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Despite the softening of the property market following the end of the boom in Sydney and Melbourne, Right Property Group’s Steve Waters believes that the rental demand across states and territories will revert to the state they were in. What does this mean for investors?
As dire as this prediction may sound, Mr Waters said that the current state of the market is nothing but a part of a normal cycle in the property investment landscape.
After the global financial crisis (GFC) in 2008, property prices percolated due to several changes in the market—including the decline in construction and the tightening of investment financing. If these changes sound familiar, it’s because it’s almost the same pattern that is being followed by today’s property market.
According to Mr Waters: “The reason why property prices really started to percolate after the GFC was because all construction stopped during the GFC because there’s no finance, no presales and so on and so forth.”
“Then, population kept happening, immigration kept happening. It was all the right fundamentals, so it lurched from an oversupplied situation in some markets, just like how we are now, to an undersupplied situation in most markets.”
“This is your normal property cycle,” the property expert highlighted.
Rental demand going back to its 'post-GFC' state simply means that there will be more people seeking accommodation than the number of accommodation available—creating a shift on the levels of supply and demand across the market.
“As a result of that, rents go up. It will happen—this is just history repeating itself,” according to Mr Waters.
Now that the property market is undergoing changes, investors are advised to maximise the value of their money in the market.
“It's bargain time. Find great properties under market value, in the affordable belts. It is that simple.”
“I think too many people are trying to complicate it. There's so much data out there and there's so much rhetoric that it’s confusing the consumer. But if you just break it down to the real basic form, this is a normal market. The market has just gone back to normality,” Mr Waters concluded.
Tune in to the first episode of the third season of Investing Insights with Right Property Group to find out how property investors can prepare for the new year amid a changing market.
Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.