MARGARET LOMAS SAYS
The news is full of speculation about what might, or might not happen to the ‘property market’. These days the media is such that reports of crashes or booms immediately seem to be taken as gospel and have an impact on buyer behavior – if the media says it’s true, it is, isn’t it?
The issue that I have is mainly one about what constitutes a ‘property’ market. While it’s rarely defined in media articles, most of them refer to the Sydney and Melbourne market, using the activity in those markets as a barometer for all property, everywhere. And because of this we see buyer behaviour emulating what these reporters say, in an almost self- fulfilling prophecy.
In truth property does behave significantly differently in all the different parts of the country. Take the recent ‘Sydney’ boom for example. While journalists everywhere were shouting from the rooftops about how fabulously the property market was performing, those in Perth and, to a lesser degree, Adelaide, were looking at their own holdings and struggling to see much cheer. But, take it back 10 years and everyone in Sydney was bemoaning their dreadful returns and blaming everything, including the state government, while Perth owners were jubilantly jumping for joy at the speed with which their own market was doubling in value! Now, Sydney centric reporters seem to have short memories, with many of them claiming it’s always an amazing market, to the point where buyers are still jumping in, often buying property with abysmal rental yields and limited growth prospects in the coming 5 years or so.
The reason for such a disparity in the values of property which exists in one country, and reportedly one economy, is that the overall economic situation of Australia is often not reflected within smaller markets. Take it down to a state level, and then, more importantly, a micro level where individual local government areas are concerned, and it can be seen that areas can perform well even when a state, or the country as a whole, is not looking as robust. The reverse is also true.
The lesson here is, don’t pay any attention to media reports which exclaim or decry booms or busts. There is not ‘one’ property market, and believing there is a right time and a wrong time to buy property may lead to missed opportunity. Examining micro markets and looking for those smaller local economies which are in the midst of creating their own mini property boom will not only make you a better property investor, but a far more financially successful one too.