Is Now A Good Time To Invest In Property?

https://www.youtube.com/watch?v=DXoCSzNB_0Y The market is forever changing and things are heating up right now in many markets across Australia. In this episode we want to look at whether or not 2021 is a good time to buy and compare it to 2020 as well as previous years. Book a Free Property Strategy Session - https://onproperty.com.au/strategy Advanced Suburb Research - https://onproperty.com.au/suburb/ 0:00 - Introduction0:50 - Sentiment is super bullish2:04 - Things don't always play out how you think they logically should5:05 - Where are we in 20219:05 - Pressure on housing stock and vacancy rates10:20 - Australia is not one market13:10 - Things to look at moving forward from here14:30 - Erring on the side of caution in this market17:12 - Know your strategy before investing Recommended Videos: Is This a Sign Property Is About To Boom? (New Mortgage and Price Growth Correlation) 2 Properties to Financial Freedom Transcription Ryan 0:00The market is forever changing. And we always like to do updates about whether or not now is a good time to buy and looking towards the beginning of 2021. Looking into 2021, we've come through an interesting year in 2020, we wanted to ask is 2021 a good time to buy and what sort of things are happening in the market at the moment, and then maybe some comparisons last year, or even comparison to a couple of years ago, and see where we're at, hey, I'm Ryan from OnProperty, helping you achieve financial freedom. I'm joined by Ben Everingham from Pumped on Property to yet give you guys an update. And to talk about this just to see where the sentiments are, how things are progressing and how they might go throughout the year. Ben 0:44You know, I geek out on anything that's like analytical data oriented, it's all about me and what I'm noticing and feeling I'm liking and I've never I've never seen it this bullish at the moment like I've never seen it this positive across the board. Ryan 0:58Yeah. And I think that's something that is just so drastically different from what we've been dealing with for the last almost three years now. You know, Sydney went through its decline, Sydney and Melbourne in 2017 2018. And so, that kind of affected things and then obviously Coronavirus last year, it's just been there's been great opportunities out there. And some markets have been moving but sentiment as a whole hasn't been super bullish and super positive. And now it's just dude, every man and his dog is talking about a property some people I talked to at school, they don't even know I'm a property vlogger YouTuber, they come up they're talking to me about the Brisbane and I'm in Sydney like event talking about Brisbane or the Sunshine Coast or Ben 1:40it's pretty wild like Westpac does an epic little report called the Australian sentiment report and it is now in as of January or February this year, the highest it's been in the last seven years and December was the highest sentiments been in 10 years since the GFC. Now that is a huge precursor for like what's coming in a positive way Ryan 2:02and I think something I've had to let go of so over the last few years and dealing with renew the recession was coming or something was gonna happen and then trying to work out logically Okay, how are things going to play out and then being at this point now looking back and realizing that things don't always play out how you think they logically should? There's so many factors at play like last year Coronavirus, borders closed down international borders closed down job Kiva people losing their jobs it's like okay, the market should tank from a logical perspective people are earning less money you know what people are losing their jobs This is crazy. The market should tank but no the market dinner and and what people ended up earning more money saving more money because of job keeper and all of that sort of stuff. And then the market has actually grown as a result. So sometimes we think okay, we've been through 2020 and Coronavirus that should hit the market hard. Not necessarily and I think you know, Ben 3:01the very first thing I did last March man when shit started to get really bad was look at history, which is what I always do. And so Fred Harrison went and looked at the mid cycle slowdown, which is the event that we've just gone through that we've been talking about on camera for what like three, four years. Yeah, yeah. And when I went back and looked at the three mid cycle slowdowns before the Coronavirus one, what I found is that the average house price during these events, which are once every 18 to 20 year events, is a decline of only 10% globally in houses and an average of about 35 to 40% in stocks. And so I went like that knowledge is really powerful. Now each mid cycle slowdown comes from a trigger event. The sun was Coronavirus, last time it was 911 and the.com. Boom. The time before that was the recession we had to have apparently because interest rates were at 18%. The time before that was the Cuban Missile Crisis. So there's always a run up. And then a period of mass freaking out globally that smashes the market. So we're already going to go that way anyway. And so from about April last year, I was already realigned with I understand how bad it's got historically. I still believe that this time it was worse, like everyone does. Oh, Ryan 4:16wait, we both did. We were both fearful that this time it wouldn't be just a mid cycle slowdown. It might have been a bigger correction. But then the government stepped in. And as soon as that happened, I think we both knew at that point and we're listening to people like Ray Dalio and all these higher level investors that are way better than us, listening to them talk about Okay, what is this government intervention mean? How's that going to affect the markets, and we understood quite early on that, okay. This isn't going to be as bad as we thought the buying opportunity is now while everyone's scared and I know like you and Simon and stuff are buying last year. We know that this is an opportunity and could be a potential run out now into the future until we have the next crash where whenever the That will be Ben 5:00completely and you know, that's an interesting thing. So as we understand that bigger picture history stuff, then we go, where are we in 2021. And there's a couple of indicators that I follow that have like, a very, very strong correlation to short term price growth. Now, one of them is the number of new mortgages being written in Australia right now. Ryan 5:20That's okay. I think I've done a video on that the correlation between new mortgage and price growth, I'll link up to it down below. But it is insane how close that correlation is. You can never say it's causation. But this one's This one's crazy. Yeah, Ben 5:35you know, so when I think it's called logic went back to 2003. So it's got about 17 years of data. And what happens is, as the number of new mortgages rise, generally, we see capital gains across Australia, when the number of new loans come down, we genuinely see price declines. And it is just gone from like a bottom here to like, right up here, particularly in Brisbane and Perth. I think the number of new loans written this year are up 35% on last year, and 40 odd percent in Perth, and Ryan 6:04you look at what's happening, because obviously house prices, it's not just tied to people's income. With rental markets, it's often more tied to the incomes of the areas because people are paying directly out of their pocket out of their weekly or monthly income to pay the rent. Whereas house prices, often tied to mortgage repayments and how much that's going to be so when interest rates are extremely high, obviously, you have to pay more to own a property. And when interest rates are extremely low, and now we're at record lows, then people can afford people looking at not okay. 400,000 versus 500,000. They're actually looking at, okay, how much is my mortgage going to be each week? It's one of the dangerous things in a market like this with such low interest rates, people are saying my mortgage each week's 400 and you like Well, what's it going to be when it goes back up to seven? Hey, at seven ply, and now no one really thinks about that at this point in time. So you've got that you've got the low interest rates, obviously putting pressure on the market, but I guess what was holding things back was there was still a lot of lending restrictions in place. So even though interest rates were low, people were finding it difficult to get loans, we had the Royal banking commission, which, you know, put a lot of scrutiny on the banks, and then the banks were then putting more scrutiny onto people. And they basically said, because of, you know, Corona, we're going to like forget a lot of that stuff. And you know, Ben 7:25just come out and said that their intention is to rollback almost all of that stuff, plus a lot of the stuff they put in place to protect Australians from the banking system in 2011, after the GFC, which Trump went and immediately removed as soon as he got into office in America back or not immediately. But back in 2018, I think it was and Australian starting to follow suit, which again, feels crazy. But if you understand your long term cycles, that's what the governments have done every single time we get to this point for the last 100 years. Well, that's Ryan 7:56it a lot of this kind of sounds crazy to us as regular people, you know, the government's printing money, or they're making access to cash really easy or bank loans really easy. And that's like, that sounds crazy. How long can this go on? etc. But I guess, stepping aside from the morals of it and things like that, you got to say, Okay, what pressure is this putting on the market? And how is that going to affect the market and affect sentiment in the short term, we,