Looking Back Over A Year
About this time last year many Australians were at the height of hysteria and panic. Fuelled by pessimistic and often irresponsible journalism, it looked to many as though the global economy would slip into the abyss and take Australia with it.
Lehmann Brothers, a large US investment bank had just collapsed, stock markets were plunging and the numerous ‘prophets of doom’ were being interviewed on primetime TV, scaring Australians into believing that their homes were about to plummet in value by 40%.
It now seems that the Rudd Government’s fiscal stimulus package was an overreaction. Certainly the Reserve Bank of Australia (RBA) began their massive monetary stimulus by slashing interest rates to 50 year record lows.
In amongst all this, we did our best to remain sober in our assessment of the economy and the property market. What we said then is still on the record now, via blogs and recorded webinars. In a nutshell we said that there were great buying opportunities for those that were informed and felt they could tough out the negatives. We said that Australia’s house prices would stall and perhaps soften due to a lack of household and investor confidence… but they would not fall by anywhere near 40% (except perhaps those executive homes at the top-end where demand is limited). We said that by mid to end 2009 we would see the market actually take off again and that 2010 would be a great year for those who hold an investment property portfolio. Might I add that we picked every interest rate cut ahead of time (with the exception of suggesting the RBA would go one more .25% down, which they didn’t).
I say all this not to ‘blow my own trumpet’ but rather to reinforce the seriousness with which we take what we do. We are not merely selling real estate but rather mentoring people to safely and responsibly navigate a wealth creation journey towards the realisation of whatever it is that is important to them and their family.
Unexpected Bumps
There have been some unexpected speed bumps along the way. I was not expecting the rental market to be so affected by the Rudd government’s boost to the first home owners scheme. I did not see rents softening as much as they have and I did not see the prolonged rental vacancies that have occurred; albeit just for a minority of our clients.
Looking Forward Over A Year
In the series of webinars (web seminars) that I held; not sure if it was the November ’08 or the August ’09 ones (link to ’09 recording below), I said that it is a great thing to follow a trend but it is a great thing to lead one. What do I mean by that?
There are those who over this past year have been actively adding to their property portfolios as well as those imminently about to. I believe that in Queensland we are now coming out of the back of a prolonged period of little or no growth… and catch up is just around the corner. I see 2010 as a very good year and would encourage those who pass our three point safety checklist to seriously consider acting sooner rather than later. There is still some already completed stock around and there are some deals that we have secured (due to developers being pressured by their lenders), but there is not that much. As far as new stock coming online there is a lot less available than what the groundswell of demand will require; this WILL push prices higher.
Prices Are Going To Go Up
Given prices are going to go up we have three choices:
- Secure at today’s price and own the capital gain
- Wait until we see the market take off, pay more and carry additional debt equal to that capital gain
- Do nothing (as 95% of Australians will)
Action Requirements
Anyone wanting to take (careful, considered and responsible) action to ensure they have more financial choices in the future, needs to right now consider three things:
- Do I have the Borrowing Capacity in the first place?
- Do I have the capacity to hold onto the property going forward? Will there be an initial cost to hold the property… and if so, how long will that take to turn around so that the income from the property is more for me than the total cost of holding it?
- Do I have the mental toughness capacity? Will I be able to sleep at night… or are there so many unanswered questions in my mind right now that I am just really not sure?
Our Complimentary, No Obligation Offer
Every week our team of Property Mentors are engaging with readers of my newsletter, from all around the country, who are having these questions (above) and many others answered. An mrd Property mentor is not a salesperson, we don’t have any. They are investors, finance broking specialists and all-round nice people who have a heart for others.
I invite you to take me up on my complimentary and no obligation offers to speak with an mrd property mentor about the questions you have. Perhaps you would like us to arrange to have your borrowing capacity assessed with the view of having our help in developing your own tailored investment plan.
Whatever your situation, question or need… we are committed to ethically, responsibly and respectfully supporting you in the pursuit of your financial goals. Our Customer Care Program recognises that investing is personal. It is our point of difference and your peace of mind.
YES PLEASE!
Happy Investing,
Nick Lockhart,
mrd Customer Care Program… because investing is personal
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