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Fast forward a few weeks and the federal election will be over, the result will be known and we’ll be getting on with our lives.
So what will that mean for the property markets?
What will happen to the value of our home or investment property?
The fact is whatever the election result; the news is good for our property markets.
Let’s look at 10 reasons why:
1. Australia’s economy is in good shape
Whoever wins the election will inherit an economy that’s in pretty good shape.  Sure we didn’t make the most of the mini resources boom we experienced over the last few years, but our economy is the envy of most developed nations.
We’ve gone two decades without a recession and according to the Reserve Bank there is no likelihood of one in the next few years.  In fact the RBA believes that exports will ramp up and also sees stronger economic growth returning to Australia.
2. Our population is growing
There has been no discussion about big Australia v small Australia for some time because our politicians recognise the importance of strong population growth to feed our economy, take the new jobs being created and replace the retiring baby boomers.
Australia’s population increased by close to 400,000 people last year - that’s like adding another Canberra or Newcastle.
Of course the majority of these people have come to our big four capital cities because that’s where the jobs are. You’ll find that most of them want to live in many of the same suburbs, but we just can’t fit them in!
3. We are a wealthy nation
By many measures we’re very wealthy and this was confirmed in the <a href="https://economics.uwo.ca/news/Davies_CreditSuisse_Oct12.pdf">Credit Suisse 2012 Global Wealth Report</a> which showed that Australians are now comfortably the richest population in the world with a median wealth of US$194,000 per adult.
Interestingly, the report states that Australians comprised some 1,571,000 people in the top 1% of the planet’s wealthiest persons.
By the way, in order to be in the world’s top 1% you need a net wealth of US$710,000, and if you have net assets of over US$71,000, you are in the richest 10% of global wealth holders.
4. Household finances are in sound shape.
Rather than spending their money, over the last few years most Australians have been stashing their cash. Many have reduced their credit card debts, while others have been saving and other people have taken advantage of low interest rates to pay down their home mortgage.
There has also been a strong gain in wealth for households due to rising stock prices on the ASX and the increased value of their homes.
Their robust balance sheets will allow many Australians to ramp up borrowings and get into the property market over the next years.
5. Unemployment is low
Sure some jobs have disappeared, but new jobs are being created and even though unemployment may rise over the coming months, overall levels remain comfortable around 5.7%.
When people feel secure about their jobs their more positive outlook is good for confidence, good for consumption and good for investment.
 
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6. Australia’s inflation rate is low.
Our low inflation rate gives the <a href="https://rba.gov.au/">Reserve Bank</a> room to keep interest rates low or contemplate reducing them even further if needed to stimulate our economy.
7. Interest Rates are low and likely to remain so for a while
Our low interest rates are allowing home owners to pay off their mortgages quicker and given some who have over committed extra breathing space.
8. Housing Affordability is high
Despite the many complaints, a number of measures show that housing affordability is at its highest level in the last two decades. 
9. Consumer confidence is picking up
Consumer sentiment (the big missing ingredient over the last few years) has been fragile over the last months. One month our mojo returns and the next we’re despondent. But overall more of us are more optimistic than pessimistic according to the latest <a href="https://melbourneinstitute.com/downloads/media_release/2013/CSI/PressReleaseCSI20130710.pdf">Westpac Melbourne Institute measure of confidence.</a>
10. The bad news around the world is subsiding.
While the world’s problems haven’t gone away, many of the fears that have plagued us over the last few years are subsiding:
<ul>
<li>
The US economy is picking up and didn’t fall off its fiscal cliff like everyone expected.
</li>
<li>
China’s economy has not collapsed as some scare mongers suggested it would. China recently reported a good set of trade figures, suggesting that the targeted 7.5% growth might yet be achieved. This is great news for Australia, being ideally positioned to capitalise on this once-in-a-generation boom for our mineral exports.
</li>
<li>
Europe will remain a basket case for years. It seems the Eurozone has got through the worst and the European Central Bank appears to have stabilised the situation compared with the crisis 18 months ago.
</li>
</ul>
Our property markets will continue to rally. Having bottomed in the middle of last year, house prices are slowly rising – a trend that should continue once the election is over.
Of course there is not one property market and some areas will still languish. But a mixture of low interest rates, strong population growth, job stability, affordability and rising rentals will make more people get involved in property this year.
Some will just renovate or improve their homes. Others will take the next step and upgrade to new or bigger homes. More first-home buyers will get a foot on the property ladder pushed by higher rents and lower interest rates.
And investors looking to get set for the next stage of the property cycle will take advantage of the opportunities the property market is offering them.
What are you going to do after the election?
Want to know what I’ll be doing?
I’ll show you exactly what I’m up to at my upcoming Property Market and Economic Updates that I’ll be conducting in four states in August and September 2013.
If you’re serious about property investment please join me and a group of property and tax experts because I will be presenting a heap of brand new content I haven’t discussed in public before.
I guarantee there will be several things I reveal that you are not doing and you should be! <a href="https://propertymarketupdate.com.au/">Click here</a> now to get more details and reserve your seat.
If you want to cut through all of the media hype, and all the contradictory predictions, and learn the truth (both good and bad) about what is going to happen to the Australian property markets, this seminar is exactly for you…  <a href="https://propertymarketupdate.com.au/">Click here</a> now to get more details and reserve your seat.  
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Michael Yardney is a director of <a rel="nofollow" href="https://www.metropole.com.au/">Metropole Property Strategists</a>. 
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10 reasons why the property market outlook is good, whatever the election result: Michael Yardney

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Will our property markets blossom this spring or will the federal election keep a lid on confidence?
Well, the election result will be known very soon, confidence will be rising, interest rates will remain low and affordability will be the best for many years. All this suggests we’re in for some good times, so it’s probably opportune to do a whip-round Australia and see how property is performing. 
What the stats show: Our capital city housing markets bottomed out around May last year and RP Data <a target="_blank" href="https://www.rpdata.com/research/housing_values_continue_to_move_higher_in_july">reported</a> that capital city dwelling values rose in all capital cities other than Hobart over the last year. Not surprisingly, once again our capital cities significantly outperformed regional property markets.
 <img alt="yards-aug-15-chart-small" src="/images/stories/2013/08/yards-aug-15-chart-small.gif" width="470" height="194">
Source: RPData
House prices are rising in part because Australia's permanent population jumped by close to 400,000 people last year – that's enough people to populate a city the size of Canberra or Newcastle. That along with rising consumer confidence and lower interest rates means higher housing demand, more construction, better job prospects and a boost to our economy.
What these big picture figures don’t show is how fragmented our markets are with different states, different price points and different types of properties behaving differently.
Major property markets in a little more detail:
 Sydney: Median house price: $645,000; 7.3% increase in last 12 months. Median unit price: $500,000; 3.2% increase in last 12 months. Vacancy Rate: 1.9%
The Sydney market continued to perform strongly with house prices now at record levels, and it’s likely that prices will continue climbing.
The Harbour City market is strong because jobs are being created there. In fact half the new jobs created in Australia last year were in New South Wales and most in Sydney.
While first home buyers are still sitting on the sidelines, and the top end of the market is still suffering from an oversupply of property relative to the reduced demand, gentrified suburbs within close proximity to the city, transport, amenities and infrastructure are performing well.
In particular, well-located apartments in the inner western suburbs and Sydney’s eastern suburbs are being snapped up by investors and owner occupiers at hotly contested auctions, according to George Raptis, director of <a target="_blank" href="https://www.sydneybuyersagent.com.au/">Metropole Property Strategists in Sydney</a>.
“The high auction clearance rates we’ve experienced over the last few months are a sign of how strong certain segments of the market are. In particular, investors are actively chasing well-located properties attracted by high yields and the prospects of strong capital growth. With 21% less stock on the market for sale than 12 months ago and a shortage of good quality properties amongst those properties for sale, I can see Sydney prices continuing to rise,” says Raptis.
 
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Melbourne: Median house price: $530,000; 4.4% increase in last 12 months. Median unit price: $435,000; 3.1% increase in last 12 months. Vacancy Rate: 2.9%
Melbourne has been the surprise performer over the last year, but different segments of the Melbourne housing market are at different stages of the property cycle.
While there is still an oversupply of property at the top end, there is more competition for properties in the middle range of the market where there is a shortage of well-located properties. This has been evident in strong auction clearance rates this year – usually in the 70% range – while this time last year it was in the 50% range.
But there are some segments of the Melbourne property market to avoid.
“There is a significant oversupply of newly built house-and-land packages in Melbourne’s outer northern and western suburbs where buyers are showing a preference for two to three-year-old homes which can be bought considerably cheaper than new stock” said Keith Franklin, of <a target="_blank" href="https://www.melbournebuyersagent.com.au/">Metropole Property Strategists in Melbourne</a>,
“There is also an oversupply of inner-city CBD apartments and there are many more apartments coming on stream in the next few years at a time when there is less demand from the tenant demographic that rents in the CBD,” adds Franklin.
“Currently, there are some good investment opportunities buying established apartments in Melbourne’s southern or eastern suburbs and adding value through renovations” he says.
Brisbane: Median house price: $450,000; 1.0% increase in last 12 months. Median unit price: $373,500; -0.3% decrease in last 12 months. Vacancy Rate: 2.1%
House prices in Brisbane started to turn last year but have only risen 1.7% from their lowest point. This is in part because Brisbane’s economy is struggling to recover from the significant job-shedding of last year.
Having said that, there’s not one Brisbane market – there are many individual markets and these markets are fragmented.
While buyer activity in Brisbane’s outer suburbs remains subdued, sales of homes in inner-ring established suburbs continue to show signs of improvement. Houses are starting to sell faster and the number of property transactions is 13% higher than last year – all signs the market has bottomed
Prices are still falling in Ipswich (-3.2) and Caboolture (-6.1%), while Logan and Redlands regions are exhibiting minimal growth, but there are good investment opportunities buying a home on a good block of land in Brisbane’s inner and south-east inner suburbs which have had stronger growth and a resurgence of buyer activity.
 
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Perth: Median house price: $510,000; 8.8% increase in last 12 months. Median unit price: $415,000; 1.6% decrease in last 12 months. Vacancy Rate: 1.5%
The Perth housing market continues to rise on the back of a strong local economy, record levels of interstate migration into Western Australia, increasing confidence and strong buyer activity.
According to Damian Collins director of <a target="_blank" href="https://www.momentumwealth.com.au/">Momentum Wealth</a>:
“The activity is still concentrated around the median price, with many first home buyers still active and competing against investors for properties under $500,000.
“With around 9000 properties for sale this is below what is considered to be a balanced market. Our buyer agents are seeing this on the ground, with multiple offers on a number of properties. The low interest rates and high rental prices have encouraged many people to move from the rental market into home ownership and we have seen a subsequent increase in rental vacancy rates, where the vacancy rate has increased to over 3% and rents have declined slightly. The higher prices and lower rents have meant that the average yield for investors has come back to around 5%.
“There have been some significant changes to the residential planning codes in Perth.
“From August 2, ancillary accommodation, commonly known as “granny flats”, can now be built and rented separately. This is a strong opportunity for investors to increase their rental returns with an average yield on a separately rented house and granny flat likely to be over 7% in quality areas within 15kms of the CBD.
“Also the changes to the residential planning codes have further increased development opportunities for apartments and there are currently strong margins on development projects.
“Overall the Perth market is still in growth mode, however, with the recent run up in prices and lower rents, we expect market growth to be at a slower rate, but still strong opportunities in some areas. Investors need to be selective in their property choices and consider opportunities to create their own growth through renovations and development.”
Adelaide: Median house price: $395,000; 1.7% increase in last 12 months. Median unit price: $332,500; 5% decrease in last 12 months. Vacancy Rate: 1.6%
Adelaide's housing market has essentially done nothing since the beginning of 2008, in line with its underperforming economy, but there are now signs of a gradual recovery in buyer activity.
Darwin: Median house price: $520,000; 0.7% increase in last 12 months. Median unit price: $457,500; 6.0% increase in last 12 months. Vacancy Rate: 0.8%
The Darwin property market was the strongest performer for a few years, fuelled by strong investor sentiment, but the excitement seems to be over (at least in the short term.) I’ve always found investor-driven markets more volatile than our big capital cities and that’s why I avoid them.
 
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Hobart: Median house price: $315,000; 0.0% increase in last 12 months. Median unit price: $270,000; -4.7% decrease in last 12 months. Vacancy Rate: 2.5%
The Hobart housing market is showing early signs of stabilising after a prolonged period of subdued activity.
Canberra: Median house price: $555,000; 4.5% increase in last 12 months. Median unit price: $457,500; -0.8% decrease in last 12 months. Vacancy Rate: 1.7%
The Canberra housing market is slowly showing signs of activity after a flat period for much of the last year.
Source of Data: <a target="_blank" href="https://rpdata.com/">RPData,</a> <a target="_blank" href="https://sqmresearch.com.au/graph_vacancy.php?region=nsw%3A%3ASydney&amp;type=c&amp;t=1">SQM Research</a>
What next?
The overall fundamentals for property are sound and our property markets should keep consolidating.
Interest rates are likely to drop one or two more times as our economy hits a few more speed bumps causing unemployment to rise a little.
But, generally, our household budgets are in good shape as we’ve been consolidating our debts, and once the uncertainty of the election is out of the way, people will start getting on with their lives.
Our population is growing strongly and almost everyone who wants a job has a job. People are still getting married, having babies, moving interstate or getting divorced – they all need accommodation.
We’re in the early upturn stage of the property cycle in most states and buyers are returning, slowly taking up available stock and gently pushing up prices in the middle price range.
However, these purchasers are being very selective. Well-located, well-priced properties are selling, but properties in secondary locations or those in areas of oversupply are languishing.
The prestige end of the market, which has been hit hard over the last five years, will also slowly improve as our economy and business sentiment picks up.
Rising consumer confidence, low interest rates, a stable economy, rising rents and more good news in the media are likely to augur well for our property markets this year.
 
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But you can’t just buy any property.
Home buyers and investors will have to do careful due diligence – they won’t have booming property prices to cover up mistakes.
This means they will need to buy the right type of property…
One that has a level of scarcity, meaning it will be in continuous strong demand by owner occupiers (to keep pushing up its value) and tenants (to help subsidise your mortgage); in the right location (one that has outperformed the long-term averages), at the right time in the property cycle (that would be now in many states) and for the right price.
Then hold it as a long-term investment and reap the rewards.
Want to know what I’ve been up to and what I’m buying?
I’ll be explaining what I’m doing and, just as importantly, what I’m not doing at our upcoming <a target="_blank" href="https://propertymarketupdate.com.au/">Property &amp; Economic Market Update one-day trainings</a> I will be holding around Australia in August and September.
I won’t be conducting similar seminars until well into next year, <a target="_blank" href="https://propertymarketupdate.com.au/">so please click here now</a> and get the full details and reserve your place. I’ll be joined by various local property, tax and finance experts in each state.
We plan to give you straight-forward, no nonsense, practical steps and honest answers to improve your property performance this year and into the future. To reserve your place or to find out more, <a target="_blank" href="https://propertymarketupdate.com.au/">simply click here now</a> and I’ll give you my personal guarantee your time will be well spent. I’m looking forward to seeing you on the day.
Michael Yardney is a director of <a href="https://www.metropole.com.au/" rel="nofollow">Metropole Property Strategists</a>.
 
 
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Remember you can’t just buy any property - and what are the capital city property markets really doing? Michael Yardney

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What’s the right investment strategy for this stage of the property cycle? Michael Yardney    
Great news for those interested in property investment and another blow for the property bears (yes they’re still out there waiting for the sky to fall) – capital city dwelling values rose a further 1.6 % in July, according to <a href="https://www.rpdata.com/research/housing_values_continue_to_move_higher_in_july">RPData</a>.  
However, despite the fact that residential home values have made a cumulative recovery of 6.5% since the market bottomed out in May last year, this property cycle is likely to be different to the past – one where capital growth is likely to be lower.  
Interestingly, most commentators agree that we are unlikely to see the type of housing boom that sparked a massive rise in personal wealth last decade.  
This has many investors asking: what’s the right investment strategy this time round?
Firstly it’s important to understand property investors make their money in four ways:
<ol>
<li>
Capital growth – the increase in value of their properties
</li>
<li>
Rental returns – which provide cash flow
</li>
<li>
Tax benefits – such as depreciation allowances and negative gearing
</li>
<li>
Forced appreciation – this is where an investor ‘manufactures’ capital growth through renovations or development.
</li>
</ol>
  Of course, strategic investors benefit from a combination of all of these.  
Despite the lower predictions for this property cycle, you can still get capital growth.  
RPData recently reported the following capital growth for our capital cities over the last 12 months:
<ul>
<li>
Perth 8.3%
</li>
<li>
Sydney 6.5%
</li>
<li>
Melbourne 4.3%
</li>
<li>
Hobart 2%
</li>
<li>
Canberra 1.4%
</li>
<li>
Adelaide 1.1%
</li>
<li>
Brisbane 0.8%
</li>
<li>
Darwin -0.9%
</li>
</ul>
 But these figures don’t tell the full story.  
In all states our property markets are very fragmented and there are some pockets that have significantly outperformed and many have underperformed the averages.  
If you dig deeper you’ll find that in most states there is a group of suburbs that exhibited double digit capital growth last year. Within those areas there will be some properties that grow strongly in value while others perform poorly.  
 
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Where have  the properties that outperform the average been?  
In many cases these were areas going through gentrification; suburbs where a new demographic was moving in spending large amounts of money on renovating or extending their homes.  
You’ll also find stronger capital growth in suburbs where growth in wages outpaces the average, meaning the locals can afford to pay more for their properties.
A positive cash flow property is where the rental income received covers all of the property’s expenses (including interest) leaving money in your pocket each month.  
In general properties with higher capital growth have lower rental returns.  
This means you can’t find cash flow positive properties in the higher growth locations of our capital cities.  
You must look to regional areas or mining towns where buyers require a higher rental yield (cash flow) to make up for the lack of capital growth.  
Buyers with lower loan to value ratios, such as those who put more money in the deal, may also experience positive gearing.  
The problem is that they miss out on the benefit of leverage.  
Which strategy is better – capital growth or positive cash flow?  
There’s no simple answer. Clearly if both strategies exist there is a place for both of them.  
I see more beginner investor going for cash flow positive properties.  
On the other hand I tend to see more successful investors, those who have built a substantial asset base, grow their portfolio through leveraging off the capital growth of their investments.  
Obviously property investment should be part of a wealth creation strategy, not just a purchase in isolation.  
So if you are considering property investment to build an asset base to one day replace the salary from your day job, then I would invest for capital growth every time.  
The few dollars a week your positive cash flow properties might bring in immediately is not really going to make much difference to your lifestyle or your ability to acquire and service other, more desirable properties for your portfolio.  
Interesting, best-selling author Steve McKnight, renowned for writing a book on how he built a very substantial portfolio of positive cash flow properties, explains in his latest book, From 0 to financial freedom- how to do it today, that the strategy of buying cheap cash flow positive properties no longer works today.  
The problem is that you can’t save your way to wealth – especially on the measly after tax positive cash flow you can get in today’s property market.  
And when interest rates increase – as they will again some day - a property that is cash flow positive today may be cash flow negative tomorrow.  
Think about, real wealth is not derived from income.  
It is achieved through long-term capital appreciation and the ability to refinance to buy further properties.  
 
 
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If you seek a short-term fix with cash flow positive properties, you’ll struggle to grow a future cash machine from your property investments.  
But here’s the trick, you can’t turn a cash flow positive property into a high growth property because of its geographical location.  
But you can achieve both high returns (cash flow) and capital growth by renovating or developing high growth properties.  
This will bring you a higher rent and extra depreciation allowances, which convert high growth, relatively low cash flow properties into high growth, strong cash flow properties.  
This means you can get the best of both worlds.  
Of course investing in negatively geared, high growth property means you have to cover the cash flow shortfall each month.  
One way of doing this is to set up the correct loan structure.  
A line of credit or offset account could be used to supplement the rental and to pay the interest on the investment loan and property expenses.  
This buys an investor time.  
The line of credit is often set up to cover the shortfall for three or more years until the property’s value grows sufficiently to refinance the loan out of the extra equity.  
To use this investment strategy, correct asset selection is critical because to make it worthwhile you need the property’s value to increase significantly more than your outstanding loan balance increases.  
This means you need to be investing in high quality assets so that you can maximise the chances of enjoying strong capital growth.  
This strategy is not without risks and the four main one are:
<ol>
<li>
Poor capital growth – that’s why correct asset selection is so important.
</li>
<li>
Interest rate increases – which can be addressed by fixing interest rates on some or all of your debt.
</li>
<li>
Poor rental growth – which highlights the importance of owning properties in continuous strong demand by a wide demographic of tenants.
</li>
<li>
Lack of financial discipline – never use your financial buffers for uses other than covering your property related expenses.
</li>
</ol>
 I can understand why beginner investors would be keen to buy a property with positive cash flow. They tend to be cheaper so it is easier to purchase and support this type of property.  
While they may give you short-term income, these properties will never allow you to accumulate the equity necessary to become truly wealthy.  
And while the rent may seem relatively high initially, it is the ongoing capital growth of your property that will underpin its long-term rental income. This means that if you buy in low capital growth areas, your rents won’t rise as much as rents in high growth areas.  
And over the long-term the value of capital gains other investors will enjoy will blow comparable cashflow returns out of the water.  
Remember, as a property investor your focus should be on safely building your asset base so you can eventually develop the passive income from your assets that will allow you to enjoy the financial freedom you desire.  
Michael Yardney is a director of <a href="https://www.metropole.com.au/" rel="nofollow">Metropole Property Strategists</a>.
 
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Finding suburbs with a new demographic: What's the right investment strategy for this property cycle?

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Property investment is not something you should enter into lightly. But for some reason, that’s what a lot of people who have dreams of making millions with real estate do.
They think, “I can go out, buy a house somewhere, stick in some tenants to pay the mortgage and make a killing! How hard can it be?”
Fact is most property investor’s fail! The stats show that around 50% of people who buy an investment property sell up in the first five years and of those who stay in the game, 90% never get past owning one or two properties.
So if you’re looking to get into property or move up to the next rung of the property ladder, here are some words of advice:
Knowledge is property investment power!
Firstly, you need to understand what makes a good property investment and recognise that not just any old digs will do.
You can profit from real estate in one of four ways, and if you get the combination right you’ll make money from bricks and mortar. They are:
<ol>
<li>
Capital growth – to build yourself a sound asset base your properties will need to appreciate in value at wealth-building rates (in other words, above average capital growth.) This will come from strong demand from owner-occupiers (who push up property values) and tenants (who help you pay your mortgage.)
</li>
<li>
Cash flow – in other words your rent.
</li>
<li>
Tax benefits – while you should never invest solely for this reason; a good tax strategy can help you manage your cash flow, decrease your tax obligations and increase your bottom line.
</li>
<li>
Accelerated growth – getting your hands a little dirty (metaphorically speaking) by investing in a property that needs a bit of cosmetic TLC through renovations, or a major facelift through property development, is a great way to manufacture capital growth.
</li>
</ol>
 
<hr class="system-pagebreak">
Property cycles
While timing the market is not the be-all and end-all, it certainly helps to understand how the property market moves in cycles.
Following the herd and buying when everyone else is on the property bandwagon doesn’t always work. That’s often when the market is near its peak.
On the other hand you have more chance of nabbing a good deal in a buyer’s market, when property is out of favour. That’s why Warren Buffett said, “Be fearful when others are greedy and be greedy when others are fearful.”
Currently many of the property markets in Australia are in the early upturn stage of their cycles, creating good medium-term investment opportunities.
Location
Location can make or break a property investment. But what is the right location?
I look for areas that will have strong ongoing demand from a wealthy demographic of owner-occupiers who can afford to and are prepared to pay a premium to live in good locations. Some of the major drivers of this type of capital growth are:
<ul>
<li>
Proximity to the city
</li>
<li>
Proximity to the sea
</li>
<li>
Adjacent to a prime suburb
</li>
<li>
Proximity to amenities such as a train station, large shopping centre, within the zone of a highly sought after public high school.
</li>
<li>
Suburbs that contain period style homes e.g. Californian bungalows, Federation, Victorian, Edwardian style homes.
</li>
</ul>
I also like buying in areas going through gentrification – a suburb that is relatively cheap now but has the potential for capital growth in the future as a wealthy demographic of people move in.
One way to find this type of location is to drive through the streets and look for some of the obvious indicators that people with money are moving in:
<ul>
<li>
Are people spending large amounts of money on renovating/extending their homes?
</li>
<li>
Are there small black (or maybe now it’s white – the new black) BMWs and Audis parked in the driveways or are they old Ford Falcons and Holden utes?
</li>
<li>
Is the nature of the shops changing – more cafés and deli and lifestyle shops.
</li>
</ul>
Money, money, money
A sound financial strategy is as important as a sound investment strategy when it comes to property.
Without a well-rounded understanding of how to maximise your borrowing power, use equity as a leverage to build your portfolio and maintain a financial buffer to see you through the difficult times that we all ultimately face, you are setting yourself up to fail financially.
It’s important to set aside a cash flow buffer in a facility such as an offset account or line of credit, to cover you for a rainy day.
 
<hr class="system-pagebreak">
Financial fluency
While you could make lots of money through property investment, you could also easily lose it.
If you are financially illiterate when it comes to managing money, budgeting and even balancing the books at home, how do you think you’ll go when it comes to a multi-million dollar property portfolio?
You may need to learn the ins and outs of taxation and the financial advantages you can enjoy as an investor, as well as the best structures to own your investments in, such as personal, company and trust set-ups.
Rather than trying to learn it all yourself and wear numerous hats, it’s worth surrounding yourself with a good team of professionals who can guide you with their knowledge and expertise. An independent property strategist, a finance broker and an accountant should all be people you rely on to support you in the journey to real estate riches.
If you’re the smartest person on your team, you’re in trouble!
Some final words of advice (or warning) for investors
<ol>
<li>
Formulate a plan – understand what you want to achieve and then make investment decisions accordingly.
</li>
<li>
Be cautious –you’ll find everyone is happy to give you advice. Rather than listening to well meaning friends, it’s important to only listen to people who have achieved the financial independence you’re looking for and who have maintained it for a period of time.
</li>
<li>
Understand the difference between a salesperson and an advisor. Many salespeople are cloaked as advisors and suggest they are representing you, the buyer, when in fact they are representing the seller or a property developer.
</li>
<li>
Be prepared to pay for advice – it’s much cheaper than learning from your mistakes.
</li>
<li>
Not everything that glistens is gold – often when you start out it can be tempting to see opportunities everywhere. The problem is you don’t yet have the perspective to decide what is a good investment and what is not.
</li>
</ol>
Property doesn’t discriminate; it doesn’t care who owns it. Today the residential property market is worth $4.68 trillion, according to RPData, and over the next decade it will increase in value by billions and billions of dollars. If you get it right, you can have your share.
Michael Yardney is a director of <a rel="nofollow" href="https://www.metropole.com.au/">Metropole Property Strategists</a>.
Housing ladder image courtesy of Andrew Michaels / flickr.
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Tips to move up the property investment ladder: Michael Yardney

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As our property markets show signs of life again, many investors recognise that this cycle will be different to the last; it will be a cycle of more subdued growth.
In order to outperform the markets one of the most common questions is “where’s the next hotspot?”
People who ask my opinion are usually disappointed that firstly, I don’t know and secondly, I don’t really care.
I’m not in the business of speculating.
Instead, I make my investment decisions based on proven long-term performance, rather than short-term speculation.
The fact is hotspotting – seeking out the “next big boom” location – is speculation and not true property investment.
If you look at the track record of people chasing the next trend it’s been pretty poor.
On the other hand to “invest” in property requires the intention of generating long-term capital growth that tracks above average long-term price growth for the area.
Now, here's what I find interesting: a lot of the hotspots predicted by some of Australia’s property analysts turned out correct.
Some of the regional areas and mining towns boomed, at least for a while as investors chased up prices but, unless they got the timing right, chasing the next hotspot has turned out disastrous for many investors.
Some are left with properties worth considerably less than they paid and with less rental income than they expected. Now, they are unable to sell their properties as buyers have abandoned these markets which have little depth from local demand.
If you're into investing in short-term trends, being right isn't what's important, it's being right at the right time that counts.
Very few can do that, so the history of investors trying to find the next boom town is littered with people who get the story right and the outcome wrong.
Instead I buy in areas that have a proven long-term history of outperforming the average capital growth and are likely to continue to outperform because of the demographics of the people living in the area.
And I like buying the property for the right price - below its intrinsic value.
Hotspotting is virtually the opposite of this sensible, not-so-sexy, tried and tested system for successfully building a property portfolio.
 
<hr class="system-pagebreak">
Let’s have a closer look at a few other reasons why I steer clear of looking for hotspots:
1. Hot spotting is about short-term speculation, not long term wealth creation.
Most property investors are trying to build their asset base so that one day it can replace their personal exertion income.
The key to building a substantial property portfolio is to use your first property to leverage into your next property and then use those two properties to leverage into more investments, and so on.
You will only have the ability to do this if you invest in locations that consistently provide long-term capital growth.
By definition, ‘hotspots’ are not these types of areas.
Just as quickly as they heat up, property values in these locations can come off the boil and cool very quickly.
Just look what happened to many mining towns and sea change locations, such as Mandurah.
2. Hot spotting often means following the crowd and more often than not, the crowd gets it wrong!
Many people trying to buy in the next hotspot get their advice from online reports or “get rich quick” seminars and in the short-term some of these predictions are self-fulfilling.
If you suddenly get a diverse group of investors buying up in a small town that has little market depth, this tends to push up prices “proving” this area really is a hotspot.
What’s really happening is that you’re seeing an over-inflated market that more often than not, is unsustainable in the long term.
Some of our mining towns, the Gold Cost and Sunshine Coast are great examples of this phenomenon.
On the other hand strategic investors buy counter cyclically, when others are afraid to get into the market.
3. Hotspotting requires accurate timing, yet most investors don’t have the necessary knowledge to know when it’s the best time to buy.
Some hotspots have excellent potential to generate long term capital growth, but these are rare.
For example, there’s the inner-city suburb that’s yet to take off because while it’s on the verge of gentrification, yet it still has an air of industrialisation.
Some investors can pick these areas before the market takes off, but timing markets like this is difficult.
The real problem is that by the time you find out about the next hotspot, it may be too late to benefit from that substantial early growth.
Or the opposite could be true. You might end up jumping in too early and not reaping the rewards for many years while in the meantime, your money has been tied up and you’ve missed out on real opportunities in proven areas.
A great example of this is the inner western Melbourne suburb of Footscray, which has been “going to improve” for the last 35 years but just hasn’t!
 
<hr class="system-pagebreak">
4. Hotspotting is usually based on opinions rather than facts.
When you read articles in the media or hear reports on TV that suggest an area is about to take off as the “next big thing”, in reality you’re simply just being given someone’s opinion.
Be careful, are they biased because they have properties to sell and it suits them to be spruiking a certain area?
You’re better off to rely on your own research and due diligence, rather than blindly accepting a so-called expert’s potentially biased advice.
5. Hotspotting can generate short-term inflation in suburbs that can’t sustain a high level of price growth over the long term.
Today’s hotspot could be tomorrow’s over heated market.
For example, when the resources boom hit Western Australia and far north Queensland, thousands of investors jumped on the bandwagon and bought into the mining towns that sprung up overnight and became a buzz of activity.
But now that the resources sector has cooled off, many of these towns have gone from boom to bust as the major industry supporting the local economy came crashing down.
I know of many investors who are still having trouble offloading their under performing properties in these mining towns and regional centres which recently were called hotspots.
My suggestion is avoid the excitement of hotspots.
This may make your investment boring, but it allows the rest of your life to be more exciting as you growth your wealth.
So what is the alternative?
To ensure I buy a property that will outperform the market averages in the long term; I use a Four Stranded Strategic Approach:
<ol>
<li>
I buy a property below its intrinsic value.
</li>
<li>
I buy in an area that has a long history of strong capital growth and one that will continue to outperform average capital growth because of the demographics of the people living there. I look for affluent areas where people are prepared and can afford to pay a premium to live, or gentrifying areas where a wealthier demographic is moving in and pushing up prices as they improve the area.
</li>
<li>
I look for a property with a twist – something unique, special, or a bit different or scarce about the property.
</li>
<li>
And I look for a property where I can manufacture capital growth through refurbishment, renovations or redevelopment.
</li>
</ol>
By following this approach I minimise my risks and maximise my upside.
Each strand represents a way of making money from property and combining all four is a powerful way of putting the odds in my favour.
If one strand lets me down, I have two or three others supporting my property’s performance.
Michael Yardney is a director of <a href="https://www.metropole.com.au/" rel="nofollow">Metropole Property Strategists</a>.
 
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Hotspotting is speculation and not true property investment: Michael Yardney

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I remember the days when experts predicted we would be working just 14 to 15 hours a week by now and would have so much leisure time we wouldn't know what to do with ourselves.   
Instead, the official workweek is still 40 hours and many Australians work considerably longer hours than that in order to finance their increasingly expensive lifestyles.
According to <a href="https://money.cnn.com/2013/07/09/news/economy/shorter-work-week/index">CNNMoney</a>, in 1930 renowned economist John Maynard Keynes predicted technological advancements would mean we would all eventually work just 15 hours a week.  
That same year, evolutionary biologist Julian Huxley predicted the two-day work week.  
Both men warned that someday, we would have so much leisure time we would be bored out of our minds.  
"The human being can consume so much and no more," Huxley said in 1930. "When we reach the point when the world produces all the goods that it needs in two days, as it inevitably will, we must curtail our production of goods and turn our attention to the great problem of what to do with our new leisure."  
More recently, I remember experts predicting that the advent of computers, the internet and the fast-paced growth of technology would mean we’d be able to telecommute and work from home. They predicted we would be able to work so much more efficiently that we’d have a shorter work week and longer vacations.
 
There is no doubt that technological progress has made us more productive than ever before.  
But rather than shortening our working hours, instant messaging, emails on our smartphones and the 24/7 news cycle just seems to have made life more frantic.  
Then there’s the fact that our more expensive lifestyle, coupled with inflation and taxes, means that living how we choose to live is costing more and many average Australians are struggling to make financial ends meet.
However, you’ll never become wealthy working longer hours (or shorter hours as was predicted).  
Sure, you’ll earn higher wages, but you’ll be taxed more; inflation will erode some and you’re likely to spend more.  
And of course, you can’t save your way to wealth – that’s just too hard.  
On the other hand, a group of Australians – strategic investors – have built themselves a substantial asset base of investment properties that act as a “cash machine” to replace their personal exertion income and fund their lifestyles allowing them to work two or three days a week if they choose to.  
Initially they worked hard, spent less than they earned, invested the balance and then kept reinvesting their funds following a proven investment strategy.  
There were no short cuts. It took time, often 10 but more like 20 years to allow the magic of leverage, capital growth and compounding to grow their asset base.  
But now they have choices in life. Now they can choose to work two or three days a week or not.  
As Warren Buffett wisely said: “Wealth is the transfer of money from the impatient to the patient.”
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Would you like to work two or three days a week?: Michael Yardney

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Our property markets have turned the corner and there are more people interested in getting into property investment.
However, if history repeats itself (and it most likely will), while some will develop financial freedom through property, many investors won’t get past their first or second property.
So how do you succeed? Where do you start? There are so many options out there, everyone seems to have an opinion and many of their suggestions are conflicting.
To start you on the right path I’d like to help by suggesting 10 questions that I believe all budding investors needs to get their head around before buying into the property game.
1. What do you want to achieve?
 
Is it money? Wealth? Financial freedom? Maybe all of the above!
 Remember the bricks and mortar are not really the end goal; rather they’re just the vehicle you choose to get there.  
So, firstly, identify your end goal and then formulate a plan to get you there in a timeframe that works for you.  
You see, property investment, as with any other journey, requires you to know where you’re heading and how you intend to get there.  
Unfortunately, most investors don’t have a plan and that’s why they get lost along the way, get distracted by the latest investment fad or the next ‘hotspot’. And if they do have a plan they rarely review it to make sure they’re on track.  
2. What is your preferred strategy?  
Once you know where you are going you need to implement an investment strategy that helps you get there.  
Since you can’t save your way to wealth, your goal should be to build a substantial asset base through capital growth. My four-part strategy to achieve this is:  
<ol start="1">
<li>
Buy a property below its intrinsic value
</li>
<li>
In an area that has a long history of strong capital growth
</li>
<li>
Look for a property with a twist – something unique, special or different and
</li>
<li>
A property where you can manufacture capital growth through renovations or redevelopment.
</li>
</ol>
  3. What type of property?  
You need to own the right type of property; one that will be in continuous strong demand from both owner-occupiers and tenants, because the former push up market prices, whilst the latter help to pay your mortgage.  
Today, more people are trading their backyards for balconies and that’s why I prefer inner-suburban apartment-style accommodation.  
 
<hr class="system-pagebreak">
4. Should you buy something old or new?  
More often than not, new or off-the-plan apartments are a ‘box’ in a high-rise monolith. The problem here is that you pay a premium to the developer and miss out on the first few years’ capital growth.  
At the same time the majority of owners in the building are likely to be investors. I prefer buying where owner-occupiers, who look after the building better, predominate.  
If you haven’t guessed it by now, I prefer to buy an established apartment, in a character-filled block, which has the potential to be ‘tarted up’ with cosmetic refurbishments.  
This gives you the potential to not only increase your rental income, but also manufacture some capital growth.  
5. Where should you buy?  
Location is critical to the long-term performance of your investment. I look for suburbs that have always outperformed the averages or ones going through gentrification.  
These are generally lifestyle suburbs in major capital cities close to the CBD, amenities or water.  
Then I drill down even further and choose the best spots in those suburbs.  
6. When should you buy?  
While there are investment opportunities at most times, I’ve found that many of my successful investments have been made by going against the crowd and buying when most people are worried about the market and sitting on the sidelines.  
7. What can you afford?  
Before you start looking at what to buy, you need to know what you can afford to buy.  
Get a loan pre-approved and make sure you’ve set some funds aside for acquisition costs, holding costs and a financial buffer for a rainy day or rising interest rates.  
 
<hr class="system-pagebreak">
8. How will you set up your purchase?  
It’s important to own your property in an entity that protects your assets and legally minimizes your tax.  
Whether you buy in your own name, your super fund or a trust, you need to be aware of what it will mean for you and your family, now and in the future.  
9. Who should you ask for help? 
If you are the smartest person in the room, you are in the wrong room!  
The real estate game is a team sport, requiring expert input and advice from a qualified accountant, a smart solicitor, a finance broker, an independent property strategist and a mentor who will help set you up for a win.  
10. Should I take advice from my friends and family?  
In general the answer is: no!  
Not unless they’ve invested successfully through a number of property cycles.  
This is because ‘the crowd’ is usually wrong. When everyone’s optimistic, people come out of the woodwork keen to give well-meaning advice; however, investors tend to be most optimistic at the peak of the cycle – when the risk is the greatest.  
Just like they are pessimistic at times when the property market is flat and the risk of further downside is low.  
As our real estate markets pick up and the cycle moves on, a whole new generation of investors will enjoy the prosperity property can bring.  
If you ask the right questions you could be one of them.
Michael Yardney is a director of <a rel="nofollow" href="https://www.metropole.com.au/">Metropole Property Strategists</a>.
 
 
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10 things you need to know when buying an investment property: Michael Yardney

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The Big Australia vs Small Australia debate was all the rage a few years ago, but that argument now seems to have gone by the wayside.
 
In fact, we’re growing faster than any other developed country.
The Australian Bureau of Statistics (ABS) recently released demographic data for December 2012 showing Australia's population grew by 394,200 people or 1.8% during 2012, well above its long-term average of 1.4%.
This is good for our economy and good for our property markets.
Of course a rising population on its own isn’t enough to push up property values, but a nation full of wealthy workers who all want to live in the same few capital cities is.
But I’m getting ahead of myself…
What’s happening state by state?
<table style="width: 470px;" frame="box" border="0" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td width="20%">
 
</td>
<td width="29%">
Population at end Dec qtr 2012 
</td>
<td width="25%">
Change over previous year 
</td>
<td width="26%">
Change over previous year 
</td>
</tr>
<tr>
<td width="20%">
PRELIMINARY DATA 
</td>
<td width="29%">
'000
</td>
<td width="25%">
'000
</td>
<td width="26%">
%
</td>
</tr>
<tr>
<td width="100%" colspan="4">
<div>
<hr size="3" width="100%" align="left">
</div>
</td>
</tr>
<tr>
<td width="20%">
New South Wales
</td>
<td width="29%">
7 348.9
</td>
<td width="25%">
90.4
</td>
<td width="26%">
1.2
</td>
</tr>
<tr>
<td width="20%">
Victoria
</td>
<td width="29%">
5 679.6
</td>
<td width="25%">
99.5
</td>
<td width="26%">
1.8
</td>
</tr>
<tr>
<td width="20%">
Queensland
</td>
<td width="29%">
4 610.9
</td>
<td width="25%">
92.5
</td>
<td width="26%">
2.0
</td>
</tr>
<tr>
<td width="20%">
South Australia
</td>
<td width="29%">
1 662.2
</td>
<td width="25%">
15.6
</td>
<td width="26%">
0.9
</td>
</tr>
<tr>
<td width="20%">
Western Australia
</td>
<td width="29%">
2 472.7
</td>
<td width="25%">
83.0
</td>
<td width="26%">
3.5
</td>
</tr>
<tr>
<td width="20%">
Tasmania
</td>
<td width="29%">
512.4
</td>
<td width="25%">
0.4
</td>
<td width="26%">
0.1
</td>
</tr>
<tr>
<td width="20%">
Northern Territory
</td>
<td width="29%">
236.9
</td>
<td width="25%">
4.2
</td>
<td width="26%">
1.8
</td>
</tr>
<tr>
<td width="20%">
Australian Capital Territory
</td>
<td width="29%">
379.6
</td>
<td width="25%">
8.6
</td>
<td width="26%">
2.3
</td>
</tr>
<tr>
<td width="20%">
Australia(a) 
</td>
<td width="29%">
22 906.4 
</td>
<td width="25%">
394.2 
</td>
<td width="26%">
1.8 
</td>
</tr>
<tr>
<td width="100%" colspan="4">
<div>
<hr size="3" width="100%" align="left">
</div>
</td>
</tr>
<tr>
<td width="100%" colspan="4">
(a) Includes Other Territories comprising Jervis Bay Territory, Christmas Island and the Cocos (Keeling) Islands.
</td>
</tr>
</tbody></table>
Source: <a href="https://www.propertyobserver.com.au/https://www.abs.gov.au/ausstats/abs@.nsf/mf/3101.0">ABS</a>
At the state level, population growth has three components: natural increase, net overseas migration and net interstate migration.
And as you can see, growth varies considerably between the various states with population growth the strongest in WA.
While it’s interesting to see the percentage growth in each state, it’s also important to look at the absolute numbers.
 
<hr class="system-pagebreak">
In some states such as Tasmania (+400), Northern Territory (+4200) ACT (+8600) and South Australia (+15,600) the actual number of people moving in is quite small and this is unlikely to change much in the future.
The lack of depth in these particular markets is one of the reasons I avoid investing in them.
On the other hand, take a look how many people are moving into our four major capital cities.
The population of WA is booming with an increase of 3.5% last year or 83,000 people. It’s little wonder the Perth property market is performing well.
Victoria’s once again had the biggest population growth (+99,500) and this is one of the reasons its property market has confounded pundits and performed better than many expected.
And in Queensland (+92,500) and New South Wales (+90,400) the population growth continues apace.
Strong migration holds the key
Australia’s firm population growth has mainly been driven by a doubling in net migration over the last few years. Back in 2005, annual net migration was around 120,000. Today, that figure is close to 240,000.
<img alt="yardneyjuly4one" height="397" width="470" src="/images/stories/2013/06/yardneyjuly4one.jpg">
Source: <a href="https://www.cba.com.au/">CommBank</a>
 
<hr class="system-pagebreak">
But dwelling construction isn’t keeping pace
As you can see from the following graph from CommBank, our robust population growth has occurred against a backdrop of modest dwelling construction.
<img alt="yardneyjuly4two" height="414" width="470" src="/images/stories/2013/06/yardneyjuly4two.jpg">
Source: <a href="https://www.cba.com.au/">CommBank</a>
CommBank estimates our population growth would require 170,000 new dwellings this year, but as you can see, we’re not building many more houses than we were one or two decades ago.
As always, some of the new apartments are being built in the wrong place – where there isn’t sufficient demand leading to an oversupply on the Gold Coast, in the Melbourne CBD and in Melbourne’s new outer suburbs.
But the overall mismatch explains some of the issues that support house prices.
What’s ahead?
The economists at the CBA expect annual population growth will be in the 350,000 to 400,000 range over the next few years with a relatively firm birth rate and strong immigration.
That means our three big capital cities could add close to one million inhabitants each over the next 15 years.
Many of our new migrants will take up the new jobs being created, while others will replace the ageing Baby Boomers moving out of the workforce.
Of course the majority will move to our big four capital cities and many will want to live in the same suburbs; those inner and middle ring suburbs where the action and the jobs are.
And our old friend, the supply and demand ratio will support the property markets in these areas.
Some final thoughts
I can’t see the population debate being a factor in the upcoming election, but it’s likely our high rate of population growth will provide some debate in the future due to the potential problems of environmental impacts, increased need for housing, infrastructure investment and demand for essential services.
On the other hand, increases in population, particularly skilled working age population growth, increases the tax base and helps boost revenues for all levels of government. It also increases demand for goods and services across the economy.
Population growth is a balancing act; let’s hope our future governments get it right.
In the meantime, move over and make room!
Michael Yardney is a director of <a href="https://www.metropole.com.au/" rel="nofollow">Metropole Property Strategists</a>, who create wealth for their clients through independent, unbiased property advice and advocacy. Subscribe to his <a href="https://propertyupdate.com.au/category/property-investment/" rel="nofollow">Property Update</a> blog.
 
 
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Wealthy workers living in the same few capital cities will push up property prices: Michael Yardney

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When master investor Warren Buffet said: “Be fearful when others are greedy and be greedy when others are fearful”, was he encouraging the strategy of countercyclical investing?  
But with all the mixed messages out there today, some even suggesting we could be in for a recession, what should an investor do today – be fearful or greedy?  
I’d like to give you my thoughts on this with a lesson from history…  
Twenty years ago few would have thought of property as a good investment.  
It was 1993 and interest rates had come down 3% over the last two years as the Reserve Bank tried to stimulate the economy and our faltering property markets.  
By the way, this brought rates down to 10%, the lowest level they had been for 13 years.  
Australia was just coming out of the “recession we had to have”, there were too many properties for sale, buyers were scarce and some properties, particularly in top-end suburbs, had plummeted in value.  
A few years earlier on Black Monday of October 1987, a stock collapse of unprecedented size hit Wall Street.  
However, while the stock market recovered, the lumbering savings and loans industry in the USA (which financed many American homes) was beginning to collapse, leading to a property funding crisis which put the financial wellbeing of millions of Americans in jeopardy.  
The financial contagion spread to other financial sectors and led to a recession which hit other countries whose economies were previously healthy but were economically closely linked to the United States. This included Canada, the United Kingdom and Australia.  
Is this beginning to sound a little familiar?  
What was happening in Australia?
In mid-1993 you would have paid around $173,000 for a typical house in Sydney, $138,000 in Melbourne, $121,000 in Brisbane, $102,000 in Perth, $156,000 in Canberra, $110,000 in Adelaide, $96,000 in Hobart and $132,000 in Darwin.  
But over the next two decades the value of many capital city properties around Australia tripled, underscoring the wealth of many of today’s Baby Boomers and creating significant property empires for those who took property investment seriously.  
Interestingly, today’s property markets look surprisingly similar to those of 20 years ago.  
And just like then, many of the same arguments are being floated by analysts explaining why property values can’t keep increasing as they did over the previous 20 years.  
I accept that much of the gains over the last 20 years were related to structural changes that will not be repeated.  
The Reserve Bank kept inflation within a narrow band, meaning interest rates could fall at a when time banks were deregulated and allowing new non-bank lenders like Aussie John Symond to make cheap finance available for borrowers.  
At the same time wages grew and there were more two-income households. This allowed more Australian families to buy new homes or upgrade their existing homes as their families grew.
 
<hr class="system-pagebreak">
Why our property values are guaranteed to increase in the long term
Don’t get me wrong, I’m not suggesting we’ll have widespread double-digit growth in property values (even though some suburbs will enjoy it). But we don’t have 7- 8% inflation like we had in the 1980s, which required those types of capital growth rates to produce a real (after inflation) rate of return.  
With household incomes likely to grow between 4 and 5% per annum there’s no reason to think that property values won’t increase by at least that much and probably much more.  
It’s important to understand that while many factors like interest rates, supply and demand and market confidence, affect a country’s property prices in the short term, in the long term prices are driven by two main factors:
<ol>
<li>
Population growth, and
</li>
<li>
The wealth of the nation
</li>
</ol>
In Australia, strong future population growth is a given and, as a matter of fact, so is our increasing wealth. This is positive news for the long-term growth of property prices.  
The fact remains that as long as people keep having children and residents from other countries seek to settle on our shores, Australia’s population will keep growing at a rate faster than almost every other developed nation. In fact, we need these immigrants to take on the new jobs created by our growing economy.  
On top of that we are going to need whole cities of new immigrants to replace the 5 million or so Baby Boomers who are going to leave the workforce over the next 15 years. They will boost our country’s economic wellbeing through revenue raised from income taxes and all the goods and services they will buy.  And yes, that includes property.  
Of course, this means with more and more of us wanting to live in the same four big capital cities, and even in the same suburbs of those capital cities, our old friend the supply and demand ratio will keep pushing up the value of well-located inner-suburban properties.  
Inevitably this will make property unaffordable for some of who will remain tenants, however others will be able to afford these higher-priced properties.  
It also means that apartments are likely to become the style of housing in strong demand as more people swap their backyards for balconies. They will do this partly because of cost but also because of lifestyle choices.  
While nothing in life is guaranteed, if like me you are confident that Australia has a prosperous future, and you agree that our population is going to keep increasing and that most of us are going to want to live in much the same parts of our lucky country, then you can understand why I see a strong long-term future for our capital city property markets.  
Sure there is a risk in buying property, but don’t forget there is also a different risk in not buying.
Michael Yardney is a director of <a href="https://www.metropole.com.au/" rel="nofollow">Metropole Property Strategists</a>, who create wealth for their clients through independent, unbiased property advice and advocacy. Subscribe to his <a href="https://propertyupdate.com.au/category/property-investment/" rel="nofollow">Property Update</a> blog.
 
 
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The long-term outlook for Australian property is strong: Michael Yardney

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How would you like a brand new investment property with a secure long lease, no property management hassles, zero vacancy risk and guaranteed rental income?  
Sounds good doesn’t it?  
Well … a few types of investments seem to advertise these benefits.  
One group are serviced apartments and I’ll give you my thoughts on these in a future blog, but another is Defence Housing Australia (DHA), which advertises all of these benefits. They also build or buy houses, lease them to military families and then sell them to property investors.  
While this sounds great to an uninitiated investor, in my opinion it comes at too high a price, which makes these very poor investments.  
Let me explain…  
1. New house equals poor gains
In general, DHA promotes newly constructed homes often in master planned estates in regional Australia.  
Being new, your investment comes with a long list of depreciation benefits and of course doesn’t have that lived in look, so this seems like a pretty good deal, right?  
Unfortunately, there are more negatives than positives when it comes to buying a new home such as those the DHA has on offer.  
First there’s the fact that new houses almost always cost more than comparable established homes in the same area, meaning you are buying them at top dollar.  
This is particularly true for DHA homes, where you pay a premium for what is sold as a “total package”; you get the tenants and even a pre-appointed property manager with the house.  
While this type of “guarantee” panders to the inexperienced, insecure investor, it’s worth remembering that property investment is about building an asset base through above average long-term capital growth – something new homes in large, purpose-built estates simply don’t provide.  
Fact is these properties tend to be in regional areas. I have always avoided investing in regional towns because of their heavy reliance on one or two industries to sustain their local economies and population.  
Remember, when those industries take a battering, it’s not long before local house prices start to bear the brunt.  
Instead, I look to invest in areas where property values will be driven up by a large and growing population base, a diverse economy and scarcity of supply of well-located properties.  
Clearly there is little scarcity to push up the value of DHA properties – they’re built by the hundreds in some towns.  
2. Difficult to sell
One of the big obstacles to capital growth for DHA properties is the lack of a secondary market.  
Demand from owner-occupiers is what pushes up the value of most properties.  
But if you bought a Defence property and chose to sell, or even worse had to sell, you’d cut out 70% of potential buyers because your property would not suit an owner-occupier because of its long lease.  
This adds up to one big fly in the proverbial ointment when it comes to owning DHA properties. A minimal secondary market for this type of property puts these investments on my “stay well clear of” list.  
By the way … mortgage insurers aren’t fond of DHA properties, and this makes it difficult to get a mortgage for more than an 80% LVR.
 
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3. High management fees means reduced rental returns
OK, you may pay too much, have below average capital growth and can’t easily sell your property, but at least you’ll be guaranteed a tenant for up to 12 years.  
This means no extended vacancy periods where you could end up struggling to meet the mortgage repayments.  
Then there’s the “make good” clause that means at the end of the lease period, the DHA ensures it will replace the carpets and give the house a fresh lick of paint.  
Sounds good doesn’t it? So what’s the catch?  
Well, as usual, this “peace of mind” comes at a cost.  
Specifically, the cost is in DHA property management fees charged at a whopping 16.5% or more than double that of a regular property manager.  
‘Fine’, I hear you argue, ‘I’ll just employ my own property manager!’  
Unfortunately you can’t. It’s compulsory to hand full management of your investment over to the DHA.  
Start crunching the investment returns and suddenly those guarantees lose a bit of their luster.  
4. The rental guarantee is up, now what?
What happens at the end of the lease? Well the DHA may renew it – or not.  
But what if you want to sell your property then? How will a home that’s had long-term tenants in place and is surrounded by other long-term rentals appeal to owner-occupiers? What if other investors in the estate also plan to sell at the same time?  
Not an ideal situation, is it?  
Look before you leap
There’s lots of ways to make money in property and there seems to be just about as many ways to get property investment wrong.  
Before you make any investment decision first have a plan, a property investment strategy and know what you’re looking for from your property investments.  
Then, if you’re considering a DHA investment, here are some questions you should ask:  
<ol start="1">
<li>
How much more would I be paying for a DHA house than other comparable properties in the area? What is the mark up for this new home and the “bells and whistles” that go with it?
</li>
<li>
How does the supply of new properties compare to demand for houses in the area from owner-occupiers?
</li>
<li>
How much of my rental return will I be forfeiting in excessively high management fees?
</li>
<li>
Will the security of a guaranteed tenant and the benefit of depreciation allowances compensate for the slower capital appreciation I can expect?
</li>
</ol>
When you start to weigh it all up, mounting a defence for military housing as an investment prospect is a difficult ask.   Trying to build a wealth-generating portfolio through niche property investing is a bit like playing roulette and hoping to win big. The odds are not in your favour.
Michael Yardney is a director of <a rel="nofollow" href="https://www.metropole.com.au/">Metropole Property Strategists</a>, who create wealth for their clients through independent, unbiased property advice and advocacy. Subscribe to his <a rel="nofollow" href="https://propertyupdate.com.au/category/property-investment/">Property Update</a> blog.
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New homes in large, purpose-built estates don’t provide above average long-term capital growth: Michael Yardney

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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