Property Investment & Wealth Creation Australia | The Michael Yardney Podcast My Property Predictions for the Next Decade
What are Australian properties going to be worth in a decade?
What's going to make a good investment property over the next 10 years?
What are the major trends that are going to affect our property market?
It's interesting to look at the difference between predictions that were made 10 years ago and what really happened between then and now.
In today's show, I'll share a discussion I had with Ahmad Imam about the major property trends and influences to expect over the next 10 years. Then I'll share my predictions for what will make a top performing investment over the next decade.
You'll hear us discuss:
- The major trends that will affect our property markets over the next decade including.
- Demographic trends
- Population growth – household formation
- How we want to live
- Where we want to live
- Economic trends
- We're transitioning from a manufacturing country and a resources led economy to an economy based on service industries
- What will this do to where job growth will occur – wages growth will occur – obviously affect housing
- How we're going to invest in a lower inflationary and wages growth environment
- How the forecast strong population growth will affect us – it's not all good news – there certainly are some challenges ahead
- Population growth and the wealth of the nation will underpin property values – we need both.
- Over the year to September 2017 the annual growth in Australia's estimated resident population picked up to +395,600. This is the largest annual increase since 2013 in absolute terms, if not in percentage terms.
- More than half of this growth is due to immigration – Australia's permanent migrant intake is capped at around 200,000 per annum, but the overall pace of net overseas migration was faster than this, partly accounted for by international students.
- The estimated rate of population increase through net overseas migration is a bit faster than might be implied by the issuance of permanent residency visas, with the growth international students accounting for some of the difference. Where all these people are moving to
- Why population growth alone won't create economic growth, and what is really needed.
- A big demographic trend that will shape our property markets but doesn't seem to be mentioned much.
- Our ageing population means we have more one and 2 people households, meaning the type of property that will be in continuous strong demand will be different in the future with more people trading backyards for courtyards and balconies. More single older people, more DINK's, more empty nesters, more young singles getting married later.
- Smaller average household size means we need more dwellings for the same number of people
WEALTH RETREAT 2018
We also discuss Wealth Retreat 2018 which be held on the Gold Coast on June 9th to 13th.
Click here to find out more and register your interest
By the way…
- Wealth Retreat is not really a property seminar, even though we do spend a lot of time talking about property.
- Wealth Retreat is about creating lifetime wealth and leaving a legacy.
- It is aimed at already successful property investors, business people and entrepreneurs.
- We have Australia's leading faculty of property, tax, finance, financial planning economic and business growth experts.
- I've found many of the attendees from previous years felt isolated in their wealth creation journey and by joining us they suddenly developed a peer group of like-minded people.
- Find out more at com.au image how you will be different after 5 days immersed with a room full of successful movers and shakers.
My predictions for the next decade:
- We are in for a period of slower capital growth – can't count on the market doing the heavy lifting
- Strong population growth will occur in our capital cities compared to regional Australia
- We have 2 super star cities, but strong capital growth in big 4 capital cities
- There will be disproportionate wages growth in some locations because of the jobs that will be created in the service industries
- Some commentators have got it wrong saying buy in regional areas as we're going to be the food bowl of Asia – I hope we will – but not high wages growth and tourism leads to part time / casual jobs
- Don't fight the trends – invest in the 3 big capital cities
- Learn from the big overseas property markets
- More people will trade space for place – and backyards for balconies and courtyards
- Location will do 80% of the heavy lifting but you still need the right property
To ensure they buy an "investment grade" property that outperforms the market, investors should consider using my 6-Stranded Strategic Approach, which means that they would only buy a property:
- That appeals to owner occupiers. Not that they should plan to sell their property, but because owner occupiers will buy similar properties pushing up local real estate values. This will be particularly important in the future as the percentage of investors in the market is likely to diminish.
- Below intrinsic value – that's why I would avoid new and off-the-plan properties which come at a premium price.
- With a high land to asset ratio – that doesn't necessarily mean a large block of land, but one where the land component makes up a significant part of the asset value.
- In an area that has a long history of strong capital growth and that will continue to outperform the averages because of the demographics in the area as mentioned above.
- With a twist – something unique, or special, different or scarce about the property, and finally;
- Where they can manufacture capital growth through refurbishment, renovations or redevelopment rather than waiting for the market to deliver me capital growth.
Links and Resources:
Some of our favourite quotes from the show:
"In the last year in Australia, population growth was almost 400,000 people. It was estimated to increase by 395,000 people. That's the largest increase we've had in population growth, in absolute terms, since about 2013." Michael Yardney
"We're having significant growth, more than any other developed nation in the world." Michael Yardney
"Don't fight the trends. Buy in capital cities." Michael Yardney
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