow your lifetime wealth, you must join us at Wealth Retreat 2024.

The high-level topics we discuss won’t be found in books or blogs or on podcasts.

This year’s broadened curriculum will include the little-known (and rarely talked about) success philosophies, beliefs, thinking and behaviours as well as the advanced investment, finance, share market, business, structuring and tax strategies that allow multi-millionaire investors to attract maximum wealth!

You will have the opportunity to network with a group of like minded investors, businesspeople and entrepreneurs while discovering how to build a true property investment business.

Wealth Retreat will cover the 5 areas that help create true wealth.

  1. Knowledge - we will be sharing "high end" wealth creation, business and tax strategies. We have Australia’s leading faculty of property, tax, finance, superannuation and legal experts.
  2. Systems - we obviously believe in property as the best system for creating wealth and we will discuss advanced property strategies such as property development. Plus we will show you advanced wealth creation and business growth systems.
  3. Mindset - this part is critical and probably the one where attendees can get the most leverage. In previous years we expanded the delegates Wealth Operating Systems (the way they think) so that they were receptive to a whole raft of new concepts - and judging by the results - it worked.
  4. The right network of people - we will be a big mastermind group. Some great joint ventures were formed at Wealth Retreat last year. In business it’s not what you know. In fact, it's not even who you know, it's often who you know knows. This is not a typo! Wouldn't you like to have access to the names in my Outlook contact list?
  5. Contribution - one of the true benefits of wealth is being able to contribute to our community and the world in general.

So in summary...

This 5 day retreat will be for successful business people, entrepreneurs and investors, who want to get to the next level, form a large mastermind group and learn high end wealth creation, tax strategies and business concepts from highly successful and credible presenters.

It’s for people who want to build a true property investment business.

Wealth Retreat was specifically so you not only get a concentrated version of everything we know about property, tax finance and property development from our faculty, but you also have the opportunity to network with a group of successful movers and shakers and the result is that you go home with a holistic plan for the next five years of your life - not just in property and wealth, but in seven different areas of your life.

You will get:

  • Strategic Breakthroughs: At Wealth Retreat we strategize solutions and together we'll tackle the hurdles that are holding you back and create a roadmap for your next big moves.
  • Community Over Isolation: Join a select group of other successful property investors, business people and entrepreneurs for five days dedicated to breaking the isolation barrier. Wealth Retreat creates a community where experiences, challenges, and victories are shared.
  • Diverse Collaboration: In a special setting, you'll benefit from different perspectives and ideas. The collective intelligence of the group offers insights that can spark innovation and propel your investments, your business and your life in general forward!

Wealth Retreat could be the breakthrough you've been waiting for.

The numbers are genuinely limited- we keep the numbers small on purpose.

All prospective attendees are interviewed to ensure they can benefit from attending and to make sure we selecting the right people to be part of our mastermind network, especially as we hope to facilitate some joint ventures or partnerships with a few of the attendees as we did in the past.

Remember the event is 5 days in the presence of some of the sharpest minds in wealth creation in Australia today including top tax accountant, business experts and solicitors.

It also includes networking with the best mastermind group we can put together in Australia - this will be one of the most important elements of this event. Just imagine the networking possibilities.

Don't count yourself out!

Click here and express your interest and I'll speak with you personally and I'll explain my personal guarantee.

So put me to the test. There is next to no risk on your part - except what you think is missing if you don’t attend!

About Michael Yardney 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.

Hi Michael, I have been reading your information for a long time now, why not a comment on the unfair covid levy for the next 10 years placed on property investors who the State Government assume are more wealthier than non property investors. I kno ...Read full version

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What a headline. Do you ever proof read. The only confusion is this click bait headlines. Never seen so much controversies in articles. And the subliminal metropole ads are just that. Anyway, Why not just stay with facts coz speculations ...Read full version

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