Book giveawa
M
ichael Sloan is the
director of property
advisory firm The Successfu
Investor (thesuccessfulinves
com.au) and author of two b
Successful Property InvestingandCracking the Real
Estate Code. We have 10 copies ofThe Formula to
Successful Property Investing to give away. For your
chance to win tell us in 25 words or less your property
investing formula. Send your entries to money@bauer-
media.com.au or Money magazine, GPO Box 4088,
Sydney, NSW 2001. Entries close June 7, 2017.I
s now the time to buy property? Not accord-
ing to Shane Oliver, AMP’s chief economist,
who recently wrote: “If you look at past cyclic
patterns in house prices, periods of strength
are often followed by periods of weakness. So
after such a huge run-up, the likelihood is we would go
through a period of weakness, which would then provide
opportunities for buyers where they can buy at a much
lower price than what is currently the case.”
Thereisanoldsaying,“Thebesttimetobuywas10
years ago and the second-best time is today.” It’s not far
off the mark. If your property had key attributes you
should look for, then whatever you bought 10 years ago
would have done well for you.
What are these attributes? For an investment property,
most investors should stick to:- Residential property.
- Appealing to home owners.
- Good location for home owners – near jobs, schools
and transport. - A balance of capital growth and cash flow that works
for you. - What the location demands, not what you think it needs.
The questions to ask are “Which property market was
Shane Oliver speaking about?” and “What end of the
market, above or below the median price, for the location?”
But first let’s consider another important point: “Where
is the property market located?”
The answer is there’s no single property market in
Australia. But that doesn’t stop people from referring to
one market. There’s a collection of markets in different
locations all over the country. Within those locations are
a range of sub-markets. This can mean that one property
can be a worthwhile purchase in one location and not
advisable just a few kilometres away.
There are even different markets in the same location
with the same type of property; sometimes there are
different property markets in the same building.
With so many different property markets in this country,
it’s unreasonable (and often flawed) to make blanket
There
are many
different
housing
markets,
and waiting
for a price
correction
can be a
dangerous
strategy
STORY
MICHAEL SLOANrecommendations for a specific type of investment
property to buy.
Take the Melbourne apartment market. Sure, there’s
a looming oversupply of these in the inner city. But just
a few kilometres away a good apartment in a boutique
complex near a shopping strip with good transport may
be a viable option.
Or, for example, a new housing estate might have lots of
land available. But just a short distance away in a quality
estate it’s sold out. And if you do find a block, you will
need to wait 12 months for it to settle. In Victoria some
of the better estates now sell through a ballot. For others
you will need to start queuing 18 hours before the land
is released to get your block of choice.
So what section of the market is Shane Oliver referring
to when he issued this warning, and could he be right?
First, he has said that it’s important not to generalise
about housing affordability in particular. After all, no matter
what arguments he makes, it’s just his opinion after all.
In my view, he may be right about one section of the
market and wrong about another. I know I have fallen
into the trap of speaking about one property market but
I believe my comments are valid for most locations thatSecret to
buying now
PROPERTY INVESTING
ay
l
tor.
ooks,The Formula to