Welcome to the first Property Update for 2009.

It's customary at this time of the year to cast an eye over the year that has just passed, celebrate the successes achieved, acknowledge the disappointments and consider the lessons to be learnt and applied to the New Year.

We live in interesting times don’t we? We finished 2008 with a bundle of mixed messages. In any other year it would have been a terrible result for our property markets, but against the backdrop of plummeting share prices and the subprime mortgage meltdown progressing into a full blown worldwide global financial crisis, the way our property markets performed was actually not so bad.

Depending where you live, property values in your state would have grown a few percent or dropped a few percent overall. Of course we all know that the value of certain properties fell much, much more than that, some by more than 20%. And some segments of the market, in particular the higher priced properties, holiday properties and rural properties, markedly dropped in value.  

Sure things were tough last year, and I’m not pretending that this year will be easy – it won’t be. But it will definitely be a year of opportunity. It’s another year when the gap between the rich and the ordinary Australian will widen.

Before you say, “Oh Michael – you’re not going to recommend buying property again,” let me remind you, and I’m sure you’ve witnessed this phenomenon: some investors seem to do well in good times and do even better in tough times, while others do poorly in good times and even worse in tough times.

Why is that so?

Quite obviously if they consistently do well overall, even in those markets where others fail dismally, it must be something internal, something within them that makes the difference. If you’ve been to any of my seminars you would know that I believe it’s an individual’s mindset, more so than any other external market force, which determines success.

Fortunes will be made in 2009, because while many people will be sitting on the sidelines waiting for things to get better, a small group of savvy investors are out there already taking advantage of the opportunities the markets present.

I recently reviewed the house price statistics for Melbourne for the last 12 months. Interestingly, in a year when the overall growth in median prices was only 3%, there were 10 suburbs that experienced an increase in median prices of around 20% or more. The top median price growth suburb, with a massive jump of more than 40% was St. Kilda; a suburb we targeted for many of our clients at Metropole last year. Of course not all properties in those top suburbs increased in value to that extent. You need to know the right type of property to look for.

By the way, there were just as many suburbs where the median price fell by over 20%, again showing that you have to be very selective in this market.

In the previous few years during our property boom, even inexperienced investors did well. So did the speculators and the foolhardy. It seems everyone can make money from property at the top of the cycle.  But our property cycle has clearly moved on and the market conditions have changed significantly, which has seen inexperienced investors or those that did not stick to strong property fundamentals find themselves in trouble. No surprises there –this happens every cycle.

If I’m suggesting you consider buying an investment property now, does that mean the markets have bottomed? 

Honestly…I have no idea - but the answer is probably not.

My question to you is: “Are you buying ‘the market’?" Clearly the answer is NO!

You are investing in a property or a small number of wisely selected properties. This means that for astute investors there are some incredible opportunities around. There are currently quite a few very motivated, and at times desperate, vendors out there and this creates some top buying opportunities for long term investors.

I know we have bought some real bargains for clients in the last few months. By the way, just in case you didn’t know, neither I nor the team at Metropole sells any properties. Yet our buyer’s agents have access to every property for sale. We represent the purchaser; both home buyers and investors, and help them research, negotiate and acquire their properties. Interestingly many of these are currently silent, off market sales from desperate vendors.

In turbulent times you need sound independent advice. Whether you are a beginning or experienced investor or a homebuyer, there is no one that will protect your interests quite like the property strategists at Metropole. Come along to one of our free boardroom property briefings in Melbourne, Sydney, Brisbane and Perth – just click here to reserve your place. Whether you are an investor or home buyer, give us a call on 1300 20 30 030 to find out how we can assist you.

So back to the original question – has the market bottomed out? Probably not. My view of the property market could be summed up simply as follows;

1. I have very strong positive views on the property markets in most of our capital cities in the medium to long term.

2. I am certainly aware of potential short term problems related to the credit crisis and poor market sentiment which means that…..

3. You should be looking for property at the right price, in the right location, with the right rental income. One that you would be happy to hold in your portfolio in the long term that’s bought sufficiently below market price, so that even if the market fell a bit further, you would still have bought well.

Just to make it clear, my strategy for this time in the cycle is to continue what I have been talking about and doing personally for years. That is;

·          Buy the right type of property – one that has some element of scarcity, which will always make it appealing to owner occupiers (who push up the prices) as well as tenants.

·          Buy at the right price – currently this is below market value. The type of price where even if values dropped another 5 to 10 % (and I don’t think they will in most areas) you will be covered.

·          Buy in an area that has always outperformed the market

·          Only buy a property to which you can add value – manufacture some capital growth through renovations or redevelopment

Are you ready to exploit the opportunities that will arise?

As always, we’ll keep you up to date throughout this year with articles from Australian experts on our Property Update Website and you can always get the latest property news from all the media in Australia and around the world on the Property News page of this web site. I’ll also keep you informed with our webcasts and my video commentaries. Have you checked out the Property Update TV page of this site yet?

The Metropole team are also conducting regular free property briefings in Melbourne, Sydney, Brisbane and Perth to help investors understand their local market opportunities. Please join us at one of these. If you are a home buyer or an investor, click here to reserve your place at one of these free sessions.

2009 will present some of the best property investment

Opportunities we have seen for a long time…

Are you ready for it?

 

ATTEND A FREE BOARDROOM PROPERTY BRIEFING

Click here to find out more about Metropole's free Saturday morning property briefings - held in Melbourne, Sydney, Brisbane and Perth.
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