2008.12.06 09:03:45
The financial markets around the world are currently taking a beating and the property markets in some parts of Australia and New Zealand have shown signs of prices falling for the first time in a long time.
This is normal after a period of high capital growth though. All markets go through cycles and after a few years of close to 20% growth in some suburbs of australia; the markets are simply getting back to their averages.
One of the biggest mistakes that many property investors make is they forget history. When a market turns, they forget that the same thing happened years ago and the market will once again improve and start rising.
As human beings, when things are good we think that they’ll be good forever, when things are bad we think they’ll be bad forever.
The truth is that all property markets are cyclical – they grow, they plateau, they may even drop in value for a short time, then they grow again.
It is just the nature of economics. Certain factors in an economy have to catch up with each other.
If you’re a long term property investor you should be excited about the opportunities our current markets present, especially after the last lot of interest rate drops.
Of course you can’t just go out and buy any property or pay any price, like some investors thought they could do over the last few years.
In this very different financial era, to be a success property investor you will need to develop new strategies or adapt your existing ones to meet the new factors posed by this volatile market.
I foresee a reasonably flat property prices over the next few months probably until Feb or March for NZ and perhaps closer to June for Australa. But I also see some great opportunities.
With rising rents, falling interest rates and the ability to buy a bargain from some very motivated vendors – the type of bargain that we couldn’t find in the last few years when there was strong competition from other investors.
Many investors are now enjoying the types of yields that haven’t been experienced in a long time.
Many properties are no longer negatively geared, something that hasn’t been possible for a while if you bought good capital city properties