The old saying is don’t let the truth get in the way of a good story. I guess that is the generation we are a part of. A high speed, 24/7 connected, instant gratification and highly media-driven society, which often causes news to travel fast, allowing for public opinions to be formed quickly and inherently with a minimal amount of factual information needed. As long as there are more people who think it did or is, than know it didn’t or isn’t, then that by default becomes the ‘new common truth’. How many times have you been told ‘the economy has crashed’ in your lifetime? How many recessions have you lived through or even worse how many times have you had to hear someone blame the GFC?
Well, here at Corbwood we have learned that men lie and women lie but numbers don’t. If you had been heavily invested in 2007 before the GFC in property or shares and you were sensible enough not to sell your investments in the downturn but instead still owned them today, would you be happy with your 13-year returns?
Average Sydney Property Price 2007 = $512,300
Average Sydney Property Price 2020 = $873,000
Growth = 70.4%
Average Growth Per Year = 5.42%
It feels like 1990 all over again, we were in the middle of the last recession that this country had been through, interest rates were alarmingly high as opposed to 2020 where they were at record all-time lows. We are being told by every media channel that the bubble has burst, and Australian property prices were about to crash. At that time, in 1990, there were some fantastic news reporters talking about people in the Western Suburbs of Sydney setting their houses on fire to stay warm because it was not worth the timber that it was made out of. The property prices at that time in 1990 in Sydney were at an average of $140,000 per property. Now I question you to speak to anybody who invested in a property in the middle of the recession of 1990 in Sydney that still owns that property today that is disappointed with the investment that they made. Who regulates the information that Channel 7, 9 or 10 share with us during the news hour? Mass media often cause us to have fear. Fear leads to procrastination and procrastination causes people to miss opportunities.
The important part of this small article is to get people into the mindset and understanding that Investing Super in Property is a long term investment, it will have boom and bust cycles, it will have hyper-growth years as well as having years of stagnation, whereby it grows very little and potentially even declines by a few percent in that short term period. But looking through history, there has never been a circumstance where the average property price in this country has declined over a medium or long term period of seven years or greater.
So just like this year in 2020, everybody has now become ultimate property enthusiasts as we saw a huge growth year with a renewed demand in the property market that was continued to be stimulated by the government incentives that were being offered. First home builders in most states receiving $15,000 or greater in the form of a grant and a further $25,000 under the COVID-19 stimulus package offering a ‘new home builders grant’, allowing first homeowners to enter the $400-500,000 property market with less than $10k cash, which many of them had just removed from their super, which is a big ASIC nightmare the country will be dealing with in 9-12 months time, keep eyes and ears posted for another article from me on that in the near future.
Cities and pockets of cities in Perth, Hobart, South East Queensland and in Darwin had over 10% growth in a single year, something that hasn’t been seen since pre GFC times. But many people will say now’s not the right time to buy because the markets are too hot. Well, they were telling you in April last year that it wasn’t the right time to buy because we were about to face global depression. And we were going to see unemployment statistics the highest they had been since 1929.
So as I said at the start, sometimes they don’t want to let the truth get in the way of a good story. And the truth is the best time to buy an investment property will always be yesterday. Seek independent news channels to get a ‘balanced view’ on the current timing of the market and hope we are positioned as a nation-leading into the future, always do your research and try to let the facts outweigh the feelings.
Managing Director – Corbwood & Associates
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