Property market review 2018: How investors’ sentiments changed over the year

Once the effect of the gradual decline became more prominent and most investors realise that they are in a softening market, almost everyone was on their way to sit down with their professional team.

Suddenly, people were more discerning of their decisions as they realise that all markets are bound to decline soon, no matter how spectacular the boom has been.

According to Right Property Group’s Steve Waters: “FOMO (Fear of missing out) investors have left the market. These are people who just wanted to buy property because they had seen the tremendous results that they see on Facebook or media headlines.

“They just needed to get in, even if it means having to pay more than what the property was really worth.”

True enough, social media has been a unique and significant catalyst in the present market cycle, inspiring a ‘herd mentality’ among aspiring investors.

As a result of the herd mentality, a lot of investors were burned by impulsive purchases once the major markets started to decline.

“Everyone seems to be having a win on social media. No one loses anymore. Any social media platform is a big part of the overall reason why this market did perpetuate as it did,” the property expert highlighted.

Negative sentiment

When the major markets started to decline, the excitement quickly turned into negative sentiment.

Negative sentiment on property investment became one of the major themes across the real estate landscape in 2018, Mr Waters said, with the media affecting investors’ emotions through doom-and-gloom headlines.

Investment activity started to decline significantly across major markets, affecting supply and demand and, consequently, property prices and rental rates.

However, those who blocked out the noise found that the market is not bound to crash into pieces any time soon. In fact, great investment opportunities remain across states and territories, even in and around the softening markets.

“Sometimes, it’s better to just don't listen to the media because it tends to get sensationalised. You read the media, it's topsy-turvy — feast and famine one day to the next,” Mr Waters highlighted.

“Be careful where you get your information from, especially on social media, because that's the greatest and easiest platform for the media to get their articles out.”

Success in property investment, regardless of the movements of the market, comes down to maintaining good cash flow and establishing strong buffers.

Right Property Group’s Victor Kumar said: “If you're buying at the top of the market, you've got to make sure that you are able to afford to hold onto that property without compromising your lifestyle until the next cycle pushes it up again.”

Seeking advice

Countering the effects of negative sentiment, investors embracing professional advice also became a primary theme across the property investment landscape this year.

This evolution of mindset has allowed more buyer’s agents, mortgage brokers, property managers and other real estate professionals to come into the scene. As a result, more investors are making smarter decisions for the growth of their portfolio.

Both Mr Waters and Mr Kumar have been in the buyer’s agent business since 2004, and through the years, they have seen a significant increase on the number of investors seeking advice, particularly now that the property boom has ended and the markets are undergoing changes.

“The emergence of buyer's agents has to be driven not by the increase of new agents but by the willingness of investors to embrace advice,” Mr Waters highlighted.

Moving forward, the property experts hope that the industry becomes regulated so investors are only given the best advice.

The rise of technology and its growing influence on the processes across the real estate landscape have given investors easier access to information and advice. Now, more than ever, they are strongly encouraged to be critical about the information they get and the advice they receive.

According to Mr Waters: “The advice that you get needs to be in line with your goals and tailored to your situation. It should not be just a shoehorn approach, as in one strategy fits all. In today's age of technology, don’t drown in the information.”

“Look at who the adviser is and what's their history in terms of how many market cycles they've seen. Are they actually living and breathing the same strategy that they're advocating? You can't trade experience and time in the market,” Mr Kumar added.

At the end of the day, navigating through a changing market and ultimately thriving in it comes down to having the right knowledge and support along the way.

Tune in to the first episode of the third season of Investing Insights with Right Property Group to learn from the movements of the market in 2018 and successfully shape your investment plan for 2019.