Expert insight: What it means to be ‘positive’ amid softening markets

After all, there is no ‘Australian property market’ but thousands of ‘markets within markets’ across the country, which all follow their own market cycles.

In fact, even Sydney and Melbourne – today’s poster children for softening markets – have pockets that continue to experience property growth.

According to Smart Property Investment’s Phil Tarrant: “Is it the right time to invest in property? Yes, it is. If you’re able to comfortably afford to invest in property and you actually are equipped with the information you need to make a sound property investment decisions, then it’s always the right time to invest.”

“[One editorial I read said], ‘Get on with it. The market is the market. The decrease in Sydney and Melbourne is only really an issue if you’ve purchased property really recently and you’ve overpaid for it, but if you have secured property in those markets four or five years ago, you’ve probably done pretty well.’”

“Property investment is definitely about timing, and it’s about where you choose to invest.”

Misleading consensus

Propertyology’s Simon Pressley agreed that it’s really not bad as it seems. In fact, according to him, consensus is often ‘grossly wrong’.

For instance, the global financial crisis that affected Australia and other countries a decade ago was deemed as the Armageddon of markets at that time – prices are going to crash and investors are going to get burned, with little to no chance of recovery.

Fast forward to the present, investors across Australia are still thriving, even amid the softening of some of the major property markets.

“Capital cities declined in value back then, and again in 2012, and the consensus was all doom and gloom. Now, it’s history behind us. Eighteen months later, Sydney and Melbourne even had some pretty spectacular booms in spite of what the consensus said in 2012,” Mr Pressley highlighted.

Even the property boom in Hobart, the oversupply in Sydney and the opportunities in regional markets were not foreseen by many due to a faulty consensus, he said.

“In 2014, no one had anything positive to say about Hobart. Fast forward 18 months later, there started a boom that’s still going. In 2016, the consensus was that you could never oversupply Sydney and Melbourne. Fast forward 18 months, those two big markets are receding in value.”

“In 2017, everyone said regional markets never grow. There’s no bloody jobs there. In 2018, there were about 40 or 50 regional locations that performed spectacularly well and 200,000 jobs have been created in regional Australia over the last two years,” according to the property expert.

Therefore, he reminded investors: “If we listened to consensus today, the odds are we’re going to be wrong.”

Positivity in the market

Instead of getting carried away by the misleading consensus, Mr Pressley strongly encouraged investors to understand the fundamentals of property investment and implement strategies that will work for the long-term.

Take a broad look at the market, reassess goals and strategies and ultimately find out how you can continue to capitalise on it considering and its current and future movements, according to him.

The property expert said: “Try to interpret what the available data means for the coming years, rather than getting absorbed in the here and now. Increasingly, society is becoming very good at grabbing one small negative figure and running with that.”

“Two days ago, the [Australian Bureau of Statistics] released the GDP figures and it is lower than what the economists anticipated. So, everyone jumped on it and said, ‘There’s going to be an Armageddon.’ Three months earlier, the same figure was seen as a really strong figure and everyone’s going, ‘Fantastic! How good is this?’ They chop and change really quickly.”

“Investors need to look at all of the information in each location and then look at that as a picture of what lies ahead for the next sort of 18 months, two years, and forget the here and now.”

The media only tend to report the positives if they happen in the big cities, but declines happening in Sydney and Melbourne does not translate to doom and gloom everywhere else.

At the end of the day, the diversity of the population and the markets across Australia, as well as the undeniable strength of the national economy, will always provide investors opportunities to create wealth, he said.

“There are always positive things here. This is an incredibly diverse country. There are still plenty of parts of Australia where property market was strong, so I guarantee that every single year, there will always be some great investment opportunities.”

“It’s all part of mindset – if something is important to you, and if it’s not, it doesn’t matter what people are saying. If financial independence is important to you, then it’s in your interest to always be looking for the positives. If you do that, you will discover that there are always some great opportunities in the market,” Mr Pressley concluded.

Tune in to Simon Pressley’s episode on The Smart Property Investment Show to know more about the many positives in Australia's property markets today.