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For as long as people have been securing their financial futures, a debate has raged as to what type of investment offers the best long-term returns. 
Well, a recent study by ANZ Research entitled Asset returns: past, present and future has provided some clear answers – <a href="https://www.propertyobserver.com.au/residential/owner-occupied-housing-top-performing-asset-over-24-years-but-not-in-the-next-decade-anz/2011100651835" target="_blank">residential property has outperformed all other asset classes over the past 24 years</a>. 
The detailed study compared a range of assets going back to 1987, and different levels of leverages and returns were then risk-adjusted in order to paint an objective picture.
ANZ compared the after-tax and after-cost returns of owner-occupied housing, investor housing, commercial property, equities (the ASX 200), government bonds and term deposits. 
The best-performing asset
The key finding was that the highest performing investment over the past 24 years was owner-occupied residential property. 
The report showed that even when costs and taxes were factored in, owner-occupied housing generated the highest average annual total return of 12% per annum. In second place was investment housing, which delivered an average annual return of 9.6% over the last 24 years. 
Over the same period the share market averaged 8.9% for a higher level of risk due to its higher volatility, with commercial property, bank term deposits and government bonds providing lesser returns. 
The following chart from ANZ shows the compound annual growth rate of the various asset classes over last 24 years.
<img src="/images/stories/yardneydec21.gif">
What about costs?
A common criticism of simple return models is that housing attracts a number of costs that other assets do not. Things like maintenance costs, stamp duty and agents commissions (on sale and rent). 
In this study the ANZ have accounted for these costs as realistically as possible. ANZ also included tax with a marginal income tax rate of 45% being assumed, as well as capital gains tax and stamp duty. 
The results
 
A gearing level of 50% was assumed for all assets, except for term deposits and government bonds, and returns were measured based on the return on equity. 
This is one of the most detailed comparative analyses I’ve read. However, I believe the results for property would have been even better if a higher gearing ratio had been assumed. If you think about it, most property investors have a higher loan to value ratio than 50%. 
And of course, the increased returns to property owners who renovate or improve their properties was not accounted for in this analysis. 
Looking ahead
 
You know what they say – past returns are no guarantee of future returns. 
In fact, ANZ believes that equities will have the highest returns over the next decade as the growth in value of residential properties tracks the growth in wages. 
We’ll just have to wait and see.
Michael Yardney is the director of <a href="https://www.metropole.com.au/">Metropole Property Investment Strategists</a> , a best-selling author and one of Australia's leading experts in wealth creation through property. He also writes the <a href="https://www.propertyupdate.com.au/">Property Investment Update</a> blog.
 
 
 
 
 
 
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myardney-DFoGhGbSJX

Property the best-performing asset, but will it continue?

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Well, 2011 will be remembered as the year the property market slumped. It didn’t crash like many property pessimists predicted, but it stalled in some areas, dropped a little in others, while prices fell significantly in a few spots.
Ongoing economic uncertainty, the worry of rising interest rates for much of the year, decreasing affordability and political uncertainty were a volatile mix that stalled the property markets.
To see what really happened over the last year here are the latest figures from RP Data:
<table border="1" cellpadding="0" cellspacing="0" width="348"><tbody>
<tr>
<td valign="bottom" width="85">
 
</td>
<td valign="bottom" width="99">
HOUSES
</td>
<td valign="bottom" width="87">
 
</td>
<td valign="bottom" width="100">
UNITS
</td>
<td valign="bottom" width="93">
 
</td>
</tr>
<tr>
<td valign="bottom" width="85">
City
</td>
<td valign="bottom" width="99">
Median Price
</td>
<td valign="bottom" width="87">
Growth last yr
</td>
<td valign="bottom" width="100">
Median Price
</td>
<td valign="bottom" width="93">
Growth last yr
</td>
</tr>
<tr>
<td valign="bottom" width="85">
Sydney
</td>
<td valign="bottom" width="99">
$550,000
</td>
<td valign="bottom" width="87">
-2.3%
</td>
<td valign="bottom" width="100">
$457,000
</td>
<td valign="bottom" width="93">
1.1%
</td>
</tr>
<tr>
<td valign="bottom" width="85">
Melbourne
</td>
<td valign="bottom" width="99">
$483,500
</td>
<td valign="bottom" width="87">
-5.7%
</td>
<td valign="bottom" width="100">
$425,000
</td>
<td valign="bottom" width="93">
-5.7%
</td>
</tr>
<tr>
<td valign="bottom" width="85">
Brisbane
</td>
<td valign="bottom" width="99">
$425,000
</td>
<td valign="bottom" width="87">
-8.8%
</td>
<td valign="bottom" width="100">
$360,000
</td>
<td valign="bottom" width="93">
-2.4%
</td>
</tr>
<tr>
<td valign="bottom" width="85">
Adelaide
</td>
<td valign="bottom" width="99">
$387,000
</td>
<td valign="bottom" width="87">
-4.2%
</td>
<td valign="bottom" width="100">
$315,000
</td>
<td valign="bottom" width="93">
-4.8%
</td>
</tr>
<tr>
<td valign="bottom" width="85">
Perth
</td>
<td valign="bottom" width="99">
$453,000
</td>
<td valign="bottom" width="87">
-4.4%
</td>
<td valign="bottom" width="100">
$390,000
</td>
<td valign="bottom" width="93">
-0.7%
</td>
</tr>
<tr>
<td valign="bottom" width="85">
Darwin
</td>
<td valign="bottom" width="99">
$495,000
</td>
<td valign="bottom" width="87">
-0.9%
</td>
<td valign="bottom" width="100">
$405,000
</td>
<td valign="bottom" width="93">
-0.8%
</td>
</tr>
<tr>
<td valign="bottom" width="85">
Canberra
</td>
<td valign="bottom" width="99">
$537,500
</td>
<td valign="bottom" width="87">
0.8%
</td>
<td valign="bottom" width="100">
$410,050
</td>
<td valign="bottom" width="93">
0.5%
</td>
</tr>
<tr>
<td valign="bottom" width="85">
Hobart
</td>
<td valign="bottom" width="99">
$330,000
</td>
<td valign="bottom" width="87">
NA
</td>
<td valign="bottom" width="100">
$266,000
</td>
<td valign="bottom" width="93">
NA
</td>
</tr>
<tr>
<td valign="bottom" width="85">
Australia
</td>
<td valign="bottom" width="99">
$465,000
</td>
<td valign="bottom" width="87">
-4.5%
</td>
<td valign="bottom" width="100">
$415,000
</td>
<td valign="bottom" width="93">
-1.5%
</td>
</tr>
</tbody></table>
Source: <a href="https://www.rpdata.com.au/">RP Data</a>
The markets are fragmented
What these figures don’t show is how fragmented the markets really are.
Did you know that the median home price in 80% of Sydney suburbs has actually had capital gain of around 1% over 2011? It is only the most expensive suburbs in Sydney, the more affluent areas, which have been the hardest hit and have suffered price declines. In these suburbs prices fell around 3.2% over the year.
And the markets are similar right across Australia. The most expensive homes across the country experienced the biggest capital losses and the lowest priced homes have dropped in value much less.
By the way… there is nothing unusual about this – the lower end of the market has always been less volatile.
What I call “investment grade properties” – good properties in the middle price range (say $450,000 to $950,000), in prime locations and with an element of scarcity are still selling well and holding their values, even though there is clearly less interest from both owner occupiers and investors than there was before.
On the other hand “B” and “C” class properties are not selling well. Some have dropped in value by 10% or more and some can’t be given away. Well, it’s not really as bad as that, but you’d have to give a very steep discount for someone to buy in areas like the Gold Coast.
And all the key indicators suggest the slow down will continue well into the first half of 2012. The number of properties on the market is high, properties are remaining on the market for longer and many buyers are still nervous about making a decision.
2012 – the year ahead 
I’ll cover myself with my first prediction being that most predictions will be wrong. 
Just look at what happened in 2011… 
For much of the year we thought interest rates were going to rise and they’ve fallen. We thought Europe would sort out its financial problems and things got worse. And many people predicted Australia’s property market would crash – and it didn’t! 
Looking forward I think 2012 will be a better year for property – but not by much. 2012 will be another year of crises. But if you think about it, every year has its crises. 
The European Debt Crisis will still dominate over the first few months of 2012. The US economic recovery is likely to slowly continue, but many of its property markets will fall further. China’s booming economy will slow a little and the Australian economy should chug along nicely as strong business investment spending will counter the lower growth in consumer spending and housing activity. 
Interest rates have come down twice over the last two months and it looks like they’ll drop further in 2012. This will increase housing affordability and slowly entice buyers back into the market. 
When the Government tried to stimulate our property markets in previous downturns, it combined rate cuts with first home owners grants (2001 and 2009) and this caused people to rush into the markets. I can’t see a first home owners boost being brought back in 2012. 
My observation is that the recent rate cuts have increased confidence in buyers, but many are still sitting on the sidelines waiting for something else. 
Some are waiting to see how the problems in Europe play out, others are interested to see what happens in our local political scene and yet others want confirmation that property prices won’t fall any further. They don’t want to buy in a falling market. 
In the meantime, many savvy investors are back picking the eyes out of the market. I was interested to read John Gandel, one of Australia’s biggest property investors, is on the look out to buy again. There must be a lesson in that somewhere. 
It is likely that the average home buyer won’t need to see a lot of price growth to regain confidence; they just want to know that home values won’t fall further. Meanwhile they are stashing their cash waiting for someone to ring the bell that the market has bottomed. 
Of course, no one will do that, so I like to remind buyers that they are not buying “the market” but an individual property in the market. 
If they buy well and purchase a good property below it’s intrinsic value, they will be covered, even if the market drops a little further. And when they look back in a few years' time they’ll be pleased they took action while others waited for the “bell to ring”.
Michael Yardney is the director of <a href="https://www.metropole.com.au/">Metropole Property Investment Strategists</a> , a best-selling author and one of Australia's leading experts in wealth creation through property. He also writes the <a href="https://www.propertyupdate.com.au/">Property Investment Update</a> blog.
 
 
 
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The year that property markets slumped

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As we look back on 2011, Property Observer is republishing some of our most noteworthy stories of the year.
 
Supply and demand are important factors in the performance of our property markets, and currently we have subdued demand and an oversupply of properties. 
This means that our property markets are likely to remain flat for much of 2012. 
Recently <a target="_blank" href="https://www.rpdata.com/">RP Data</a> reported that based on the current rate of sales and total number of homes being advertised for sale, the Australian residential market has 7.4 months of effective housing supply overhanging it. 
What does this mean? I know some commentators are suggesting we have a shortage of properties, but I don’t necessarily agree. 
You see, there are two ways to measure supply in the residential marketplace:  “core supply” and “effective supply”. 
RP Data explains that “core supply” is the difference between base level demand (i.e. population growth) and base level supply (i.e. new dwelling construction). And this is what many commentators are measuring. 
“Effective supply”, which measures the number of months it would take to sell all the properties listed for sale based on the current rate of sales, seems a better way of measuring what’s really going on. 
So what’s really going on? Across our nation’s capital cities, the effective supply of properties is currently recorded at 5.8 months, and nationally that level stands at 7.4 months. In other words, there is an even bigger oversupply in regional areas. 
Digging deeper into the numbers shows that sales volumes are at similar levels to those recorded 12 months ago, which means that supply levels are being driven higher by a greater amount of stock available for sale rather than fewer people buying properties. 
How does this compare with the past? Not surprisingly, things are worse than they were a year ago when our combined capital cities had an effective supply of 4.5 months of stock and nationally there was an effective supply of 5.6 months. 
These results suggest that current effective supply levels are well above average. 
Since the beginning of 2007 the effective supply level across the capital city markets has averaged at 3.9 months and reached a high point of 6.5 months in January of this year. 
Record number of listings Currently the number of homes for sale is at near-record high levels. There are 26.4% more houses for sale this year than there were at the same time last year, and it’s not because more people are putting their homes up for sale. 
The increase in listings is almost entirely being driven by rising levels of re-listings, which is indicative of slowing market conditions and the <a target="_blank" href="/news">longer length of time it is taking to sell a home</a>. 
Around the nation As expected, the oversupply situation varies from region to region. 
In each capital city and state except for Perth and Western Australia the months of supply figure is currently higher than it was at the same time last year, indicating that selling conditions have deteriorated. 
Canberra has the lowest current effective supply at 3.6 months while Brisbane has the greatest effective supply recorded at 8.8 months. 
Melbourne has 5.3 months’ supply, Sydney 5.1 months’ supply, Adelaide 6.4, Perth 6.1 and Darwin 6.3 months’ supply of properties on the market. 
My thoughts:'
 This extra supply of properties available at a time when buyers are standing on the sidelines waiting to see how matters pan out suggests that our property markets are likely to languish, at least in the first half of 2012. 
The November and December drops in interest rates have boosted consumer confidence a little, but not enough to move our property markets. Not with all the uncertainty about how the problems in Europe will affect us. 
Some Australians are still hesitant to buy residential property due to expectations of falling housing prices. 
For property prices to start rising, consumer confidence is going to have to increase and the oversupply of properties is going to have to be taken up. 
Of course we don’t have “one” property market in Australia and there are still some areas where prices are moving up slightly, but they are far outnumbered by suburbs where prices are stagnant or falling. 
No property collapse in sight
But don’t misunderstand me – there is no suggestion that our property markets are going to collapse. The underlying fundamentals will underpin our property markets. 
1. Interest rates are likely to drop once or twice more next year.
2. Vacancy rates are low and rents are rising.
3.  Unemployment is falling and wages are rising.
4. Consumer confidence is slowly returning and the spectre of a number of interest rate rises that we expected earlier in the year has disappeared. 
The bottom line is that there is still a large demand for housing – people are still getting married, having babies, getting divorced and coming from overseas. And if they can’t afford to buy their homes they are going to rent, and this will force rentals up. 
Over the next six months we’ll move into the stabilisation phase of the property cycle where values might only grow a few percentage points higher than inflation for a few years, but it’s a time when investors will be compensated by higher rents. 
As I’ve explained, it is important to recognise that there is not one “Australian housing market”. 
Capital city and regional housing markets are performing differently and even in each capital city markets are segmented according to the impact of the various supply and demand dynamics on different price points and in different geographic locations. 
Of course, as it is a buyers’ market, informed home buyers and investors will be able to pick up great properties below their intrinsic value if they do their research properly and negotiate wisely. 
This is also a great time to buy properties to which you can add value through renovations and manufacture some capital growth. 
And when buyers look back in a few years they’ll wonder why they didn’t buy more properties while others were waiting for the bubble to burst.
 Michael Yardney is the director of <a href="https://www.metropole.com.au/">Metropole Property Investment Strategists</a> , a best-selling author and one of Australia's leading experts in wealth creation through property. He also writes the <a href="https://www.propertyupdate.com.au/">Property Investment Update</a> blog.
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Oversupplied property markets to remain flat in 2012 - but there is opportunity for investors

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What's the most important economic question in the world today?
 
While many of us are concerned about the collapse of the euro or whether the US will fall back into recession, closer to home a more important question could be: will the China property bubble burst?
Anyone watching China in the last few years must be wondering if it is another bubble in the making. We all know that Australia’s future prosperity is substantially reliant on the resources boom, and a large part of that will depend on China’s growth.
What has all this got to do with property?
Well, the health of our property markets is intimately intertwined with our general economic prosperity.
Of course it’s not just Australia that relies on China. China's growing strength is essential to recoveries both in the US and Europe, as the country contributed 19% of the world's economic growth in 2010, and that's expected to increase to 24% this year. 
The strains of the last three decades of growth are starting to show. 
There are now widespread reports of a property bubble in China, with stories of large cities full of new high-rise buildings that remain unoccupied. “Ghost cities” are signs of a property bubble in anyone’s language. 
And the Chinese factories that make things the world wants are having difficulty competing with other Asian countries that can now churn out goods more cheaply. 
In response the Chinese Communist Party has been attempting to put a damper on the debt-fueled real estate boom as part of a deliberate attempt to rejig the Chinese economy into one that relies more on a domestic service sector and less on manufacturing and exports.
What would a China slowdown mean to us?
It’s already started. China's economy grew 9.1% in the third quarter of the year, the slowest pace in two years.  
This has some analysts asking if the bubble will burst or if there will be a soft landing.
Economists disagree on the answer.
Only time will tell, but China's economy expanded 10.4% last year and growth is forecast to slow to 9.5% this year. 
But remember, this is six times the pace of the US and euro area, according to the International Monetary Fund. Expansion of 9% in 2012 will be eight times as fast as the group of 17 nations that share the European currency, it forecasts.
Let’s put it into perspective 
Here are some more numbers quoted earlier this year by as ANZ’s Paul Braddick as he explains what could happen in China between now and 2025
<ul>
<li>350 million more people will move to the cities – 103 million have moved to urban areas since 1990</li>
<li>221 Chinese cities will have 1 million-plus people living in them – the whole of Europe has 35 today</li>
<li>1 million kilometres of new road and 28,000 kilometres of metro rail will be laid</li>
<li>170 mass-transit systems will be built – twice the number that all of Europe has today</li>
<li>40 billion square metres of floor space will be built in 5 million buildings</li>
<li>50,000 skyscrapers (30 storeys or more) will be built – the equivalent of building two cities the size of Chicago every year</li>
<li>97 new airports will be built</li>
<li>One in seven planes assembled by Boeing and Airbus will be delivered to China</li>
<li>1,000 megawatts of coal-fired power capacity will be commissioned every week - equivalent to 4 million tonnes of new coal demand</li>
<li>One wind farm turbine will be built every hour and a half</li>
</ul>
Now if those numbers haven’t blown you away…
I found some of these numbers <a href="https://www.telegraph.co.uk/finance/china-business/8311283/Growing-out-of-control-China-by-numbers" target="_blank">in The Telegraph</a> interesting reading: 
<ul>
<li>1.3 billion – China’s population as at 2009</li>
<li>10.3% – China’s GDP growth in 2010</li>
<li>$US183.1 billion – China’s trade surplus in 2010, a decline of 6.4% compared with the previous year.</li>
<li>6.06% – China’s official one-year lending rate, up 25 basis points from 5.81%. China last raised interest rates on Christmas Day last year.</li>
<li>3% – China’s official deposit rate</li>
<li>4.6% – China’s rate of inflation in December 2010, down from a 28-month high of 5.1% the month before. Inflation for 2010 as a whole was 3.3%.</li>
<li>7.2% – Official food price inflation in 2010.</li>
<li>73 years – Life expectancy of someone born in China in 2008, up from 71.3 years in 2000 and 46.6 years in 1960.</li>
<li>4.1% – China's unemployment rate as at the end of December 2010.</li>
<li>42 million – The projected population of China's newly planned “mega-city”. If projections are correct, the city would be 26 times bigger than the greater London area and twice the size of the entire country of Wales.</li>
<li>94% – Literacy rate of people aged over 15 in China. This compares with 65.5% in 1982.</li>
<li>$36.4 billion – Amount of new loans the biggest state-controlled commercial lenders gave out in 2010, much of it for property development</li>
<li>70% – Increase in sales of land-use rights to developers in 2010</li>
<li>6.4% – Amount property prices rose in 2010</li>
<li>1 million – Number of people living in underground bunkers in Beijing</li>
<li>14.8% – Increase in retail sales in China during 2010</li>
<li>39 – Average age of Chinese millionaires, according to the Wall Street Journal
</li>
<li>8.4% – Average annual pay increase at multinational companies in China last year, according to a report by Hewitt Associates</li>
<li>1 million – Number of Chinese tourists who visited the US during 2010</li>
<li>500 billion yuan (£47.3 billion) – the amount of direct economic losses caused by extreme weather in China in 2010, according to the chief of the National Climate Centre</li>
</ul>
What’s ahead?
 The anticipation of a slowdown in the Chinese investment boom has fuelled a host of pessimistic projections about how China will crash and cripple the rest of the world.  
However Bill Mitchell, research professor in economics and director of the Centre of Full Employment and Equity (CofFEE) at the University of Newcastle, has a different view. 
He believes the Chinese government is totally on top of managing their economy, which sets it apart from the leaders in the advanced world. 
Mitchell says that China will not let a major economic crisis occur within their its borders, explaining that it has so much more scope to expand, although we will all rue the environment impacts of that expansion. 
Mitchell suggests their problems are going to political – taming an increasingly rowdy middle class. For the rest of us, China provides an economic example, according to Mitchell – when all other sources of expenditure fail, turn on public spending, do it quickly and don’t err on the conservative side.
We are in for some interesting economic times ahead. As always, savvy investors prepare for the worst and look forward to the best outcome.
Michael Yardney is the director of <a href="https://www.metropole.com.au/">Metropole Property Investment Strategists</a> , a best-selling author and one of Australia's leading experts in wealth creation through property. He also writes the <a href="https://www.propertyupdate.com.au/">Property Investment Update</a> blog.
 
 
 
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China's economy slowing, but whether the bubble will burst remains to be seen

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Over the years I have seen many people think about getting rich, proclaiming affirmations, visualising and meditating, yet they don’t get rich. 
Let’s be realistic, to get ahead in the real world you have to take action. 
Why is it that most people don’t take action? 
Sometimes it is lack of knowledge, but more frequently it comes down to fear that stops people from living their dreams. 
However, successful people tend to act in spite of their fears. They’ve learned to harness their fears and use them to their advantage. 
I understand that Tiger Woods keeps training, uses a coach and continues playing at the intensity he does because of fear. The fear of not being the best and that someone else may play golf as well as he does. 
The most common reason people don’t getting involved in property investment is fear. The fear of failure or that they will lose money or that people will ridicule them. 
The key to success is not to let your fears scare you into inaction, but to use them to prepare you for action. 
Apart from failure, let’s look at some other potential fears. 
The fear of ridicule 
You can’t do much about what other people say, but you can control how you react to it. The people trying to stop you achieving your dreams have probably lost the ability to do the same. The only way they know how to build themselves up is to bring other people down.
 Now that is sad, but it’s not your problem. No one has ever died of embarrassment, so tune out to the critics and focus on what you want to accomplish. 
The fear of success 
Surprisingly the fear of success can be almost as paralysing as the fear of failure. It often follows on once you have conquered the fear of failure. 
It is ironic that you work so hard to overcome the fear of failure and achieve success, and then all of a sudden you become afraid that you won’t be able to maintain your success. Yet I have seen this happen to many investors once they have grown a sizeable property portfolio. 
Things seem to be going well and then they start feeling uncomfortable. While there is no logical reason for this, we are all controlled by our own internal “financial thermostat” that sets our level of comfort. 
Yours is set to a particular level of success that you see yourself at with your self-image. If you exceed that level of success you become nervous and fearful. I have seen this fear sabotage the efforts of property investors because their inner thermostat just didn’t allow them to see themselves as successful. In fact, they were so afraid of what might happen when they become successful so they subconsciously did things that keep them from being successful. 
The fear of not being worthy
 
Many people fail to take action because they fear they don’t deserve wealth. This also stems from the “financial programming” they received in childhood. All those negative things that some well-meaning people said early in their lives. Things like “Don’t be greedy”, “People like us don’t get rich”, “What makes you think you can do that when others have failed?” 
I’ve also seen investors adults sabotage their wealth because they felt undeserving. I must admit I have things I don’t need, yet I have them because I want them, because I enjoy them and because I can afford them. The difference is I feel I deserve everything I have because I have earned it. 
The fear of debt 
Obviously the fear of debt holds some investors back, however debt shouldn’t be feared. It’s the inability to service the debt or repay the loans that should be feared. If you understand how to use debt wisely and if you know the difference between good and bad debt, there is nothing to fear. 
By the way, it is not necessary to get rid of all your fears to succeed. 
All rich and successful people have fears, doubts and worries; they just don’t let those feelings stop them. That is the big difference: unsuccessful people also have fears, doubts and worries but they let those feelings stop them. 
It is normal for your brain to bring up these fears. Your mind is protecting you. It is doing its job. And acting in spite of your fears is going to be uncomfortable. We all like living in our comfort zones because they are comfortable. But if you want to move to a new level you have to break through that comfort zone. I have never moved forward in any aspect of my life without being uncomfortable. Your comfort zone may make you feel warm and fuzzy but it doesn’t allow you to grow. 
If you think about it, every time you tried something new it was probably uncomfortable; but the more you did it the more comfortable it became. 
So every time you are feeling uncomfortable, instead of retreating back into your comfort zone, pat yourself on the back and say, “Hey this is great. I am moving forward and I am growing.” 
Sure, in our current turbulent economic times the constant conveyor belt of negative messages in the media makes it easy to be fearful, but remember the words of the great investor Warren Buffet: “I like to be fearful when others are greedy and greedy when others are fearful.” 
If you want to be a successful property investor, and if you truly want to be one of the wealthy, you are going to have to become comfortable with being uncomfortable.
Michael Yardney is the director of <a href="https://www.metropole.com.au/">Metropole Property Investment Strategists</a> , a best-selling author and one of Australia's leading experts in wealth creation through property. He also writes the <a href="https://www.propertyupdate.com.au/">Property Investment Update</a> blog. 
 
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Take action and invest in property despite your fears

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I’m going to start with a bold statement – Our property markets are guaranteed to recover – and by the time you finish reading this article you will understand why.
But before I explain, I’d like to comment on the debate about Australia's population growth and our nation’s capacity to house the growing number of new residents arriving on our shores. Some say we should limit immigration, while others are saying we need more skilled workers to boost our economy.
Although immigration has slowed in recent times, the projections for our future population have many concerned about where all of these people will live and how our already strained infrastructure and environment will cope.
The fact is Australia's population will get bigger under every realistic scenario, according to a report by the Centre for Independent Studies, and no matter what politicians do, population growth is going to happen. This is a certainty.
Another certainty is that our population ageing. While ageing has been conspicuously left out of the population debate, in many ways it will provide a greater challenge for policymakers than population growth.
In a moment I’ll discuss the implications of this for you and me as property investors, but it’s worth stepping back and taking our local conundrum and multiplying it by several billion.
On a global scale, our issues appear pretty insignificant, considering that 220 children are born into the world every minute. Last week we passed a population milestone with the birth of the world’s seven billionth citizen.
And if there weren't already enough concerns about the capacity for the world and its environment to prosper under the weight of all these people, it is expected that by the year 2050, the world population will be closer to the 10 billion mark.
What are the implications of this massive population growth?
I know many are asking how our planet can sustain more human life, with talk of impending shortages of food and natural resources.
I don’t have any answers, in fact I don’t really understand all the implications, but I do know that over the years I have heard many global scares that didn’t eventuate, including:
<ol>
<li>
The communists are coming to get us – in the 1960s</li>
<li>
Global cooling – Yes, when I was a teenager I remember we were told the world going to end up freezing, not overheating.</li>
<li>
The world will end because a nuclear war is eminent – in the 1960s and ’70s.</li>
<li>
Global famine – We just weren’t going to be able to produce enough food for our growing population.</li>
<li>
We’ll run out of petrol and fossil fuels – This was a popular theory in the ‘80s and brought on a range of more fuel-efficient vehicles.</li>
<li>
Global warming – But I’ve heard more convincing arguments against this than I have heard for it</li>
<li>And of course I couldn’t leave out property prices are too high and can’t keep going up, because properties are unaffordable. I heard this in the 1970s. And again in the early ‘80s when we had a recession and in the late ‘80s before our property markets flatlined for a few years. I heard this again in the ‘90s as well as after property markets topped out in 2003. And of course we heard this in 2008 during the GFC, and we’re hearing it again now.</li>
</ol>
Over the years I've heard lots of scary predications that sounded correct, but didn't come to pass.
What about our ageing population?
Recently Harry Dent has caused a stir making another scary prediction.
He suggested that our ageing population and their lack of spending was going to cause the next depression.
The fallout of a baby boom gone wrong has been witnessed in Japan, where the number of retirees escalated beyond the number of working-age citizens and had a notable impact on their local economy.
This has caused some demographers to suggest that Australia is facing its own demographic tsunami as more of our baby boomers hit retirement age.
To me the conclusion is inescapable: we are going to have to populate or perish.
Look at the facts. Today 43% of our workforce is made up of baby boomers (people born between 1945 and 1964).
This means the first wave of the tsunami has hit, as the first baby boomers are now turning 65. Over the next 15 years, Australia’s 5.3 million boomers are going to reach retirement age, and as they leave the workforce they will stop paying tax, many will go on the pension and most will use our public health care system.
You see, most baby boomers don’t have enough savings or superannuation to see them through retirement.  This means many will have to keep working longer than they had anticipated but eventually, when they do retire, they will place a massive burden on our financial system.
The governments will have to find the money for their pensions and health costs while at the same time making up for their lost taxation revenue by either:
<ul>
<li>Increasing taxes for those in the workforce, which would be political suicide; or</li>
<li>Increasing the size of the tax-paying workforce by importing younger workers.</li>
</ul>
If we import young skilled adults to fill the increasingly wide gap in skilled labour we are experiencing, these immigrants will work for some years and, given their skills, will earn high incomes and pay more tax.
What does the government say about all this?
In its 2010 Intergenerational Report, our Treasury, on seemingly conservative assumptions of net overseas immigration of 180,000 each year in the future, concluded that we would, in fact, have 35.9 million residents living in Australia by 2050.
BIS Shrapnel addressed the question of the shorter-term impact of these figures and concluded that Australia’s population will likely increase by 25% to around 28.3 million people by 2026.
Based on this analysis there will be 5.7 million new Australians within 15 years. About 55% of these will be immigrants and the balance due to net births.
BIS Shrapnel projects that this translates to about 2.3 million new “households”, with on average 2.5 people per household, by 2026.
What does this mean for Australia?
There is no doubt that our population growth will bring with it significant, social, infrastructure and environmental impacts.
Interestingly Professor Roger Short from Melbourne University, who at 80 has lived through a tripling of the world's population, recently explained that: ''We are the most affluent and the most effluent people on earth”.
Currently more than half of the global population lives in urban environments, with the number expected to rise to 75% by the year 2050. Developing nations are set to become home to more than half of the world's 50 largest cities.
In Australia at present, 87% of us live in urban areas. With an obviously emerging trend towards smaller dwellings and inner-city lifestyles, more of us are going to be concentrated around our major capital cities.
What will this do to property prices?
While many factors affect a country’s property prices in the short term, in the long term they are driven by two main factors:
<ol>
<li>Population growth; and </li>
<li>The wealth of the nation.</li>
</ol>
As I’ve already explained strong population growth is a given and as a matter of fact so is our increasing wealth.
I don’t think that anyone would argue that as a nation Australia will become wealthier over the next 15 years.
Australia is well positioned to benefit from the growth of Asia, which represents 50% of the world’s population. We have vast resources that will be required by our growing neighbours, and we’re at the beginning of the mother of all resources booms.
Sure some companies and their shareholders will become richer, but so will the average Australian. On many accounts the average Australian is richer already than people living in most other countries, however some people living in Australia just don’t see that and complain and protest.
After all, the latest figures from the ABS show that about 2.7 million households own their homes outright, with an average value of $541,000. And about the same number have mortgages on houses worth an average of $521,000 with mortgages of $188,000.
In conclusion:
The fact remains that as long as people keep having children and residents from other countries seek to settle on our shores, Australia will not be immune to the population pandemic that's sweeping the world.
Rather than fight it, we need to embrace it in a positive and sustainable way.
We must also recognise the opportunity this will give us to boost our declining workforce and in turn, our country’s economic wellbeing through revenue raised from income taxes, as well as new Australians buying goods and services. And yes, that includes property.
While property prices are in a bit of a slump at present, that’s just part of the property cycle. As the cycle moves on, and it always does, the combination of population growth and increasing wealth will underpin the strong growth of capital city property values – as they have done for decades.
Michael Yardney is the director of <a href="https://www.metropole.com.au/">Metropole Property Investment Strategists</a> , a best-selling author and one of Australia's leading experts in wealth creation through property. He also writes the <a href="https://www.propertyupdate.com.au/">Property Investment Update</a> blog.
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Why our property markets are guaranteed to recover

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Recently there have been protests around the world against the richest "1%".

The protesters say they are opposed to "the fundamental inequality in society – social, economic, ecological – and want to change the ways that our society is structured and run so that way, the vast majority of people – the 99% – have their interests accounted for, their voices heard, their needs represented".
As many of these protestors claim our society is run for and by "the 1%", I found it interesting that recently the Australian Financial Reviewassessed what it takes to join this exclusive club.
And by the time I finish explaining how to get in the rich 1% club, you may find you're already in it. But I'm getting ahead of myself...
Apparently it takes assets of $11.2 million to be among the richest 1% of Australia's 8.4 million households.
The top 1% has a lazy $1.07 million kicking around in cash or it's equivalent according to the Australian Financial Review. That compares with just less than $120,000 for the top 20% of households.
The average value of cars owned by the top 1% is $84,000; compared with $32,000 for the top 20%. And their financial security is covered by $1.4 million in superannuation, more than double the super held by the wealthiest 20%.
Those who make it in the top 1% of rich people tend to have extensive share portfolios, worth $450,000 and have a business valued at an average price of $3 million.
This is in line with the Merrill Lynch Cap Gemini report of <a href="https://www.capgemini.com/services-and-solutions/by-industry/financial-services/solutions/wealth/worldwealthreport/">High Net Worth Individuals</a><a href="https://www.capgemini.com/services-and-solutions/by-industry/financial-services/solutions/wealth/worldwealthreport/"></a> that found 80% of this club made their wealth through business.
But that doesn't mean that the wealthiest Australians don't like property – they do and they are among the keenest property owners in the world.
If you are in one of those 84,000 households that make up the 1%, you are likely to live in a house worth on average $1.9 million and own other property holdings worth over $3 million.
Now clearly there is a wide gap between the top 1% and the average Australian and figures from the Australian Bureau of Statistics show that Australia's richest households are expanding their wealth three times faster than the poorest groups, and many are using <a href="https://www.smartcompany.com.au/property-investor/20111102-the-rich-are-getting-richer-through-real-estate">property to leverage their wealth</a>.
<h3>Another perspective</h3>
No one's hardship should be belittled. Becoming unemployed or not being able to keep up your mortgage payments aren't just financial problems. They're social and emotional problems that strike at your sense of worth.
But things always need to be kept in perspective. Some really interesting numbers emerge when you expand your view and look at the richest 1% in the entire world.
It's no secret that Australia is among the richest nations on Earth, so how much do you need to earn to be among the top 1% of the world?
According to an article by Morgan Housel in <a href="https://www.fool.com/investing/general/2011/10/28/attention-protestors-youre-probably-part-of-the-1-.aspx">Motley Fool</a> the answer is US$34,000.
This article explains that in his book The Haves and the Have-Nots, World Bank economist Branko Milanovic shares that to be in the top half of the globe, you need to earn just $1,225 a year.
To be included in the top 20% of income earners in the world all you need is a salary of US$5,000 per year. To be the top 10% you would need to earn US $12,000 a year. And to be included in the top 0.1% requires an annual income of US $70,000.
Dig even deeper and the figures become inconceivable.
According to the UN, "Nearly half the world's population, 2.8 billion people, earn less than $2 a day." According to the World Bank, 95% of those living in the developing world earn less than $10 a day.
When you consider the context of the entire world, it means that the Australians we consider poor are among some of the world's richest people.
In short, most of those occupying Wall Street or Melbourne or Sydney would be considered extraordinarily wealthy by much of the world.
Many of those protesting the 1% are, in fact, the 1%.
<h3>Anyone can join the 1% club</h3>
But the protestors in Australia should remember that we live in the best country in the world. A country of opportunity where virtually anyone can make it into the BRW Rich 200 list. Clearly that's just not possible in many other parts of the world.
Just look at this year's Rich 200 List...
While 17% inherited some of their fortune, most were self-made successes, some coming from working-class backgrounds.
And there's no use complaining about the school you went to, because attending a private school and having an elite education is clearly not a prerequisite to joining Australia's wealthy. While some forged important networks at school, many went to public schools and others didn't even finish high school. In fact, less than half of those in the Rich 200 list have tertiary qualifications.
<h3>And don't say it's too late...</h3>
You're never too young and you're never too old. The youngest member of this year's BRW Rich 200 is aged 35 and has an estimated wealth of $1.01 billion, which is even more than the oldest member who at the age of 92 has accumulated $289 million.
<h3>Some final thoughts.</h3>
Just to make things clear... before I receive a flood of negative comments – this blog isn't to belittle the protestors' message. I see merits in some of the Occupy protestors' arguments.
And I'm definitely not against protesting – I grew up in the age of protests against the Vietnam War.
Needless to say I can understand why people would be upset when many of top 1% are perceived to have earned their income unjustifiably. Being paid by big corporations that in some cases have been run into the ground and then been bailed out by their governments doesn't sound right.
Nor does a tax system where the wealthy seem to avoid tax and the poor seem to pay a disproportionate amount.
It's hard to argue with that logic.
Remember... I'm not having a go at the protestors. I'm just offering another perspective and reminding them that even though our system has lots of faults, it has created more prosperity, even for the lowest 1%, than most of the world can comprehend.
Michael Yardney is the director of <a href="https://www.metropole.com.au/">Metropole Property Investment Strategists</a> , a best-selling author and one of Australia's leading experts in wealth creation through property. He also writes the <a href="https://www.propertyupdate.com.au/">Property Investment Update</a> blog.
 
 
 
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The Rich List shows anyone can join the 1% club

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New figures from the Australian Bureau of Statistics show that Australia’s richest households are expanding their wealth three times faster than the poorest groups. 
And if there was any doubt in your mind of the value of property as a creator of wealth, the figures clearly reveal a substantial amount of Australia's wealth is tied up in home ownership. 
Melbourne households are (on average) the richest in the nation, followed by Perth, Canberra and then Sydney, which has been knocked off its perch as home to more wealthy Australian families. 
With protests against “greed” going on around the world these findings are timely, so let’s first look at how the rich are getting richer and then I’d like to share some of my thoughts about the importance of money and its relationship to true wealth. 
Mind the gap
Across the country, the average value of household assets in 2009-10 was $907,500, while debts owed were $135,700. This put average net worth at $771,800, up from $591,000. 
Digging deeper into these figures revealed the rich experienced a far more rapid increase in wealth than the poor. 
The wealthiest 20% of households had an average net worth of $2.23 million in June 2010, up $300,000 or 15 per cent from 2005-06. 
The middle class is also doing better, with average household wealth up 14% to $720,000. 
On the other hand, <a href="https://www.propertyobserver.com.au/trends/rich-getting-richer-poor-getting-moderately-richer-abs/2011101451936">the ABS stats </a> reveal the lowest 20% of households account for just 1% of total household wealth and had an average net worth of $32,000, up about $1,000 or 4%. 
Not surprisingly the family home was the biggest contributor to household wealth. 
About 2.7 million households owned their home outright, with an average value of $541,000. For those with a mortgage, the average house value was $521,000 with an average mortgage of $188,000. 
For households with superannuation, the average value of their superannuation was $154,000, but for half of these, the value was less than $60,000. 
Where our rich live
Household wealth was more concentrated in metropolitan areas. The average net worth of households located in capital cities was $772,000 as compared with $629,000 in areas outside of capital cities.
 
Melbourne households were the wealthiest, with net worth of $866,000. In Perth households had an average net worth of $853,400; Canberra - $843,370; Brisbane - $665,800; Darwin - $629,600; Hobart - $605,000 and Adelaide - $572,400 
The average Sydney household had a net worth of $766,700 in 2009-10, up from $697,200.  For the first time since the survey began in 2003-04, this was less than the national average of $771,800, and behind other capital cities. 
This can be explained by the poor performance of the average Sydney house price over that time. While the average value of owner-occupied housing in Sydney rose by about $50,000, the increase was more than $100,000 in Melbourne and about $150,000 in Perth. 
The importance of home ownership 
It should come as no surprise that owner-occupied homes were the main asset held by Australians. 
While the number of Australians that own their home outright fell slightly to 32.6%, the ABS data confirms a “strong correlation” between net worth and home ownership, with mortgage-free households being almost two-thirds wealthier than the rest. 
There's no question that these figures reveal a substantial amount of Australia's wealth is tied up in home ownership and this this has led a number of groups to argue about the inequality of our “system”, including the lack of capital gains tax on our homes. 
Isn’t this uneven distribution of wealth unfair?
I know that currently there are protests around the world about the uneven distribution of wealth and how the greed of various companies and even some countries has got the world into a financial mess. 
These people have some valid arguments and as you’ve taken the time to read some of my views on wealth through property, I’d like to share some of my philosophies on money and wealth for what they are worth.
Firstly let me set the record straight – money is important. It helps you get through life, but money doesn’t equate to wealth. 
Money is important in those parts of your life where it works (like paying the bills) and is not at all important in those areas where it is not essential. 
To be truly wealthy you need a lot more than money. 
Let’s face it, to be prosperous you need things like family and friends, health, time to appreciate your life, personal growth, spirituality (which means different things to different people) and very importantly contribution. 
In my mind contribution back to the society that has helped you become wealthy is critical. 
Rich people are not necessarily greedy, as some believe. Have a look at the ultra-rich – Warren Buffet has donated the vast majority of his wealth back to society, as has Bill Gates. And there are many examples of generous, philanthropic people much closer to home. 
One more thing: wealthy people recognise that it’s not an either /or equation.
They can be rich and happy. They can be rich and generous. They can be rich and good people, while others believe they have to choose between money and other aspects of life. Therefore they’ve rationalised a position that money is not as important as other things. 
Let me ask you a question. 
Just because I own an investment property, that doesn’t stop you from owning one – does it? There’s enough of everything to round in this lucky country we live in. 
Rich people live in a world of abundance, while the poor tend to see limitations. 
My own observation is that many of those protesting about the distribution of wealth look at other people’s success with resentment. Some are even a little jealous. Others seem to believe that the rich people make them poor. 
The problem is that if you resent what other people have, you can never have it! 
If you view rich people as “bad” and you want to be a “good” person, then you can never be rich. How can you become something you deride? 
I can understand why some may think all of this is “unfair” but they should remember that currently over two-thirds of households own their own home either outright or with a mortgage. 
The fact is that when these Australians bought their homes prices seemed expensive to them. However they were disciplined in their spending and saved up a deposit, took on the financial commitment of a home and allowed the magic of compounding, leverage and time to grow their wealth. 
The bottom line
If you want to grow your financial wealth you need to get a foot on the property ladder. 
Yes the economic times are uncertain at present, and you can’t just buy any property and become rich. 
In fact in turbulent times like we’re now experiencing fewer investors will do well, but those who buy the right properties in the right locations and finance than correctly will grow their wealth just like all those millions of other Australians have done before them. 
Remember, as a long-term investor, and that's the only way to look at property as an investor, you can buy a property at any time in the property cycle as long as the fundamentals of the deal are sound. 
This year may be a good time to buy property – I have always found it a good time to buy when everybody tells you that property is a bad investment. Now is the time to get set for the future. 
Michael Yardney is a director of <a href="https://www.metropole.com.au/">Metropole Property Investment Strategists</a> who create wealth for their clients through independent, unbiased property advice and advocacy. He is best-selling author, one of Australia's leading experts in wealth creation through property and writes the <a href="https://www.propertyupdate.com.au/">Property Investment Update</a> blog.
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Building wealth through property possible not just for the rich

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It would seem Australia is set to live up to its global status as the “lucky country”, with the number of millionaire households expected to almost double in Australia over the next decade. 
While $1 million might still seem like a lot of money to many people who are struggling with rising household debt, and it would definitely go a long way in developing countries where you can buy a whole lot more for a whole lot less, in reality a cool million just isn't worth as much as it used to be. 
That being said, the Deloitte Center for Financial Services along with Oxford Economics studied total household wealth, including the value of a primary residence and business equity, and here are the 2011 and projected 2020 rankings of countries with the most millionaire households: 
<table style="width: 470px;" border="0" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td width="71" nowrap valign="bottom">
 
</td>
<td width="428" nowrap colspan="4" valign="bottom">
 Number of millionaire households (1000s)
</td>
<td width="80" nowrap valign="bottom">
 
</td>
</tr>
<tr>
<td width="71" nowrap valign="bottom">
2011
</td>
<td width="158" nowrap valign="bottom">
Total
</td>
<td width="64" nowrap valign="bottom">
37,978
</td>
<td width="48" nowrap valign="bottom">
2020
</td>
<td width="158" nowrap valign="bottom">
Total
</td>
<td width="80" nowrap valign="bottom">
65,521
</td>
</tr>
<tr>
<td width="71" nowrap valign="bottom">
1
</td>
<td width="158" nowrap valign="bottom">
United States
</td>
<td width="64" nowrap valign="bottom">
10,541
</td>
<td width="48" nowrap valign="bottom">
1
</td>
<td width="158" nowrap valign="bottom">
United States
</td>
<td width="80" nowrap valign="bottom">
20,551
</td>
</tr>
<tr>
<td width="71" nowrap valign="bottom">
2
</td>
<td width="158" nowrap valign="bottom">
Japan
</td>
<td width="64" nowrap valign="bottom">
5,705
</td>
<td width="48" nowrap valign="bottom">
2
</td>
<td width="158" nowrap valign="bottom">
Japan
</td>
<td width="80" nowrap valign="bottom">
8,649
</td>
</tr>
<tr>
<td width="71" nowrap valign="bottom">
3
</td>
<td width="158" nowrap valign="bottom">
Germany
</td>
<td width="64" nowrap valign="bottom">
3,485
</td>
<td width="48" nowrap valign="bottom">
3
</td>
<td width="158" nowrap valign="bottom">
Germany
</td>
<td width="80" nowrap valign="bottom">
5,789
</td>
</tr>
<tr>
<td width="71" nowrap valign="bottom">
4
</td>
<td width="158" nowrap valign="bottom">
United Kingdom
</td>
<td width="64" nowrap valign="bottom">
2,904
</td>
<td width="48" nowrap valign="bottom">
4
</td>
<td width="158" nowrap valign="bottom">
United Kingdom
</td>
<td width="80" nowrap valign="bottom">
3,814
</td>
</tr>
<tr>
<td width="71" nowrap valign="bottom">
5
</td>
<td width="158" nowrap valign="bottom">
France
</td>
<td width="64" nowrap valign="bottom">
2,653
</td>
<td width="48" nowrap valign="bottom">
5
</td>
<td width="158" nowrap valign="bottom">
Italy
</td>
<td width="80" nowrap valign="bottom">
3,552
</td>
</tr>
<tr>
<td width="71" nowrap valign="bottom">
6
</td>
<td width="158" nowrap valign="bottom">
Italy
</td>
<td width="64" nowrap valign="bottom">
2,478
</td>
<td width="48" nowrap valign="bottom">
6
</td>
<td width="158" nowrap valign="bottom">
France
</td>
<td width="80" nowrap valign="bottom">
3,346
</td>
</tr>
<tr>
<td width="71" nowrap valign="bottom">
7
</td>
<td width="158" nowrap valign="bottom">
Canada
</td>
<td width="64" nowrap valign="bottom">
1,745
</td>
<td width="48" nowrap valign="bottom">
7
</td>
<td width="158" nowrap valign="bottom">
China
</td>
<td width="80" nowrap valign="bottom">
2,500
</td>
</tr>
<tr>
<td width="71" nowrap valign="bottom">
8
</td>
<td width="158" nowrap valign="bottom">
China
</td>
<td width="64" nowrap valign="bottom">
1,312
</td>
<td width="48" nowrap valign="bottom">
8
</td>
<td width="158" nowrap valign="bottom">
Canada
</td>
<td width="80" nowrap valign="bottom">
2,413
</td>
</tr>
<tr>
<td width="71" nowrap valign="bottom">
9
</td>
<td width="158" nowrap valign="bottom">
Spain
</td>
<td width="64" nowrap valign="bottom">
1,022
</td>
<td width="48" nowrap valign="bottom">
9
</td>
<td width="158" nowrap valign="bottom">
South Korea
</td>
<td width="80" nowrap valign="bottom">
1,730
</td>
</tr>
<tr>
<td width="71" nowrap valign="bottom">
10
</td>
<td width="158" nowrap valign="bottom">
Taiwan
</td>
<td width="64" nowrap valign="bottom">
719
</td>
<td width="48" nowrap valign="bottom">
10
</td>
<td width="158" nowrap valign="bottom">
Australia
</td>
<td width="80" nowrap valign="bottom">
1,620
</td>
</tr>
</tbody></table>
 
 
And there's Australia coming in at number 10 by 2020, with an expected 1.62 million households boasting millionaire status across the nation. This is more than double today's number of millionaire households (698,000.) 
Now that’s not bad when you consider that our population is significantly smaller than those of all other countries that make up the top 10. 
A large part of this new wealth in Australia will come from property. New figures from the Australian Bureau of Statistics show that Australia’s richest households are expanding their wealth three times faster than the poorest groups, and the statistics clearly reveal that wealth was more concentrated in households that own property. 
Interestingly, while some countries will continue to dominate the top of the millionaire household rankings, the rising cost of living will have a direct impact on how much those millions of dollars are capable of buying. For instance, $1 million will buy a lot less in the US than it will in China, where it will be worth more like $1.8 million comparatively speaking, given its higher purchasing power. 
Yes, I know the world is in economic turmoil, and there’s no doubt that we’re in for some interesting times ahead. 
However if the next 10 years is anything like the last 10 years we’ll have another property boom as well as a property slump. We’ll have periods of low interest rates and times when interest rates rise. We’ll probably have a change of government plus a gaggle of unforeseen hurdles put in our way to test our resolve. 
But those investors who keep their eyes on the big picture and invest in well-located properties are likely to do well and join the ranks of those new Australian property multi-millionaires.
Michael Yardney is a director of <a href="https://www.metropole.com.au/">Metropole Property Investment Strategists</a> who create wealth for their clients through independent, unbiased property advice and advocacy. He is best-selling author, one of Australia's leading experts in wealth creation through property and writes the <a href="https://www.propertyupdate.com.au/">Property Investment Update</a> blog.
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Becoming a millionaire not what it used to be: Michael Yardney

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Over the last few weeks I have noticed increasing nervousness among the property investors I speak with. And it’s not just beginning investors wondering whether they should get into the market. I’m also noticing concern from some investors with substantial property portfolios. 
Only yesterday I got a phone call from a professional colleague who has been investing for years, but now has the jitters after reading that US economics commentator Harry Dent’s warning that the world’s economies are going to fall into recession and Australia’s “property bubble” will burst, causing prices to come down by something in the order of 40%. 
Is he right? Are our property markets going to crash? 
Well, before I give my thoughts (for what they are worth) let me share some other concerns I’ve heard over the last few weeks. 
Some investors are worried that property prices have remained flat for some time now, indicating that they rose too high too quickly and that they must now drop. Others are concerned that they have been priced out of the market and it’s too late to get in. 
Yet others are anxious about all the issues playing out overseas and how this could affect us over here. They recognize that we’re now dependent on China and ask what happens to us if the Chinese juggernaut slows down. 
Why investors are nervous.
 
I understand why so many investors are nervous. It wasn’t that long ago, while the rest of the world was suffering after the GFC, that Australia avoided going into recession. We felt confident, in fact a little smug, and thought the worst was behind us. With all the good news in the media at the time buyers were out in force and set some of our property markets on fire. 
But for most of this year the messages were different. It’s no longer just good news. 
There is bad news, followed by good news, followed by some mixed messages. Most people, even some experts, don’t know exactly what’s happening or, more importantly, what’s coming next.  No wonder most investors don’t know what to do. 
We’re in good shape for a downturn.
 
While Australia’s economy has performed well and is likely to continue to do so, we don’t operate in a vacuum. We are part of a global economy, one that is still having lots of problems. 
America is taking longer than expected to work its way out of its economic problems and has a long way to go yet. And the extent of the problems in Europe is bigger than many anticipated, and it is likely we’ll see some sovereign defaults in the coming months. 
If history repeats itself there will be plenty more surprises ahead – maybe even some shocks – and these may have a negative impact on the Australian markets and in particular our stock and finance markets. 
The good news is that Australia is ready for almost anything the world economy throws at us. We’ve been battening down the hatches anticipating further financial problems. 
As a country, we have low debt levels – the International Monetary Find estimates 24% of GDP this year as opposed to 100% in the US and 150% in Greece. And even though we have a small budget deficit, our government could spend its way out of another economic crisis. Plus the RBA has the ability to lower interest rates to help stimulate our economy, as it has done in the past. 
At the same time the average household is in much better shape than a few years ago. We’re saving more than ever. On average we’re stashing away about 10.5% of our disposable (after-tax) income, paying down mortgages faster than needed and paying off credit card debt. 
While small retailers are battling, many of our larger companies are in a strong financial position, particularly our banks, which have bolstered their balance sheets. This means our major banks are no longer as dependent on overseas funds and could keep lending to us even if overseas interbank lending dries up. 
What could cause our property markets to crash? 
Despite all the predictions of a property collapse, over the past year capital city dwelling values fell by only 3.2% according to the latest figures by RP Data. 
Clearly we’re at a stage in the property cycle when prices will be flat for a while, and some properties will still fall further, but that doesn’t mean property values will crash. 
If you look at it logically, there are really only four things that could make our property markets collapse: 
<ol start="1">
<li>
A recession – when people lose confidence in the future and stop spending. No one I know is suggesting that is likely to happen in Australia over the next few years. Not with the mother of all resources booms buoying up our economy.</li>
<li>
High unemployment – when people can’t afford to keep up their mortgage payments they have to give away their houses at any price. Again, there is no evidence to suggest this is likely. If anything there is a shortage of skilled labour that will require us to increase immigration, which of course, will be positive for property.</li>
<li>
High interest rates – With interest rates likely to remain steady or fall over the next year, this risk to our property markets has been eliminated in the short term. Of course as our economy picks up over the next few years it is likely the RBA will once again have to push up rates to slow us down a little.</li>
<li>
An oversupply of property – Too many new properties built by exuberant property developers on the Gold Coast has shown how an oversupply can cause property prices to collapse. But, other than in selected areas like the Melbourne CBD and Brisbane CBD where an oversupply is looming, we don’t have more properties than buyers or tenants. 
</li>
</ol>
Sure property prices got a little ahead of themselves in some areas, but putting all this together means it is more likely that our property markets will remain flat for a while as they get back into equilibrium, in contrast to a sudden sharp fall as some of the doomsayers are predicting. 
And if property values start to fall significantly, it is unlikely that the government or the RBA would allow such a correction to occur. They will introduce stimulatory packages, or drop interest rates as they have in the past. 
What about all the talk regarding affordability?
 
Sure it’s hard for first-home buyers to get into the property game, but that’s nothing new.
Despite what some are suggesting, one of the economists I respect, HSBC’s Paul Bloxham, suggests that since late 2003 the dwelling price-to-income ratio has been broadly stable at between 3.5 and 4.5 and has averaged 4. 
He is forecasting growth in disposable income per household of around 5% per annum over the next couple of years as a result of strong employment and wages growth, and suggests that house prices will grow at this pace over the next couple of years.
<img src="/images/stories/yardneyoct19.gif"> 
 Property analyst <a target="_blank" href="https://www.matusik.com.au/">Michael Matusik</a> says that on average, Australians hold 80% equity in their dwellings – even higher for their principal place of residence.  He goes on to explain that when looking at Australians’ leveraging – when playing mortgage size against household income – this has declined over the last five years. 
He makes the insightful comment that unless we see our banking system collapse, he can’t see how house prices across Australia will lose close to half their current value in a short, sharp crash. And even over the longer term, such deflation seems very unlikely. 
So what should property investors do? 
Firstly it is worth remembering that the fundamentals that a strong medium- and long-term property market are sound. 
We still have a strong economy, full employment and rising wages, lowish interest rates and a growing population, yet at the same time we are not building the right type of properties in the right areas to meet this growing demand. 
But one important factor that boosted the market in the past – consumer confidence – is now faltering. 
The growth of our property markets, especially in some segments of Melbourne and Sydney in particular, was unsustainable. In some ways, the property markets have gotten ahead of themselves.  They are now taking a breather. This is normal. Property prices don't increase in a straight line. They go up in little booms then catch their breath and sometimes even drop a bit, but then they move up again. 
But not all properties will react the same.
Currently the upper end of the market is suffering and prices have dropped back significantly in many of our more expensive suburbs. 
The lower end of the market is holding its own, but it is never as volatile as the upper end.  By the way, this doesn’t make these places better areas to invest. In general these suburbs don’t exhibit the same strong capital growth as properties in the middle and upper price brackets. 
Properties in the middle range have varied in performance. There is still a scarcity of well-located properties for sale. This means well located homes and apartments are snapped up by owner-occupiers and investors. On the other hand secondary properties, and there are lots of those for sale, aren’t attracting buyers. 
Is property still a good investment? 
So back to the original question – is property a good investment? 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 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 intrinsic value, so that even if the market fell a bit further, you would still have bought well. 
Are you ready to exploit the opportunities that will arise during this market lull? 
Michael Yardney is a director of <a href="https://www.metropole.com.au/">Metropole Property Investment Strategists</a> who create wealth for their clients through independent, unbiased property advice and advocacy. He is best-selling author, one of Australia's leading experts in wealth creation through property and writes the <a href="https://www.propertyupdate.com.au/">Property Investment Update</a> blog.
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Property is still a good investment

Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.

The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.

It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.

With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.

“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.

“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" />

GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.

“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”

Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.

“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" />

&nbsp;

One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.

Green praised local policy settings.

“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”

One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.

“The way we will be able to achieve economies of scale is through size,” Green added.

One Living enters Sydney's new apartment market with Northern Beaches site acquisition

It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.

Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.

Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be

"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.

"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."

[smartcode_project:default project_id=134646 project_image_fid=6109]

The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.

The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.

Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.

[smartcode_project:default project_id=134646 project_image_fid=6110]

Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.

The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.

[smartcode_project:default project_id=134646 project_image_fid=6116]

While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.

WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.

With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.

[smartcode_project_cta:default project_id=134646]

Michael Yardney

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