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This year is turning out to be a good one for property.
The cycle is moving on and, as growth returns to our property markets, memories of the last few difficult years will fade.  
However, it would be a pity to have lived through the challenging times we all experienced in the last few years without learning some lessons so that we are not destined to repeat the pain.  
So what did you learn from the downturn?  
Probably the most important lesson we can all learn is to never get too carried away when the <a href="https://www.propertyobserver.com.au/news/the-10-insights-into-the-2013-property-market-what-why-when-and-where-to-look/2012121658500" target="_blank">market</a> is booming or too disenchanted during property slumps. Letting your emotions drive your investments is a sure-fire way to disaster.  
To ensure you never get caught again, let’s look at five big lessons from the last few years.  
Lesson 1: Neither booms nor busts last forever
During a boom, everyone is optimistic and expects the good times to last forever, just as we lose our confidence during a downturn. Our property market behaves cyclically and each boom sets us up for the next downturn, just as each downturn paves the way for the next boom. 
Let’s face it: while the news is much more positive today, we know that over the next few years the buoyant market conditions will be followed by a property bust and then another boom. And over the next decade or so we’ll probably have a recession and we’ll most likely have another depression one day.
The lesson from all this is that even as you take advantage of our rising property markets, you should get prepared for the next phase of the property cycle. During the last cycle, most investors didn't really have their downside covered or their upsides maximized.  
Lesson 2: Beware of doomsayers
For as long as I have been investing - and that’s close to 40 years now - I have heard people with excuses as to why property prices will stop rising, or even worse, why property values will plummet. However, in that time, well located properties have doubled in value every eight to 10 years.  
Fear is a very powerful emotion, and one that the media use to grab our attention. Sadly, some people miss out on the opportunity to develop their own financial independence because they listen to the messages of those who want to deflate the financial dreams of their fellow Australians.  
Lesson 3: Follow a system
Smart investors follow a system to take the emotion out of their decisions and ensure they don’t speculate. This may be boring, but it’s profitable. Let's be honest, almost anyone can make money during a property boom because the market covers up most mistakes. But many investors without a system find themselves in financial trouble when the market turns.  
Warren Buffett said it succinctly: "You only find out who is swimming naked when the tide goes out." In other words, if you aren't following a system that works in all market conditions, you will be caught naked when the market changes.  
If you prefer to have consistent profits and reduced risk, follow a proven system. Make your investing boring so the rest of your life can be exciting. 
 
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Lesson 4: Get rich quick = get poor quick
Real estate is a long-term investment, yet some investors chase the “fast money”. You’ve probably met people like that - they look for that deal that will make them fabulously rich. When you see them a year later, they’re usually no better off financially and still talking about the next deal that will make them rich.  
They are often influenced by the latest get-rich-quick artist with a great story about how you can join them and become stupendously wealthy. Their stories can be very compelling, even hard to resist. They often pander to the wishes of people who would like to give up their day job to get involved in property full time, but in reality it takes most people many years to accumulate sufficient assets to do this.  
Patience is an investment virtue. Warren Buffett said it right when he explained that: “Wealth is the transfer on money from the impatient to the patient.”  
Lesson 5: it’s about the property
You’re in the business of property investment, yet during the last boom many investors forgot the age-old property fundamentals of buying the best property they could afford in proven locations.
Instead, they got sidetracked by glamorous finance or tax strategies, and some lost out.
Smart investors do it differently.
They make educated investment decisions based on research and buy a property below its intrinsic value in an area that has above-average long-term capital growth and then add value creating some extra capital growth.
These are just five of the many lessons that I trust you learned from the recent property downturn.  
We know that in some regions the pendulum swung too far into the positive during the last property boom, driven by greed, and then swung too far into the negative during the downturn, driven by fear.  
Learn the lessons that this downturn has taught us and the rollercoaster ride will not be as dramatic next time because you won’t let emotions drive your investment decisions. Both fear and greed will drive you down the wrong path.  
Promise yourself that as the property market rises you won't get too excited, then when the next downturn hits (and you know it will) you can just confidently smile because you learnt the lessons that this downturn has taught you.  
Decades from now you will be able to tell your children and grandchildren that you survived the Australian property slump following the Global Financial Crisis and it taught you well.
Michael Yardney is a director of <a rel="nofollow" href="https://www.metropole.com.au/">Metropole Property Strategists</a>.
 
 
 
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Five investing lessons you should never forget: Michael Yardney

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Last year may be a distant memory to some, but when I recently reviewed various newspaper headlines from 2012 it revealed that we were a sombre lot back then.
Our property market was in the doldrums, the sharemarket hadn’t really started moving and even seasoned investors were wondering if the gloom would ever end.
The pessimists were having a field day
At the same time, the doomsayers had a multitude of things to worry about.
China was slowing down, commodity prices were collapsing and we were being told our mining boom was coming to an end.
The US economy was in trouble, the European economy was a basket case and there were concerns the world banking system would collapse.
And as they have done for the last few years, the overseas (and some local) property pessimists again enjoyed rubbing our noses into our high home prices, forecasting property prices would drop 15-20%.
Well, the doomsayers got it wrong!
But looking back with the benefit of hindsight, 2012 was a pretty good year for some investors. The world didn’t end, the share market recovered well and our property markets turned the corner in the middle of the year.
But not so good for everyone…
While all the action was going on, there were two types of property investor who didn’t do so well:
1. The nervous nellies
These are the potential investors who sat on the sidelines waiting for someone to ring the bell that the property market had bottomed. They have missed out on the strong capital growth that has occurred in most property markets since the middle of last year as can be seen from the following graph from <a href="https://www.macrobusiness.com.au/" target="_blank">Macrobusiness</a>.
<img src="/images/stories/2013/03/yardneymarch22one.png" width="470" height="368" alt="yardneymarch22one">
Source: MacroBusiness.com.au/RPData
Of course, certain properties performed significantly better than the average shown in the chart above.
2. Victims of the get-rich-quick crew and property spruikers
Firstly a quick disclaimer: because of my enthusiasm for property, the amount of writing I do and the numbers of emails I send out, I’m sometimes called a spruiker.
But remember, I have no properties for sale and never have had. So my advice is independent and unbiased and my optimism comes from the perspective of over 40 years in property investing.
Interestingly, I seem to have heard of more investors getting themselves into trouble over the last year than I’ve come across for a while.
Some have bought properties off the plan and were disappointed that end project values fell short of their purchase price.
Others bought house and land packages in “affordable suburbs” from developers or their marketing companies, only to find that the vast oversupply at a time when they settled and the valuations on their properties didn’t live up to expectations.
Yet others bought in mining towns.
Some of these investors may not yet realise how much trouble they are in until they try to sell.
 
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Why property is poised for growth
Well, that’s all history, so the question is: where to from here?
As always, the pessimists will find something to worry about, but I think we’re in for a good year in property driven by:
&gt;A stable global economy
&gt;A strong local economy
&gt;Low unemployment – around 5.4%
&gt;Inflation at 2.2%, which is at the bottom of the Reserve Bank’s comfort band
&gt;Low interest rates stimulating consumer and business confidence
&gt;Strong immigration, rising rents and generally low levels of supply of good quality property
&gt;Robust household budgets
&gt;Funds flowing into self-managed super funds – much of it looking for a home in bricks and mortar.
The final nails in the doomsayer's coffin…
Over the last week, a number of leading indicators have made me feel even more confident about property in 2013 as they tend to pre-empt stronger property values.
1. Consumer confidence rose again in March
The Westpac Bank-Melbourne Institute reported consumer confidence rose a further 2.0% in March. The current level of the consumer confidence index is now around 10% higher than the long-term average and has risen 17% since April 2012. This will translate into increasing sales in all areas of our economy, including our real estate markets.
2. Strong jobs growth
While our unemployment rates stayed the same at 5.4%, payrolls rose 71,500 in February, the biggest jump in just over 12 years.
3. The RBA has confirmed the property markets turned last year
RBA governor Glenn Stevens confirmed our property markets turned last year (something those of us on the ground have known for months) and assistant governor Christopher Kent suggested construction of houses and apartments would pick up in 2013-14, and play some role in helping to support a gradual pick-up in economic growth.
4. Rising finance approvals
Australia’s housing finance approvals (in value terms) rose by 2.4% in January, driven in particular by investors responding to the lower interest rate environment.
<img src="/images/stories/2013/03/yardneymarch22two.jpg" width="470" height="318" alt="yardneymarch22two">
The bottom has now passed
While some of our property markets offered fantastic opportunities, lack of confidence held back many would-be homebuyers and property investors last year.
I can understand them: it’s hard to go against the crowd and make a significant investment in property if you think the market could fall further.
But as the year goes on and confidence grows, more and more people will realise the markets have turned and this will propel the upturn phase of the real estate cycle, particularly in the middle brackets of our capital city property markets.
The property cycle bottomed in the middle of last year – right at the time the doomsayers were having a field day.
Michael Yardney is a director of <a href="https://www.metropole.com.au/" rel="nofollow">Metropole Property Strategists</a>.
 
 
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Property doomsayers have been slayed by latest stats: Michael Yardney

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Now that we’re well into 2013, home buyers and investors who were looking to the property markets for direction are seeing positive signs and responding with renewed interest.
This is reflected in more people attending open homes, more offers being made to buy properties, higher auction clearance rates and property values slowly rising.
The biggest change I’ve seen so far this year is the rise in consumer confidence and history suggests this is good for property.
So today I’d like to whip around Australia and see how our property markets are performing.
But before I do, let’s first look at the latest housing stats. 
<a href="https://www.rpdata.com/" target="_blank">RP Data</a> reported their February <a href="https://www.rpdata.com/images/stories/content/pressreleases/2013_03_01_rpdata_rismark_indices.pdf" target="_blank">house price index</a> and the findings were encouraging.
<img src="/images/stories/2013/03/yardneymarch8one.jpg" width="470" height="193" alt="yardneymarch8one">
Interestingly I’ve already seen the word ‘boom’ used in the media. It would be misleading to say our housing markets are in full-scale recovery and any deterioration in economic conditions could easily slow things down again.
However the latest stats will once again disappoint the doomsayers who frequent the property forums and for the last five years have been predicting an apocalypse.
What the stats show 
The five-city dwelling price index recorded a 0.26% rise over the month. This is the second consecutive monthly increase following January’s 1.11% increase in our five big capital cities.
What the figures don’t show is how fragmented our markets are, with different states, price points and types of properties behaving differently.
Only half our capitals showed price increases and this time around Melbourne was the outstanding performer with its third monthly increase in a row.
<img src="/images/stories/2013/03/yardneymarch8two.jpg" width="470" height="201" alt="yardneymarch8two">
Source – RP Data
The tide is turning
According to RP Data’s Tim Lawless, most housing markets bottomed out around May last year and since that time the combined capital cities index has recorded a 3.3% improvement in values.
<img src="/images/stories/2013/03/yardneymarch8three.jpg.png" width="470" height="215" alt="yardneymarch8three.jpg">
Apartments outperformed
Units outperformed houses in Australia’s major capital cities. Over the past year apartment values rose 2.3% compared with a 1.2% gain in house values.
 
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Let’s now look at some of our major property markets in a little more detail:
Sydney
Median house price: $600,000 with 2.2% increase in last 12 months   Median unit price: $400,000 with 4.7% increase in last 12 months Vacancy Rate: 1.6% 
Sydney performed well over the last year, but the top end of the market is still suffering from an oversupply of property relative to the reduced demand. However, affordable gentrified suburbs within close proximity to the city, transport, amenities and infrastructure are performing well.
In particular, investors and owner-occupiers are snapping up well-located apartments in the inner western suburbs and Sydney’s eastern suburbs at hotly contested auctions, according to George Raptis, director of <a href="https://www.sydneybuyersagent.com.au/" target="_blank">Metropole Property Strategists in Sydney</a>.
“I’d like some of the property doomsayers to come to one of these auctions and see how many genuine bidders are in the market for the small selection of good properties for sale,” says Raptis.
“The market for well-located apartments is likely to remain strong throughout the year. Strong rental demand, a shortage of rental properties, tightening vacancies and rising rents means investors will vie for the same apartments as owner-occupiers, underpinning prices.”
Melbourne
Median house price: $520,000 with 0.6% decrease in last 12 months   Median unit price: $420,000 with 1.4% decrease in last 12 months Vacancy Rate: 3%
Melbourne has been the surprise performer over the last three months 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.
But there are some segments of the Melbourne property market to avoid.
According to Keith Franklin, of <a href="https://www.melbournebuyersagent.com.au/" target="_blank">Metropole Property Strategists in Melbourne</a>, “Builders and developers have got ahead of themselves, and there is an oversupply of newly built house-and-land packages in Melbourne’s outer western suburbs. “Currently there is a flood of new properties, but buyers are showing a preference for two to three year old homes which can be bought considerably cheaper than new stock.
“There is also an oversupply of inner-city CBD apartments and the rental vacancy rate in Melbourne’s CBD is 4.4%.
“The problem is 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.
“This will put downward pressure on prices and rentals. I expect there will be an oversupply of inner-CBD and near-CBD apartments in Melbourne for a few years, causing prices to fall slightly.
“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: $453,000 with 1.3% increase in last 12 months   Median unit price: $350,000 with -2.4% decrease in last 12 months Vacancy Rate: 1.9%
House prices in Brisbane are still around 9% below their peak, but there are now signs of improvement in this market.
“Last year we saw Brisbane buyers lacking the necessary confidence to re-enter the market, instead sitting on the sidelines waiting for signs that real estate has bottomed before buying a property, but things are very different this year,” said Liz Wilcox, director of <a href="https://brisbanebuyersagent.com.au/" target="_blank">Metropole Property Strategists in Brisbane.</a>
“More potential buyers are coming to open homes, with many putting in offers within days of properties being put on the market. There has definitely been an increase in confidence among Brisbane-based property buyers.”
“Like other parts of Australia, the prestige end of the Brisbane housing market is suffering, but well located, more affordable homes within 5-10 km of the CBD are likely to perform well this year” said Wilcox.
Currently there are a large number of off-the-plan apartments available in the Brisbane CBD and surrounding suburbs. Many of these remain unsold, and this oversupply of properties will put downward pressure on prices and rentals in these suburbs.
Perth
Median house price: $480,000 with 3.9% increase in last 12 months   Median unit price: $410,000 with 1.5% decrease in last 12 months Vacancy Rate: 0.8%
In the three years leading up to the 2008 peak in house prices, WA house prices increased 20% per annum on average, compared to a national average of 6% per annum. Since then, investors and home owners deserted the Perth residential property market, until the middle of last year when the market turned the corner.
“Currently prices are around 4% below their March 2008 peak and with rising rentals (up around 15% in the last year) and a shortage of good stock on the market at a time of strong population growth and first home owners and investors returning to the market, prices in Perth are once again moving up,” says Damian Collins, director of <a href="https://www.momentumwealth.com.au/" target="_blank">Momentum Wealth</a> in Perth.
Adelaide
Median house price: $395,000 with -1.5% decrease in last 12 months   Median unit price: $320,000 with 2.8% increase in last 12 months Vacancy Rate: 1.4%
The Adelaide property market has been flat for some time now and prices are likely to correct a little more before the market bottoms.
Darwin
Median house price: $587,000 with 6.3% increase in last 12 months   Median unit price: $410,000 with 4.2% increase in last 12 months Vacancy Rate: 1.4%
The Darwin property market has been the strongest performer over the last year, fuelled by strong investor sentiment at a time of a shortage of properties and rising rents.
What next?
While our property markets are likely to remain soft this year, they should keep consolidating.
We’ve entering the stabilisation phase of the property cycle where 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 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.
Warning: There are plenty of speed bumps ahead
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); and one in the right location (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.
Data Sources: <a href="https://rpdata.com/" target="_blank">RPData</a>; <a href="https://sqmresearch.com.au/" target="_blank">SQM Research</a>
Michael Yardney is the director of <a target="_blank" href="https://www.metropole.com.au/" rel="nofollow">Metropole Property Investment Strategists</a>, a best-selling author and one of Australia's leading experts in wealth creation through property. He also writes the<a target="_blank" href="https://propertyupdate.com.au/category/property-investment/" rel="nofollow"> Property Investment Update blog.</a>
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Rising consumer confidence a good sign: Michael Yardney

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Is property still a good investment? The last few flat years in our property markets and concerns about the potential for future capital growth has some investors worried.
They are wondering what’s ahead for property, especially as they’re hearing some commentators suggesting we’re in unprecedented times.
You just have to look back further
The problem is these people don’t have a big enough rear vision mirror. Some of us with grey hair see clear parallels with the past.
So I thought that today I’d delve into my memory and see what we can learn from previous cycles to help you understand where our markets are heading.
But before I do, I’d like to remind you that even though we’re currently in the flatter stage of the property cycle, the bottom line is that as a long-term investment, property is hard to beat.
I remember reading a research report from Massey University suggesting that Australian residential property has been the best performing asset class over the long haul. The study dated back to 1920 and showed that property produced an average return of around 15% per annum (combining rental income and price gains) over all those years.
These figures don't really reflect how good property is as an investment as they don't take into account the power of leverage and the higher returns you can obtain on your own funds. When you factor this in, property far outperforms all other asset classes over the long term.
The market moves in cycles
But don’t get me wrong, while there's little doubt that property is a potent long-term wealth-builder, it clearly goes through cycles just as other investment classes do. This means the reported high long-term average returns take into account periods of very high growth and also periods when property went nowhere for a few years.
A good example of that is those who bought a home or invested in the Sydney property market at its peak in 2003 would have seen the value of their properties stagnate, or even fall, over the next five years or so.
But I’m getting ahead of myself. Let’s go back in time…
Has this happened before?
Back in the early 1980s house prices across most of the capital cities were stagnating for a couple of years. Melbourne's median house price languished at about $50,000 from 1980 to 1983 then grew steadily but unspectacularly before really taking off in 1987.
In Sydney, the median house price reached about $80,000 in 1981 and stayed there for the next four years. Perth prices were falling in 1983, and Brisbane house prices were going nowhere after a year or two of 25% returns in the early 80s. It took until 1987 before these property markets all began to boom again.
In Adelaide, there was a major rise in property prices between 1982 and 1984, and then growth slowed, before values only grew around 5% for most of the 90s until 2000.
After crashing in 1990, property prices in Sydney and Melbourne stayed flat until 1995 and then slowly started moving upwards.
It wasn't until 2000 that prices in Brisbane finally took off after a decade of growing at 5% or less per year. Interestingly this was despite a huge influx of immigrants from other states coming to the Sunshine State. And obviously they’ve been falling over the last few years again.
In Perth, a short recovery followed the boom and bust of the late 1980s and early 1990s. The market there ambled along, with annual returns at about 6% until its boom in the middle of last decade, where Perth's median property price overtook all capital cities other than Sydney. And then, of course, prices have fallen over the last few years and are still 4% below their peak of 2007.
And like all the other capital cities, Sydney also experienced a period of flat property prices after they peaked in late 2003 and didn’t start rising again until 2008.
What’s been a little different over the last few years is that property prices fell at much the same time in all our capital cities, and as you can see from the chart below, they are all still below their peaks of a few years ago.
So what’s the lesson?
In short, each state has its own property cycle and there are cycles within each cycle. Different areas, different prices points and different types of property have their own cycle.
Looking into these further, you’ll find that in each 10-year period there seems to be three or four years when the market is flat, three or four years of low capital growth, and a few years of strong price growth during the boom stage of the cycle.
Clearly property investors must be aware of and prepared for these cycles.
However, as we’ve learned over the last few years, it’s hard to remain positive in the middle of the flat period of the property cycle.
When you look at the property prices that prevailed 10 and 20 years ago and look at property prices today, it’s clear that property investment is a long-term play. You need to be patient as, over the long term, values in our major capital cities have doubled every seven to 10 years.
What are the factors behind these cycles?
It's the old story of supply and demand. Property prices are pushed up by the demand created by a healthy economy, high levels of employment, population movements caused by migration and immigration and positive market sentiment.
They are dragged down when the economy performs poorly, when interest rates rise, when employment and immigration figures fall, when supply exceeds demand and when those in the market are nervous about their wealth and their future.
Cycles are an inevitable part of any investment market and our property markets are behaving normally at present.
So what’s ahead for property?
The cycle is moving on. It always has. There is <a target="_blank" href="https://propertyupdate.com.au/2012-the-year-the-property-market-turned/">strong evidence</a> that our property markets bottomed in May last year.
Currently, the fundamentals are good for property. Our economy is performing well and interest rates are low and likely remain so for a while. Unemployment remains low, which means most Australians feel secure about their jobs.
The world’s economic problems are sorting themselves out, and the final piece to the puzzle – <a target="_blank" href="https://propertyupdate.com.au/the-final-piece-to-the-property-puzzle-has-fallen-into-place/">consumer confidence – is slowly returning</a>.
Most household budgets are in good shape as they’ve paid down their debts over the last few years. This puts them in a good position to get involved in property this year.
Some will just renovate or improve their homes. Others will take the next step and upgrade to a new home. And more first home buyers will get a foot on the property ladder pushed by higher rents and lower interest rates.
At the same time, strategic investors are looking at getting set for the next stage of the property cycle and more Baby Boomers are investing in property through their self-managed superannuation funds.
However, others will hold back at this early stage of the property cycle, waiting for more signs of certainty. Of course, while they are waiting, many will miss out on significant property price growth the strategic investors who get in early and buy counter-cyclically will enjoy.
What about affordability?
 
Every cycle I hear the cry: "Property prices are too high! They can't keep going up like that."
I remember it in the early 80s and then again in the late 80s when people said house prices just can't go up any more: "They are so high our children will never be able to afford a house."
But prices doubled over the next decade until they again said the same in 2003 as prices rose through the boom that started in 2001. Of course many are saying the same again now.
However, recent RBA and HIA-Commonwealth Bank stats disagree, suggesting housing is the most affordable it’s been in a decade.
Recently, economist Christopher Joye used the following graph in The <a target="_blank" href="https://www.afr.com/p/blogs/christopher_joye/housing_values_maintain_build_up_N2u1LtLLkNmHCKvZXOxlFJ">Australian Financial Review</a> to make the point that mortgage repayments as a share of our disposable income are the best they’ve been for a decade :
In summary
Our property markets are behaving normally as they work their way through their individual property cycles.
Within each state the property markets are fragmented – at different price points and geographically, but overall increasing consumer confidence is bringing homebuyers and investors back into the market.
Are you ready to exploit the property investment opportunities that will arise this year?
Michael Yardney is a director of <a href="https://www.metropole.com.au/" rel="nofollow">Metropole Property Strategists</a>, which creates wealth for its clients through independent, unbiased property advice and advocacy. He is best-selling author, one of Australia's leading experts in wealth creation through property and writes the <a href="https://propertyupdate.com.au/category/property-investment/" rel="nofollow">Property Investment Update</a> blog. Subscribe today and you'll receive a free video, The Golden Rules of Property Investment.
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What history can teach us about what’s ahead for property: Michael Yardney

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For much of last year the Australian housing markets were a "tug-of-war", with low interest rates pulling hard on one end of the rope and poor consumer confidence at the other.
Despite many of the fundamentals being sound, consumers were sitting on the sidelines waiting to see how the economy played out or for someone to ring the bell that the property market had bottomed.
Well… no one rang the bell, but our property markets did bottom in the middle of last year and consumer confidence is slowly returning.
In a moment I’m going to share nine reasons why I feel our property markets are going to perform well this year, but let’s first look at:
 
Consumer Confidence 
Last week the Westpac/Melbourne Institute index of consumer confidence rose to its highest level in over two years. Consumer confidence rose sharply in NSW and Western Australia and recorded healthy gains in Victoria and Queensland.
The index is up 7.2% over the year to February and this is the first big jump in confidence since the RBA commenced its rate-cutting cycle which dropped its interest rate by 1.75%.
Now don’t get me wrong, this is good news for our housing markets, but confidence isn’t at the level it was in previous rate-cutting cycles and this points to more subdued property price growth than might be expected given the current level of interest rates.
<div><img src="/images/stories/2013/02/yardneyfeb22graph1.jpg" width="470" height="297" alt="yardneyfeb22graph1"></div>
<div>Source: Westpac</div>
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What does all this mean?
Over the last few years, global as well as local economic uncertainty caused Australians to stash their cash. Some saved their pennies, many reduced their credit card debt and others took advantage of low interest rates to pay off the principal in their home mortgage.
But things are changing and the average Australian is now feeling more confident about their future and their job security. There has also been a strong wealth effect for households from rising stock prices on the ASX.
If history repeats itself, increasing confidence, low interest rates and robust financial   positions will encourage many Australians to ramp up their borrowings again and get into the property market.
The following chart from economist Leith Van Onselen of <a href="https://www.macrobusiness.com.au/2013/02/a-confidence-lift-for-housing/" target="_blank">Macrobusiness</a> plots the annual change in house prices (as measured by the ABS) against the annual change in the consumer sentiment index on a quarterly basis up to December 2012 and shows how rising consumer sentiment is a bullish indicator for Australian house prices.
<img alt="yardneyfeb22graph2" height="335" width="470" src="/images/stories/2013/02/yardneyfeb22graph2.jpg">
What are the implications for interest rates? 
It’s likely we’ll see the increase in confidence feed through to the broader economy, as well as stimulating further rises in our sharemarkets and house prices.
In today’s connected society, as confidence rises there will be a new group of investors who will fear missing out and this will stimulate the investment cycle to once again move forward.
This suggests that the Reserve Bank won’t make changes to interest rates any time soon, preferring to see how the economy responds to the rate cuts it has already made. 
Nine reasons our property markets will perform well this year 
I’m confident about our property markets in 2013, not only because consumer confidence is rising but:
1. Last week NAB confirmed that business confidence is also rising. This is good for our economy and for job prospects.
2. The Australian sharemarket has performed remarkably well over the last year, enhancing people’s wealth, replenishing their super funds and instilling confidence in investors.
3. The world’s economic problems seem to be diminishing. China’s growth seems to be back on track with predictions of 8% growth this year. The USA is slowly working it’s way through its economic problems, and while Europe is still a basket case, no one seems to be worried that it will bring down the world banking system like they were last year.
4. We have record low interest rates. This means existing home owners and investors are benefiting and paying down their debt faster; while new borrowers will reap the benefits of being able to borrow more.
5. Household budgets are in good shape. Since the GFC, Australians have been saving more. Credit card debt is low and 68% of people are ahead on their mortgage payments. Our robust household balance sheets means we have more money to invest and as people hear more good news stories in the media they’ll start to put their money into property.
6. Low interest rates and less volatility in our economy make cash and interest bearing deposits unattractive investments. While some investors will look at getting into the sharemarket, many won’t forget how the volatility of equities burned them a few years ago and will look to the security of bricks and mortar.
7. After the turmoil following the GFC more Baby Boomers are keen to control their own destiny by managing their own self-managed super funds (SMSF). Rivers of cash from SMSFs are going to be flooding the real estate markets over the next few years.
8. Increasing immigration and a shortage of properties in some inner and middle ring suburbs of our capital cities will see rents continue to increase. On the one hand, this will provide investors with better yields, but it will also encourage a new group of first home buyers to get a foot on the property ladder.
9. Recently, economist Christopher Joye used the following graph in <a href="https://www.afr.com/p/blogs/christopher_joye/housing_values_maintain_build_up_N2u1LtLLkNmHCKvZXOxlFJ" target="_blank">The Australian Financial Review</a> to confirm that despite what some of the overseas reports are suggesting, Australian houses are more affordable than they have been for over a decade:
<img alt="yardneyfeb22graph3" height="486" width="470" src="/images/stories/2013/02/yardneyfeb22graph3.jpg">
In summary
The property markets have bottomed, consumer confidence is returning and the property cycle is moving on. Already we’re seeing more people attending open for inspections and making offers on good properties and auction clearance rates for the first few weekends of this year have been strong.
The beginning of a new property cycle is a great opportunity for investors to ride the next property wave and doesn’t come around that often.
2013 will be a good year for property. Educate yourself, learn lesson from the past and take advantage of the opportunities the market has to offer.
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Why 2013 will be a good year for property: Michael Yardney

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When you look at the facts, despite there being over one-and-a-half million property investors in Australia, most don’t own more than one or two properties, which means that most property investors don’t ever develop the financial independence they desire. 
In fact, only one in 200 property investors owns six or more investment properties, and you need at least that many to become financially independent. 
Now that’s something to think about, isn’t it? 
With our property markets now moving forward I would like to outline four of the common mistakes I’ve seen investors make, so you can avoid them and make the most of the new property cycle. 
1. Buying the wrong property 
While all properties increase in value over time, some increase in value significantly more than others. To build financial freedom you need to own the right type of property – one that grows in value sufficiently to enable you to borrow against your increased equity, giving you the funds to purchase further properties. 
However, when you ask investors why they purchased their property they’ll say things like: it was close to where they live, close to where they holiday or close to where they want to retire. These are all emotional reasons for buying property, and while possibly a good way to buy your home, they are not the right way to buy an investment property.
 2. Not having a plan 
Most Australians spend more time planning their holidays than they do planning their financial future. If you don’t have an investment plan, how can you hope to develop financial independence? 
I have found most Australians fall into four categories: 
a. They don’t invest at all.
The majority of Australians fall into this group – they just haven’t taken action yet. 
b. They don’t invest enough.
 Many Australians have bought a home and understand the power of appreciating real estate, but they want to pay off their home before they invest in more real estate. This means they are not using the untapped equity in their home to further their financial independence. 
c. They invest too much.
Some people invest too much – yes that’s possible! They have taken unnecessary risks and borrowed too much. Some of these investors came unstuck over the last year or two as property values fell, while others will run into trouble as interest rates rise in the future. 
d. Those who invest the right amount.
Then there are those who invest just the right amount. Not too little. Not too much. They invest the right amount – sounds a bit like Goldilocks, doesn’t it? 
These investors have an investment strategy and their investment property purchases are part of this plan. 
The problem is that if you don’t have a strategy it’s easy to get distracted by all the “opportunities” that keep cropping up. 
Unfortunately many of these “opportunities” don’t work out as expected. Look at all the investors who bought off the plan or in the so-called next “hot spot”, only to see the value of their properties underperform. 
 

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3. Not reviewing their property portfolio 
Sure, property is a long-term investment and the costs of buying and selling real estate are considerable, but that doesn’t mean you should fall into the trap of not reviewing your property portfolio. 
Of course you can’t easily “swap” properties or reweight you property portfolio like you would shares. But that doesn’t mean you shouldn’t regularly review your portfolio to see what you can do to improve or upgrade your properties. 
When was the last time you checked to make sure you were getting the best rents or that your mortgage was appropriate for the current times? 
Maybe it’s time to refinance against your increased equity and use the funds to buy further properties?
And sometimes it is appropriate to consider selling an underperforming property to enable you to buy a better investment. 
It’s a bit like going to a financial planner to review your share portfolio or super fund. He’d say something like, ‘We are starting an economic cycle so now is a good time to see which sectors will perform best over the next few years and which shares will outperform’. So you would sell some shares and reweight your portfolio into sectors that will outperform. 
It’s much the same with your property portfolio. 
Do you own the type of properties that will allow you to take advantage of the next property cycle? Remember, over the next few years some properties will strongly outperform others. 
If you own secondary properties or real estate in areas that are unlikely to benefit from strong capital growth, it may be worth selling up and replacing them with the type of property that will help you develop long-term financial independence. 
And the last common mistake I see investors make is…
4. Not managing their risk
Many investors don’t understand the risks associated with property investment and therefore don’t manage them correctly.
One common error I see investors make is not having sufficient financial buffers to see them through from one property cycle to the next.
Smart investors don’t only buy properties; they buy time by having financial buffers.
They have sufficient financial buffers in their lines of credit or offset account to not only cover their negative gearing and see them through the down times like we experienced in the last few years.
Another way smart property investors protect their assets is to buy them in the correct ownership structures to legally minimise their tax and protect their assets. I have found that most wealthy property investors own nothing in their own names, but control their assets through companies or trusts.
Australia has now moved into the next stage of the property cycle
The three major property research houses – RP Data, Australian Property Monitors and Residex – as well as the Australian Bureau of Statistics, broadly tell the same story: the property markets turned in the middle of last year.
According to APM’s monthly index, Sydney and Melbourne prices have appreciated at annual rates of 6% and 7% respectively since June 2012. RP Data offers a similar picture, with monthly dwelling values in Sydney and Melbourne rising at 7% and 6% if projected on an annual basis since they bottomed in May 2012.
Yet in this cycle, just as in the past, some property investors will do very well, but many won’t. Let’s make sure we learn lessons from the past to help us secure our futures. I’ll be sharing exactly what I’ll be doing together with a group of leading property experts at my <a target="_blank" href="https://propertymarketupdate.com.au/">National Property Market &amp; Economic Update</a> one-day training events around Australia in March and April. Get full details <a target="_blank" href="https://propertymarketupdate.com.au/">here</a>.
Michael Yardney is a director of <a href="https://www.metropole.com.au/">Metropole Property Strategists</a>, which creates wealth for clients through independent, unbiased property advice and advocacy. He is best-selling author, one of Australia's leading experts in wealth creation through property and writes the <a href="https://propertyupdate.com.au/category/property-investment/">Property Update</a> blog. Subscribe today and you'll receive a free video training - The Golden Rules of Property Investment.
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Four mistakes to avoid in property investment: Michael Yardney

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This month is special to me, I celebrate a big birthday. I won’t tell you how old I am, but it’s one of those birthdays with a zero in it. 
As I’ve been investing in property, and some would suggest rather successfully, since my early 20s. I’d like to share some of the most valuable investment lessons I’ve learnt over the last four decades.
 
 
1. Have a plan 
Strategic investors have a plan, know where they are heading and follow a proven system to take the emotion out of their decisions and give them more consistent results. They make educated investment decisions based on research and buy a property below its intrinsic value, in an area that has above average long-term capital growth and then add value to manufacture equity.
 
2. Take a long-term perspective 
The property market moves in cycles and in every decade there are a few years of flat or falling property prices. However, well-located real estate has increased in value by an average of over 8% per annum over the long term. 
Imagine if you could buy the house your parents bought at the price they paid 30 or 40 years ago; how many properties would you have bought then knowing what those properties would be worth today?
 
3. Treat your property investment like a business 
 
The successful investors I know have grown a substantial asset base by treating their investments like a business. They do this by surrounding themselves with a great team of advisors, getting the right type of finance, setting up the correct ownership and asset protection structures and knowing how to legally use the taxation system to their advantage. 
 
4. There is not one property market 
While many people generalise about “the property market”, there are many sub-markets around Australia. Each state is at a different stage of its property cycle and within each state the markets are segmented by geography, price points and type of property. 
For example, the top end of the market will perform differently to the new homebuyers market or the investor segment or the median priced established property sector. And while at any time there are hundreds of thousands of properties for sale in Australia, most are not investment grade properties.
 
5. The crowd is usually wrong 
“Crowd psychology” influences people’s investment decisions, often to their detriment. Investors tend to be most optimistic near the peak of the cycle, at a time when they should be the most cautious and they’re the most pessimistic when all the doom and gloom is in the media near the bottom of the cycle, when there is the least downside. 
Market sentiment is a key driver of property cycles and one of the reasons why our markets overreact, overshooting the mark during booms and getting too depressed during slumps.  Remember that each property boom sets us up for the next downturn, just as each downturn sets the scene for the next upswing.
 
6. There will always be reasons not to invest 
Every year brings its own set of crises and lots of reasons not to invest. You can go back as far in history as you like and there won’t be a crisis-free year. Sure some years are worse than others, but there is always bad news and much of it is unexpected. Where investors get into trouble is that rather than focusing on their long-term goals, they see these crises as once in a generation events that will alter the course of history, when in reality they are just the normal path of history.
 
7. The devil is in the detail 
With so much market analysis available to us today, it’s easy to get caught up in the detail and scared into inaction. It’s better to keep an eye on the big picture and look at the property markets through a telescope and not a microscope.
 
8. Remember it’s about property 
 
You’re in the business of property investment, yet at times investors forget the age-old rule of buying the best property they could afford in proven locations. Instead they get sidetracked by get-rich-quick schemes or glamorous finance or tax strategies and lose out. 
Fact is, property is not a get-rich-quick scheme. Don’t get carried away by the next hot spot or latest fad – make your investing boring, so that the rest of your life can be exciting. Warren Buffett was right when he said; “Wealth is the transfer of money from the impatient to the patient.”
 
9. Use debt as a tool 
 
While many people worry about debt, smart investors use “good debt” and leverage to build their asset base. They then protect their assets by buying time though having a “rainy day” cashflow buffer set aside in a line of credit or offset account.
 
 
10. The two big drivers of property values 
 
 
 
While in the short term our property markets will be driven by market sentiment, interest rates, supply and demand and microeconomic factors; in the long term, the value of well-located properties will rise, propelled by the twin factors that have always driven long-term property prices – population growth and the wealth of the nation. Both of which will increase substantially over the next few decades. 
Learn from these lessons and the rollercoaster ride of your property investment career may not be as dramatic. Remember, both fear and greed will send you down the wrong path, but sense and sensibility will keep you heading in the right direction – toward real estate riches.
Michael Yardney is a director of <a href="https://www.metropole.com.au/">Metropole Property Strategists</a>, which creates wealth for clients through independent, unbiased property advice and advocacy. He is best-selling author, one of Australia's leading experts in wealth creation through property and writes the <a href="https://propertyupdate.com.au/category/property-investment/">Property Update</a> blog. Subscribe today and you'll receive a free video training - The Golden Rules of Property Investment.
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The 10 lessons successful property investors need to learn

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Over the years, I have discovered that successful investors do things in a certain way that helps them become rich, while others continue to do things differently and in general they tend to struggle.
I’ve come to the conclusion that when you do what most successful investors do, you get to become one of them, and if you don't – you won’t.
With 2013 panning out to be another challenging year in property, let’s look at six simple reasons most investors will never get rich and how to make sure you do:
1. Most people wait too long to start
Most people can’t wait to succeed; yet they are willing to wait to get started on the road to riches.
Many investors are waiting for everything to be “perfect” before they get going.
They wait for the right time in the cycle, the right property, the right economic environment or the right interest rates: which means they never get going.
The longer you wait to get started with your investing, the longer it will be before you get the money, success and freedom you want. It takes time to grow real wealth. It takes time for the power of compounding to work its magic.
You need to understand that the timing will never be perfect or you will never have all the information you want. You need to develop the confidence to make an investment decision based on knowing enough and realising that you will learn the rest along the way.
2. Fear stops them
Fear keeps many of us from getting what we want, especially in matters of money.
Be honest with yourself and count the number of times fear has prevented you from taking action, and in the process cost you a lost financial opportunity.
In the matter of property investment, fear holds many investors back.
Some fear taking on more debt, others fear failure and some even have a fear of success (will my friends still like me?).
Successful investors have learned to harness their fears and rather than focus on the negatives, they use fear to force them into positive action.
For example, rather than allowing fear of debt to stop them taking on the commitment of buying a property they use the fear of not moving forward with their investments to motivate them.
They use the fear of being stuck in their job for the rest of their lives, without the financial independence that they are craving, to motivate them to take on the commitment of an investment property.
Money and success lives on the other side of fear.
3. Waiting until they know enough
The fear of not knowing enough prevents other investors from getting started.
However, the irony here is that the more you learn, the more you learn you don't know!
Once you start learning some basic investment concepts you suddenly realise there are a whole lot more things about investing or property that you don’t understand.
That's the paradox of knowledge: The more you learn, the more you learn you don't know.
The trap is that many investors think that the way to escape this paradox is to learn even more, so they read more books, go to more seminars, listen to CDs and watch DVDs.
As they learn more they find a whole heap more things they don’t yet know.
The key is to recognise that while you don't know it all, and you never will, you do know enough to get started with your investing and you will learn more along the way as you apply your knowledge in the real world, surviving any mistakes and challenges along the way.
 
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4. Focusing on linear income instead of passive income
It is important to realise that not all income is created equal. Some streams are linear and some are passive.
Linear income is what you get from a job. You work for an hour and get paid once for that hour's work, and that's it. If you don’t turn up to work you don’t get paid.
Passive income is when you work once but you continue to get paid over and over again from work you're no longer doing. The way to become wealthy is having passive income coming in whether you go to work or not.
Wouldn’t it be nice to be paid hundreds of times for every hour you work?
That’s what happens to property investors. Initially they work long hours, save up a deposit and then invest it into a property.
Now their money starts working for them and keeps giving them sound investment returns “passively” in the form of capital growth and rental returns. Rather than getting another job, the wealthy people know they need to send their money out to work for them.
To put it simply: if you're not making money while you sleep, you'll never become rich.
5. Not using systems for making money
A system for making money is something that takes the emotion out of your investment decisions and makes the results more reproducible.
My preferred system is investing in high growth property. In particular I invest in high growth properties in areas that are in the upturn stage of their property cycle.
I buy them below replacement cost and then add value through renovations or redevelopment.
I rarely sell these properties. I borrow against the increasing equity in my property portfolio to buy more properties.
Once you create a proven system for making money, there is no limit to the money you can make.
 
6. Not being patient
Warren Buffet once said: “wealth is the transfer of money from the impatient to the patient”.
To become a successful property investor requires patience and persistence. You must not only get started, but you must continue on and follow through.
Residential property is a long-term investment. It’s not a get-rich-quick scheme.
Yet many investors speculate rather than invest. They look for that “big deal” which will land them a jackpot in a short period of time.
In general these types of deals rarely occur and if you find one, it will likely be speculative in nature and riskier.
The problem for many investors is that the successful buy and hold strategy I advocate is boring and others consider it slow. But successful property investment is a long-term affair.
Many investors look for the latest fad or try finding the next hot spot or speculative growth areas. Other investors consider other types of investments with potentially higher returns.
When you are tempted to do this, remind yourself that real estate has been the number one long-term multi-millionaire maker throughout Australia’s history, yet most people that speculate in the latest fads have not made much money.
You don’t have to look for the latest fads or the latest speculative growth areas if you create your own capital growth through buying a good property at a fair price, then adding value through refurbishments, renovations or redevelopments.
By doing this you are manufacturing your own capital growth.
So, it's really quite simple...
Decide to do these six things that successful property investors do and you are much more likely to become a successful and wealthy property investor. If you don't do them, then like most people, you may never get rich.
 
 
Michael Yardney is a director of <a href="https://www.metropole.com.au/">Metropole Property Strategists</a>, which creates wealth for clients through independent, unbiased property advice and advocacy. He is best-selling author, one of Australia's leading experts in wealth creation through property and writes the <a href="https://propertyupdate.com.au/category/property-investment/">Property Update</a> blog. Subscribe today and you'll receive a free video training - The Golden Rules of Property Investment. 
Here’s a bonus reason for you…
Another reason so many investors fail is that they try and do it all themselves. The inconvenient truth is that there is no such thing as a self-made millionaire.
Successful investors build a great team around them and have mentors and models – they learn from people that have already achieved what they want to achieve.
They look for people who give them independent, unbiased advice, and that's what Rolf Schaefer, Mario Borg and I will be doing at my National Property &amp; Economic Update - Outlook for Property Investors 2013 around Australia in March and April.
<a href="https://propertymarketupdate.com.au/">Click here</a> for more details and reserve your seats now.
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Six reasons most property investors struggle and never become rich

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At the beginning of the new year it’s customary for commentators to give forecasts for what’s ahead. 
Today I'm going to share 10 reasons I'm feeling positive about 2013, but first let me give you my obligatory forecast, which is: Most forecasters will be wrong this year.
 
Why do I say this?  
<ul>
<li>You just have to remember all the things we worried about last year that didn’t happen:</li>
<li>The European Union didn’t break up and its woes didn’t break the banking system; </li>
<li>America muddled its way through its challenges and its economy is picking up; </li>
<li>China’s economy slowed down, but didn’t tank like many predicted; </li>
<li>The mining boom didn’t end, it just moved on to its next phase; </li>
<li>The Mayan prediction of the world coming to an end was wrong; and </li>
<li>All those who predicted our property markets would crash were also wrong.</li>
</ul>
 
OK – now I’ll stick my neck out and make a prediction... 
The year 2013 will be an average year. 
Now don’t get me wrong – I’m looking forward to this year. In fact, I’m about to give you 10 reasons to look forward to it to. 
Why I’m calling it an average year is that I expect it to be a better year than last year, but not as good a year as 2014 will be.
 
Here are 10 reasons for optimism for 2013 and beyond
 
1. The bad news around the world is subsiding 
<ul>
<li>While the world’s problems haven’t gone away, many of the fears that plagued us last year are subsiding: </li>
<li>China's economy is resuming its rapid expansion, with its manufacturing output growing at its fastest rate in 19 months. </li>
<li>The US economy is picking up and didn’t fall off its fiscal cliff of sharp tax rises and spending cuts. </li>
<li>Europe will remain a basket case for years, but the European Central Bank seems to have stabilised the situation compared with the crisis 12 months ago.</li>
</ul>
 
2. Australia’s economy is in good shape 
Whether we have a budget surplus or not this year, our economy, which has gone 22 years without a recession, is the envy of most developed nations. 
We withstood the deepest global recession since the Great Depression and we are likely to keep growing at around 3% this year.
 
3. Unemployment is low 
Sure some jobs have disappeared, but around 400,000 new jobs have been created in Australia since the GFC and unemployment levels remain comfortable around 5.6%. 
When people feel comfortable about their jobs, their more positive outlook is good for confidence, good for consumption and good for investment.
 
4. Australia's inflation rate is low 
 
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Our low inflation rate gives the Reserve Bank room to keep interest rates low or contemplate reducing them further.
 
5. 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 giving some who overcommitted some extra breathing space.
 
6. Household finances are in sound shape 
Despite all the global economic worries over the last few years, recently released ABS figures show that Australian household wealth climbed 18.4% in the past year to $69,422 per person. This makes us the wealthiest we've been in five years. 
Rather than spending, Australians have been stashing their cash. Many have reduced their credit card debts, while others have been saving and yet others have taken advantage of low interest rates to pay off the principal on their home mortgage. 
There has also been a strong wealth effect for households from rising stock prices on the ASX. 
Their robust balance sheets will allow many Australians to ramp up borrowings and get into the property market this year.
 
7. Housing affordability is high 
The HIA-CBA Housing Affordability index shows that national affordability in the September quarter 2012 is just shy of the highest level in a decade. It is likely the next round of data (December quarter out around the middle of February) will show housing is even more affordable due to higher wages and lower interest rates.
 
8. Consumer confidence is picking up 
Consumer sentiment (the big missing ingredient over the last few years) has been rising over the last six months, and following the disappointing post-December rate cut 4.1% sentiment decline, this month’s report showed sentiment up slightly (0.6%) placing the level of sentiment at its long-term average.
 
9. Last year the Australian stock market recorded its biggest gains since 2009 
Typically the stock market starts to pick up a year or two before the economy, and the big money seems to think our future looks rosy.
 
10. Our property markets will pick up 
Having bottomed in the middle of last year, house prices are slowly rising – a trend forecast to continue this year. 
Of course there is no single 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.
 
In summary 
Australians, and particularly Australian investors, have a lot to be optimistic about in 2013. 
We still love property, our tax system favours investors and our banking system is underpinned by housing. 
While there will always be an argument for keeping house prices low and more affordable, with 70% of Australians owning their own or paying off their homes, our major political parties cannot afford to disenfranchise the majority of our population. 
Affordability, low unemployment and interest rates, and pent-up demand in some regions point to a good year for property.
 
One last forecast for the year… 
The property pessimists will be out there again and will no doubt pick more holes in my arguments than in a block of Swiss cheese. 
I know some will say “this time it’s different” but I suspect it won’t be.
 
Michael Yardney is a director of <a href="https://www.metropole.com.au/">Metropole Property Strategists</a>, which creates wealth for clients through independent, unbiased property advice and advocacy. He is best-selling author, one of Australia's leading experts in wealth creation through property and writes the <a href="https://propertyupdate.com.au/category/property-investment/">Property Update</a> blog. Subscribe today and you'll receive a free video training - The Golden Rules of Property Investment.
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Why 2013 will be average but 2014 will be better for Australian property markets: Michael Yardney

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Before the GFC hit and destroyed many Australians’ retirement funds, we were beginning to see a demographic shift as some segments of Australia’s population, particularly the retiring baby boomers, were selling up their large suburban homes and moving to the coast to retire, undertaking a transformation known as a  “sea-change”.
While this trend seems to have been halted as many boomers reassess their retirement plans in light of the current economic conditions, the trend will re-emerge, and in time, many coastal towns will have to reinvent themselves to cope with the influx of people.
When looking for a high-growth properties in coastal locations, the question to ask yourself is, “Will this be the type of property that will be attractive to a sea- changer?” Sea-changers will be looking for spacious, modern, low-maintenance properties that offer security and privacy. They will not be looking for “holiday” accommodation.
Another important factor is driving time to major cities, because even though sea-changers are shifting out of a big city environment, they still want a relatively easy drive to a major regional centre or the city. They want to be near hospitals and airports.
Beware the “holiday home” syndrome
Many people like the idea of buying a holiday home and think they can get the dual benefit of a rental income and a free holiday.
I would be cautious, because many people fall into the trap of buying with their hearts overruling their minds in this area. Many investors kid themselves and tell their friends and family that they bought a holiday property for financial reasons when, in reality, they fell in love with the idea of owning a holiday home and often paid scant attention to the investment fundamentals.
I’d rather own my investment properties in prime (non-vacation) locations and then stay at the latest and best accommodation in the spots where I want to holiday.
So which location?
For years, the agents have been telling us the answer is “location, location, location!” And in recent years they have been telling us the right location is near (not in) the CBD or near the water. But this doesn’t help us decide which location to choose and which property within that location to choose.
Location is important, but as you now realise, not always as important as some other factors. You will need to do the legwork and research you do to familiarise yourself with your chosen areas and markets so you can identify bargains and keep your finger on the pulse.
<img style="margin: 5px; float: left;" src="/images/stories/2012/12/yardneybook.jpg">
Michael Yardney is a director of <a href="https://www.metropole.com.au/">Metropole Property Strategists</a>, which creates wealth for its clients through independent, unbiased property advice and advocacy. He is best-selling author, one of Australia's leading experts in wealth creation through property and writes the <a href="https://propertyupdate.com.au/category/property-investment/">Property Investment Update</a> blog. Subscribe today and you'll receive a free video, The Golden Rules of Property Investment.
This is an excerpt from the fully revised new edition of Michael Yardney’s best seller How to Grow a Multi Million Dollar Property Portfolio – in your spare time. Get your own copy plus four free bonuses by here <a href="https://thebookonpropertyinvestment.com/" target="_blank">https://thebookonpropertyinvestment.com/ </a>
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Be wary of investing in holiday properties

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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