How economic trends could impact your portfolio in the mid-term
In this episode of The Smart Property Investment Show, IPA’s general manager of technical policy, Tony Greco, gives hi...
Property investors unanimously agree that 2021 will kick off a three-year favourable investor environment with strong price growth.
After a year of high uncertainty, but one thankfully void of earlier doom-and-gloom scenarios, investors can kick up their heels and enjoy a three-year winning streak as property prices not only rebound but shoot up on the back of highly favourable economic trends.
This is the view shared by OpenCorp director Michael Beresford, who joined the SPI podcast this week.
“It’s really appealing for property investors, and there seems to be a unanimous environment that 2021, at least kind of through to 2023, is going to be a really, really good time for investors and really strong price growth,” said Mr Beresford.
“The reason why we say that and the reason why that view is so well shared and agreed upon, the RBA have come out and said that cash rate at record lows of 0.10 per cent is going to remain for the next three years to get the economy re-stimulated.
“So, we know that with interest rates not moving anywhere, costs to hold are zero, properties will be paying for themselves, so you can be in the market without it impacting your lifestyle at all, provided you’ve got job security,” Mr Beresford explained.
He bases his confidence on previous years where clear upswings have followed serious downturns and the fundamentals that drive property markets – interest rates, population growth and supply, lending policies and government stimulus, infrastructure and spend.
“If we look at where everything is lining up on these fundamentals now, it’s really appealing for property investors,” Mr Beresford said.
Discussing population growth, he explained that despite Australia’s border policy, there has been more overseas migration this year than in previous years, with thousands of expat Aussies returning home.
“Supply to market has been dramatically reduced because developers are not as active, banks are not lending as much during downturn, so straight away the supply and demand dynamic is the way that we want it,” Mr Beresford said.
Moving on to lending policies and government stimulus, Mr Beresford opined that lending is where things get really exciting.
“You can’t inject hundreds of billions of dollars into an economy, before we even think about quantitative easing and bond buying, without seeing an inflationary effect over the years to come,” he said addressing the government’s stimulus spend.
Next, and in regard to lending policies, Mr Beresford spoke about the pent-up demand.
“People are realising that the world is not going to end. They’re realising that prices are not going to crash, realising that interest rates are low and now is a good time to buy, and getting prepared to be buying into 2021.”
To hear more of Mr Beresford’s predictions, listen to our podcast here.