Real investment opportunities not in 'hotspots', says expert

In fact, depending on your goals, capabilities and limitations as an investor, when the market is fluctuating or in so-called ‘doom and gloom’ might just be the best time to commit to a long-term wealth-creation journey.

According to Propertyology’s Simon Pressley: “You can never choose the bottom of the market, you can never choose the top of the market, but as long as you're getting the right advice and you're making the right decisions, property should serve you well.”

However, the final solution still depends on your personal and financial circumstance, which highlights the importance of doing thorough research and due diligence before jumping into any investment.

The property expert said: ”Our economies across our capital cities and regional markets are completely different. It's really, really diverse, so it's always a good time to invest. The key question is never when—it's where.”

“The property world to me is just full of all these dots and I'm just trying to join them together and see what sort of picture it creates. If it's a positive picture, then we're excited and we’ll probably invest. If it's starting to show some clouds, we still need to know about that as well,” he added.

Being more discerning about expert advice and property news have never been more critical now that the decline of the bigger markets such as Sydney and Melbourne have given rise to ‘doom and gloom’ predictions, according to Mr Pressley.

State of the market

Median house price in Sydney is currently at sitting at around $1.1 million while median house price in Melbourne is currently at $840,000. The prices in capital cities are consistently declining for several months now, save for a few exemptions, and the level of supply and demand have been imbalanced for a while across the bigger markets.

Some doom-and-gloom headlines today go as far as saying people should not invest in property because it is currently the most overpriced asset in Australia.

Is the current state of the property market in the country really that bad?

While it’s true that some of the markets have seen way better days, investors would do well to remember that Australia is a diverse country with multiple states and territories and tens of thousands of suburbs carrying different opportunities for wealth-creation.

Smart investors might as well take advantage of the flat markets by negotiating good property deals in areas with fewer competition.

Mr Pressley said: “The real opportunities are probably in the places that aren't getting reported in the mainstream media. I always take an objective look of every capital city in Australia, of every region and location in Australia.

“I think that in spite of all this negativity, 2018 and 2019 might go down marked in time as an opportunity where those who made the most money disregarded all that negativity and realised that they had a chance because there was less competition and they could be more selective about which property they bought.

“They stand a chance of getting it at a better discount to what the list price was. If they get that location selection right, and they're safe with their cash flow so they're not hurting their household budget, you may well see them in late 2019, 2020 reaping returns when things pick up really, really well,” the property expert highlighted.

Once the markets are back up again, as is usual in market cycles, those who will be benefiting the most are the investors who have entered the market way before they were told it’s ‘safe’ to do so.

After all, once you’ve heard in the media that there’s a property boom going on, everyone has rushed into the market, the prices have gone up and the supplies have been depleted.

According to Mr Pressley: “ Those who made the most money out of the recent Sydney property boom were already in the market. Unfortunately, people get too influenced by the media, so a lot of people bought into the Sydney market in late 2016, early 2017 due to that FOMO effect, the fear of missing out, and they've probably lost money already.”

“But those who made really, really good money, disregarded all that and focused on the fundamentals. They either got professional advice or they educated themselves and learned to read markets properly instead of just reading newspapers or iPhones,” he added.

At the end of the day, property investment is all about understanding the factors that influence positive price growth, or simply the growth drivers, and making them the basis of your decisions moving forward.

Doing research

When it comes to researching for property investment, a lot of people usually start with selecting a location and then doing their research around it, but Mr Pressley strongly advised investors to start with a broader approach before narrowing down their options.

Rather than doing research on a particular town, he encouraged them to understand the macro- and micro-economic factors that affect the property investment landscape.

“Deep dive into that economic research and then translate that to a location, translate that to a type of asset, translate that to long-term projections for growth. That's the secret around property research,” the property expert said.

As always, engaging professionals and seeking mentorship, where appropriate, remain as some of the most effective ways to overcome the overwhelming influx of information and ultimately make the right investment decisions.

Mr Pressley highlighted: “Sometimes you have to pay for good advice because it's hard to get it yourself, it's hard to work it out yourself.”

“Don't worry too much about what the media is saying. Make your own assessment on the state of Australia's property market, the state of markets within markets. Understand what you're looking to achieve. Cut out the noise, get clarity.

“Bring it back to the basics—you're not going to read that in the media,” he concluded.

Tune in to Simon Pressley's episode on The Smart Property Investment Show to know more about his top tips for investing in the current Australian property market.