Property investment lessons Part 1

The economy and our property markets move in cycles. Booms never last forever, neither do busts.

That’s mainly because most of us get swept up in the optimism or pessimism of others.
Don’t be surprised when they come around and don’t overreact. This will help you avoid being sucked into booms and spat out during busts.

Despite the ups and downs, the long-term trend for well-located capital city properties is rising values.
This long-term growth of property values is underpinned by Australia’s population growth and our demographics changes as well as the underlying wealth of our nation which allows us to afford more expensive properties.

Even though they are armed with all the research available in today’s information age, economists never seem to agree where our property markets are heading and usually get their forecasts wrong.
You see…market movements are far from an exact science.
It’s more than just fundamentals (which are relatively easy to quantify) that move markets.
One overriding factor the experts have difficulty quantifying is investor sentiment.

Every year we get hit by an X factor – an unforeseen event or situation that blows all our carefully laid plans away.
Then every decade or so we have a major event and the world "breaks.”

There are multiple property markets in Australia.
And even within each capital city, there are multiple property markets divided by geography, price point, and type of property.
So when somebody tells you the Australian property market is doing this, or the Sydney property market is doing that, don’t pay attention because this type of information is of no use.
You need to examine what is happening to property markets at a more granular level.

Jason Gwerder
Tuesday, 18 January 2022

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