Is 2019 A Good Time To Be Investing In Property?

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Is 2019 a good time to be investing in property? 2018 was an interesting year in the property market with the peak and decline of Sydney and Melbourne while Brisbane continued to grow. 2019 is an exciting year to be buying property if you have solid fundamentals, or a very dangerous year to buy if you don’t know what you’re doing.

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0:00 – 2018 was an interesting year
1:04 – Nationwide shift in sentiment
3:00 – What made Brisbane different? Why didn’t Brisbane go backwards?
7:06 – Can it be a good time to buy in 2019?
8:42 – The mid-cycle slow down and how that will affect markets for the next couple of years
13:28 – Why does the mid-cycle slow down make it a good time to buy?
16:20 – What sort of investments/strategies should people consider in 2019?
18:14 – Going back to the absolute fundamentals of property shows why Brisbane represents value
21:35 – Buy the dip, if you believe in the asset class
24:37 – What to do with these thoughts so you can decide whether or not you want to buy
26:32 – Ben’s disclaimer

Recommended Videos:
How To Get Your Strategy Right for 2019 – https://www.youtube.com/watch?v=mFTQN7dz2F0

Transcription:

Twenty 18 was a very interesting year in the property market where we saw the peak of both Melbourne and Sydney as well as seeing those markets going backwards a little bit. I think southeast Queensland and Brisbane did go up throughout the years. I correct, yeah. I think golden had four percent. Sunny coast did almost seven percent in Brisbane. Surprised everyone doing almost three percent. So when you guys are thinking that everything’s over for the Australian property market because Sydney and Melbourne have gone backwards. That’s not necessarily the case over the entirety of Australia. And so looking at those results from 2018, I want us to take some time today to interview Ben. Bit of a different vibe here. I’m going to be interviewing him because this is his specialty is is 2019 a good time to be investing in property and we were talking about the different markets, talking about the Australian market as a whole and also talking about met you guys and your investment goals.

So initial thoughts. Ben, what are you thinking? Going from 2018 into 2019 with the current state of the Australian property market, the biggest thing that I’ve noticed in terms of the last five months in the Australian market is a nationwide shift in sentiment and we know that investors and humans are creatures of habit and when the herd moves one way, generally the rest of the herd moves with it and so you know anybody that’s invested in shares understands this. Anyone that’s invested in Crypto, anyone that owns a business or is in a job that is in an industry where cycles actually have an impact, would understand this. Anyone that’s an investor understands that things go up and down, but people’s sentiment, which drugs the marketplace has moved from. Okay, let’s see what happens to our. Okay, let’s sort of see what happens and just watch it for a little while.

Yeah, so obviously we had, was it 2017 and color? I’m not sure if the 2018 was that frenzy in Sydney and Melbourne where people were just buying property sort of mid seventh, 2017. I felt like it was the top of New South Wales and then I think by the end of 2017, early 2018, it was the top of Melbourne, so there’d been actually topped out for a lot longer than people expect. Like I, I believe the current downturn has been running for almost 18 months now in Australia. We just haven’t really noticed. Yeah, people just haven’t noticed that it was an actual downturn. Like when you look at indicators that I look at, um, it was pretty clear to see, you know, Perth is almost down 25 percent now from its peak or sorry, Darwin’s almost 25 percent down from its peak pervs 15 to 20 percent down depending on whose data Sydney’s now.

Ten percent down from its top depending on the suburb and Melbourne’s, you know, potentially again whose data three to seven percent down. So it a wide. We’ve been moving in this direction for awhile. It’s just that maybe has really been hammering home for everyone for the last six months. Yeah. So while they, Brisbane different, like why did Brisbane grow in this market when Sydney and Melbourne went backwards? Um, there’s a number of reasons why. And again for 2019, um, I think it’s going to be a relatively flat year. In fact, I believe it’s going to be a year in most marketplaces. Sydney, Melbourne, Perth, and Darwin as well where property prices will continue to go backwards. I don’t see Brisbane or southeast Queensland running away as a whole. I mean running away like Sydney and Melbourne, 10 percent plus growth, the, you know what I mean, like crazy speculative growth.

Um, but certain suburbs are performing extremely well in south Queensland right now. Like I got a text this morning from rory, one of my clients we bought from a suburb 21 case in the city for him. He’s like, then just checked out quarterly growth three percent this quarter. Just checked out 12 months growth of 10 point nine percent. Good effort night. And I’m like, fuck you bro. Sydney’s gone backwards by Chad present. You’re not 20 percent on where you were going to vegas and we’re having a laugh about it together, but why I want to frame the conversation is to, you know, it’s, it’s definitely not a year where everything you buy is going to turn to gold. Certain markets in Brisbane and southeast Queensland and I think southeast Queensland will be Australia’s top performer. Hobart’s still might keep running away, but who the fuck wants to own Haber?

Seriously, like not when it’s gone up by 50 percent in four years. Whereas Brisbane didn’t have that run when Sydney and Melbourne and Hobart and everything went up. Brisbane, it just steadily increased. It didn’t have dramatic double digit growth. Yeah. So Brisbane actually hasn’t had any meaningful prospect at all were coming into its 11th flat year. And what do you mean by flat? Yeah, flat year to me as a year without any double digit growth. Okay. So it’s still growing. It’s not completely flat line, zero percent growth. It’s growing, but just not. If you look at core logic in the last 10 years, it’s done zero point nine percent per year. So it’s done less than one percent per year for a decade now, Brisbane, which is pretty close to the heart, they just there, but it’s not telling too much, but that’s the problem with averages because certain suburbs in Brisbane have done 60 to 80 percent in 10 years.

Others have gone backwards by 20 percent. Others have just tucked away it three or four percent. So average is you’ve got to be careful of. But the reason Brisbane is doing well is one, it’s been flat for a long period of time to according to the ABS, more Australians and moving to Brisbane than anywhere else in Australia. Right now I’m three. We’ve got $43,000,000,000 worth of guaranteed projects in pipeline, private and public that I can see between Goldie, Brisbane and sunny coast over the next seven to 10 years, which is just huge amounts of work with the current labor force we can’t delete. Um, another thing that’s really interesting up here is that wages have been growing exponentially because there’s a shortage of skilled labor. And so the average household income in Brisbane vishy we’ll finish higher than the average household income in Melbourne.

I remember seeing that. We did a video on this where the average income in Brisbane is higher, but housing affordability in Melbourne was obviously off the charts compared to Brisbane. It’s 57 percent more expensive in Melbourne to buy than it is in Brisbane right now. And people in Brisbane on average earning more than people in Melbourne.

Yeah. So when we look at long term trends, you know, history suggests that the next 10 years, based on the last 50 years worth of cycles looks nice for Brisbane. It’s, it’s the time of the cycle where things historically overnight and to 20th. So who do better up here? Um, you know, an, uh, an issue that we had in Brisbane at 12 months ago. It was a big topic of conversation that was all over the Australian majors. Brisbane is chronically oversupplied by city units and we thought we’re going to have 10 years worth of oversupply. It’s caught everyone by surprise. But according to mark Matousek now Brisbane’s the only unit market in Australia where it’s under supplied from property fucking perspective like just shows you, you know what I mean, to take everything with a grain of salt and I think 2019 is definitely one of those years where you can buy the hype and most people will and smart investors like you and I like it. There is serious buying operation.

So can it be a good time to buy in 2019

she. Yeah. Yeah. Like I mean do you want to, do you want to buy when everyone else is buying at the peak for a profit or do you want to strategically buy the right market at the right time at the bottom? Like I wouldn’t be rushing out and buying Sydney or Melbourne because even if they’ve dropped by 10 percent, they’re still up 80 percent where they were six years ago. Like Brisbane and Sydney have a ways to go. I still believe that they are correct by between five and 10 percent. HTC, like there’s still a full for Sydney and Melbourne before we hit bottom. Yeah.

And obviously we don’t have a crystal ball, so none of this don’t take this as fact.

Just check out the videos that we’re doing in 2015, 16, 17 where all of this stuff has been documented for like three years.

Well that’s the thing we were talking about when everyone was going crazy and Sydney were like, this has to peak too soon. This just seems excessive growth. What is going on here are just. I feel like we were talking about that, yeah, 18 months, two years ago that we wouldn’t really want to look at investing in those markets. And we’ve always talked about, look at the Herron, todd white month in review report. Pick the markets that are at the bottom or that are starting to increase rather than markets that are peaking or near the top of their market cycle and investing in the right time in the market is really important. And we’ve always talked about that as well as investing in a way that you can be cashflow neutral or cashflow positive. Yeah, like

Chico Thousand and 19 and 28 going to be what I believe the two best years of buying from a sophisticated investor point of view in Australia in the last decade. Why is that? It’s hard to say without being technical, but if you look at the time can go technical and then I can explain it in layman’s terms. So what we’re coming into over the next two years is the mid cycle. Slow down. If you know anything, if you had a history in Europe or America, you know that a crazy amount of accuracy, good last two years he’s made socket, slide down, has happened and Australia is no different than America. We’re so connected to the global economy now that damaged sokolow recession points equal a midsize recession points loosely and what a mid cycle, slow down point represents. People feel like the whole world is going to fall on it’s head right now.

Like that is a sentiment out there. People can’t differentiate because they don’t know the history of what is happening right now, which is a point where generally stock markets will get hammered in the next two years. Particularly the American one, which is ran away in the last couple. I don’t know about you guys, but I’ve been getting 30 percent returns in my super fund for the last two years straight. I don’t feel like that’s sustainable growth in the stock market. Um, because the Australian stock market is that pretty much flat since the last ship, say it might not get this hammered, but it was still get hammered. And so what happens is stock markets get hammered. Business sentiment and consumer confidence declines. American might go into a recession if trump doesn’t cook the books and allows it to happen. John already cooking the books, Europe’s cooking the books lack.

Everyone’s doing their bit to like keep the show on the road right now. Um, and we entered these point where property prices in some markets can go flat, some markets they’ll decline and we’ve started to see that in Sydney and Melbourne now. And you know, as an investor, as a short term, as a person who’s looking for short term opportunities without doing major development, the next two years is going to be hard. But as someone who’s got a 15 to 20 years strategy that wants to use smart timing to by far out, there’s an opportunity.

So mid cycle, slow down is different to a full blown recession. So you get slow down in the market. Obviously things drop a bit, but you don’t go into full recession mode like we did back in 2008. It’s like less. Yeah, like because right

now when you’re getting blamed, Berg in America, reporting that it fuck apple has $257,000,000,000 of cash sitting in their reserve and all of the big hedge funds around the world going into cash right now and said that they can take advantage of the next two years and this weight reporting front front page of the website that mom and dad investors at all in in America and that across the world. A bunch of the tallest buildings are getting opened up in the next year and all of these other indicators that you can look for for me will

point. So it’s just that indicator of access that everyone’s put everything into the market. No one’s got anything left to put in the building. There’s excessive buildings. You coming to the peak of the market. Then if people don’t have anything left to put in and people are selling, then it’s,

you know there’s the show stops, but the show only really stops for one and a half or one to two year period and then because it might look like people that are all in. But what I was trying to say there is institutional investors have a lot of cash in the bank. Smart investors have cash in the bank right now to take advantage of these conditions and companies like apple just have all of these cash that, that don’t know what to fucking do with it. They’re not the only ones in the world that are in that position after a really good run over the last seven years. And so people confuse this point as it’s gonna be like bank values. It’s going to be government values. It’s going to be like world war three. It’s going to be blood on the streets and certain people that are over leverage will get hurt.

But what happens at the top of the cycle when we get to like a recession, depression, like a JFC or you know, the 19 nineties like major recession that we had or before that it was like 19, you know, just after 1970 type thing where people get fucking smash, like a depression. Depression is apples or an apple doesn’t have cash in the bank anymore. Like the institutional investors have just bought the heart in such a way that they’re all in all of the governments around the world over leverage. All of the banks are over leverage. Every single person that you know has been buying stocks in property like a magnum because it’s running like crypto did at the end of last year. Two thousand 17 and nobody can bail anybody out because everybody’s stuffed.

Yup. And so with that coming into that mid cycle, slow down, why does that make it a good buying opportunity in 2019

anytime when not everybody’s all in and when people are sitting back for no good reason except other people around them and sitting back or fucking Carl on the today show told people that, you know, they shouldn’t be buying property, you know, like what the fuck does a TV presenter now that anything except what to read off the other side of this rain. Like it’s not their core business, it’s not. You know what I mean? So like anytime as Warren Buffet says, when other people are being scared, I think represents a buying opportunity, particularly when some markets have been running very, very hot for a period of time.

Yeah. So, but when people will be scared that investing in property, the market’s going to go backwards and then they’ll lose money.

That’s one possibility. Like at any time you invest in anything, you know, I’m not saying go buy Sydney, Melbourne, Perth, Darwin, Hobart, or any regional market that’s had a good run over the last seven years. Today. Like this very, very good.

Picking Your markets in 2019, there’s going to be less markets that will look awesome and it’s not going to be like buying in Sydney three or four years ago where you just going to have a run. You really need to pick your market in 2019 and pick the right suburb within that market as well. That’s going to be. I know we’ve talked about this for years, but that’s going to be more important than ever if you want to see success.

It’s one market right now, which is southeast Queensland and I already believed that the taste is because it’s run by 40 to 50 percent in the last five years that no one’s seen reporting on that Brisbane, North Brisbane, parts of the sunshine coast might represent those short term. Who knows what’s going to happen in 2019. All I know that there are more and more and mold buying opportunities in this market right now than I’ve seen in quite a while. And if you’re an investor with a 15 year approach to doing this, then you know, you might be buying somewhere close to the bottom in Brisbane right now. It could drop by five or 10 percent in the next two years. Who knows how bad things are gonna get. But you’re some, your according to Herron, Todd White, bis shrapnel, corelogic, Michael Matosich where somewhere very, very close to a bottom or a rising market phase now in Brisbane.

And after, you know, we’ve had one other period in the last 50 years where we had 11 years without a double digit growth year. Yeah. This would be like the first time in proper recorded property, data history that way going into a period as long or as what for so long. Like with more population, with more jobs, with more income, more infrastructure infrastructure. Plus what Brisbane and southeast Queensland traditionally doing this second half of every major 20 year cycle, I just, you know, I think 2019 it’s going to be amazing, but it’s better than buying in 2021 when it’s gone up by another 10 or 15 percent.

So what sort of investment should people be looking at in 2019 or what sort of strategies should people consider that’s different to what they should have considered? Maybe in 2016

you can’t buy everything because the tide is not lifting all boats anymore. And in fact over the next few years we’re going to say a lot of people, you know, call it out because the tide is dropping in some markets in some areas. Um, I think like always we should be buying property with longterm potential for quality capital growth. So quality capital growth, potential, low maintenance properties that are easy to rent in suburbs with chronically under supplied vacancy rates, property, the great cashflow like you and I always talk about, or the ability to add great cash flow through a granny flat and property with the potential for some upside. So even if the market goes flat or backwards by 10 percent in southeast Queensland in the next two years, you’ve bought it at a good price and you bought something with potential to add some value. And if the market doesn’t go flat or backwards in just nine times, then you might be able to move yourself forward when other people around you can’t.

Yeah. So it’s basically everything we’ve been saying for the last couple of years, which is to pick your markets well, pick yourself a within that market. Well buy the right property in that suburb or what the people in that suburb one and look for good cashflow as well as opportunity to add value to the property. So basically it’s a more risk adverse strategy. You’re not just investing in something for the capital growth, you’re investing for the long term growth, not just the next couple of years, but then also being in a good safe and solid cash flow position where you’re making money from the rent of that property. So even if the market does drop by five percent, you’re still making profit and you’ve bought in the right area so that you get that long term growth.

It’s just going back to the absolute fundamentals of property. Now. I’ve been working with a lot of clients in Sydney and Melbourne this year as of you and I’ve been really doing some analysis on the market this year as well, and if I think about Sydney right then I’ll look at the central coast, Newcastle and I look at Woolongong and then if I look at Melbourne and I’ll look at the Mornington peninsula in Melbourne or I look at the genome genome, Jalong Peninsular in Melbourne to buy into Jalong. Right now you’re probably looking at 800 K for a high quality home, walking distance to the beach, maybe more anywhere in the Mornington peninsula anywhere close to the city. You’re looking at way over one to one point 5 million bucks now. Anyway, walking distance of the water in Woolongong. We’re talking about well over a million bucks now for high quality home.

Same with the central coast. Same with Newcastle, like to be in the quality areas and these are all just little tin towns like these are all regional market sitting next to a major metro market and the price points is sitting at the new like seven figures, million dollar price tags. You can buy houses on the beach in Brisbane that take all of those boxes that we just talked about, 450 to 500 k right now like that. Two to three times cheaper and Brisbane is going to be the actual size of Sydney and Melbourne. It’s not going to be a little jalong that he’s hoping on like a high speed rail to make it part of Melbourne. It’s not Mornington peninsula, which is a lifestyle thing. Sixty ks away from the city of Melbourne and Brisbane city. You know what I mean? Like artist think Brisbane represents so much value right now or you’ve got to say that Woolongong, Newcastle, Jalong all inflated by about two to three times their actual value right now and I just don’t think it’s that.

So that gets me excited. Like when I start comparing product, there’s product and income versus income and number of people moving versus number of people exiting and infrastructure projects and potential because it’s been so flat for so long, it just gets me excited and then you overlay in election year when people sit on the fences because all my God, there’s a new government, like there’s no correlation between government in America or Australia or Europe over 38 period and price point. It might be temporary, but it always swings like there’s an election year. Like there’s potentially an American recession towards the middle to back of end of next year. Maybe in a small list. Ryan recession over the next couple of on paper. Like a technical one is just shitty sentiment. There’s, it’s hard to get money from the banks right now for some people

like these others. Hard for some people, easy for others.

So easy for people that are just getting started. So easy for people that are in good financial position. So easy for people with good jobs and good incomes. And so all of those things to me like, you know, as a 15 year investor looking at the Patriots, I’m like, yes, like by the debt, not the top, you know, like if your stock market invest in like a bunch of my friends are you by the 10 percent deeper every year, every three years you buy the 15 to 20 percent tip every seven to 10 years, you buy the 30 percent, Dave and I’ll look for the deep. I’m not like looking to buy a top of market so that this excites me. I don’t run away from it.

And that’s one of the biggest things I’ve learned through investing in Crypto is by the deal until the 26 k that was like a speed rating where like a crash course in market cycles is cryptocurrency and obviously property works different to that and they’re on different cycles and stuff like that. But if you believe in something by the dip, if you believe in property investing as a fundamental way to build wealth than buying the dip shouldn’t be scary. Especially if you’re choosing the high quality markets. The right time in the cycle, if you’re buying something that’s generating passive income through positive cashflow so you can see out those cycles and still make money, then why wouldn’t you buy the dip and don’t

you know when I took it, when Ryan and I are talking about Australia, we’re not saying you know by Sydney that went up by 90 percent and by the 10 percent gap in Sydney, like Sydney is completely overvalued. If you understand your history in the next 10 years, the next 10 years, don’t look great for Sydney from a, you know, longterm capital growth perspective over that period because history shows that Sydney always comes out of a GFC. Well and then for the 10 years after that, because it looks so hard, it doesn’t perform as well as some other markets in Australia. Now, I’m not saying history’s going to repeat, but you can learn from this history and you know, Brisbane, if, if at the end of next year or the year after it’s been flat for 11 or 12 years, it gets even more exciting to me because it’s just like at some point that’s got to replace, you know, and you know, that that stuff gets me excited.

Like don’t lie Melbourne in the next year, don’t by Sydney in the next year, like sit on the sidelines and suck it and say there. But if you are thinking about achieving financial freedom over 15 to 20 years and you have money and there is an opportunity to do something, then wrap your head around southeast Queensland. Don’t take our word for it. Look at what the IBS is saying. Look at what Matosich saying, look at what Paul logic vis htw are all saying. That’s just information that we’re feeding to you based on what we’re reading from analysts in the market. And you know, um, I get excited about a buying opportunity where sentiment shocking. So think 20, 19 from what I hear can be a really exciting year to buy if you have good fundamentals and it’s very dangerous, you need to buy if you don’t know what you’re doing.

So make sure you have a plan, work your plan, you get very educated about the market, the suburbs, the property type. Yup. I’m all just do what everyone else is gonna do for the next three years, sit on the sidelines and then you know, that’s, that’s an option for some people as well. You know what I mean? Like sometimes doing nothing can be better than doing something. But for those of you that have a simple plan like buying a couple of houses, adding a couple of granny flats, knowing that you can do that for $400 in Brisbane right now, like how much cheaper is it going to get bang than 400 k within 20 days of Brisbane right now. Like how much cheaper can it go?

Exactly. Alright. So hopefully this has been insightful to you guys looking at 20, 19 as a year to potentially invest in property. I hope that you take these, these tips, this advice, this the way that we’re looking at the market. Just thoughts with a grain of salt. Yeah, taken with a grain of salt. Apply your own strategy to it would everything through the lens of your own strategy and what you’re trying to achieve to find the best properties that suit you or to decide whether or not 2019 is a year that you want to invest in the property market. There’s going to be some great buying opportunities out there. There’s also going to be some high risk markets out there that may go backwards as well, so obviously you’d be very careful in 2019, but it can be a great opportunity to move yourself and move your health forward and move closer to your goal of financial freedom if you buy correctly.

So I hope this has helped you. If you want to get clear on your goals, if you want to talk to the team over at pumped on property about the current state of the market where they’re at. If you’re thinking about buying, but you’re nervous, you’re not exactly sure, you can book a free strategy session with a team over there. If you got on property.com dot a u, you can book in a time that suits you, have a conversation over the phone, talk about your situation, where you’re at, where you want to be, and whether or not this is a good time to buy for you and what markets you should be looking at. Then you can choose whether to work with pumped on property, get their help if you want, because obviously they specialize in the southeast Queensland market or you can go out and invest yourself and make those decisions yourself as well. So again, check out on property Dotcom Day. You took a free strategy session time that suits you. Otherwise we wish you the absolute best of luck in 2019. Whatever you decide to do. We hope that you have a great year and we hope that you finished a year closer to your financial goals, closer to your goal of financial freedom

or united. Say One thing man, and I don’t want to end the video and you’re like a morbid way, but I do want to say we’ll. Anyway. I’m going to just as a disclaimer, the only thing that I know about markets is they go up. Sometimes they go flat sometimes and sometimes I go down. If you’re an investor that still chasing short term returns like any of those things could happen in the next 12 months to two years for anyone in any type of stock business, property, commodity in the world right now, but if you’re an investor looking for value either the next 15 years and you are using that value investment driven approach. Then buying these little opportunities that come up when they come up with confidence and not expecting anything for the first five years from a meaningful perspective. Then the next couple of years will represent an incredible opportunity in the right area and for some people the next couple of years will be the years where they took money out of what they made in Sydney or Melbourne. They tried to do more of Sydney and Melbourne and then I ended up losing money like these are the top two years where people can get burned too, and I just, I want everyone to tread with caution and go from a low risk approach, you know, make sure to different ideas from a different bunch of people before you take action at all people that are taking action, but in a lower risk way. So don’t just take what we say

no out there. Get look at different sources of inflammation. Gives much information. Educate yourself as much as possible before you go ahead and invest. Yeah, no, it’s great. This is great and people love this. Thanks so much for tuning in. Everyone, go ahead. If you haven’t set your strategy for 2019, check out the video that me and Ben did on how to get your strategy right for 2019. That will just really set you up for a great year. Otherwise, we wish you the best of luck. Thanks so much for tuning in. Until next time, stay positive.

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