Episode Details

I hope you're taking advantage of the current property boom.

I haven't seen conditions like this since the early 1970s when I first started investing.

Now you won't find charts of that particular boom in the various research house statistics, because they weren't keeping those types of records in those days.

Back then, the boom in property values was in part related to the very strong inflation we were experiencing, and at the time the booming markets of the early 70s and that of the late 80s and the boom of the early 2000's twenty years ago created a lot of Real Estate empires.

I know the boom of the 70's got me off to a great start and the subsequent booms grew the value of my portfolio allowing me to continue growing it, but I also know there were others who invested through the various property booms who haven't had the success they hoped for. Even though initially it seems they were heading in the right direction.

So, my chat with you today will be to help you understand the type of property that you should be buying at this stage of the cycle to take advantage of the current conditions that see you through for the rest of your investing life.

Today's podcast will be in two parts, I'll initially give you my thoughts and then I'll have a chat with independent financial strategist financial adviser Stuart Wemyss who will share his thoughts on a big mistake he's seeing investors make – in the hope that you don't make the same mistake.

Here's how to invest in our booming property markets

I'm continually being asked questions like:

• What's the right property for this stage of the property cycle?
• Is this the right or wrong time to invest in property?
• Is it too late to invest this time round – prices have grown so much?
• Where's the best place to invest in 2021?

First, let's take a look at what is happening.

What's driving Australia's property boom?

• Low interest rates – Low interest rates are facilitating change from all types of prospective property buyers, many of who are starting to experience FOMO (fear of missing out) and are pushing prices higher and higher. Rising consumer confidence -- The combination of improving economic conditions, increased jobs security plus the sense that we're getting Covid under control is lifting consumer confidence, which in turn has created continued strong demand for housing.
• Supply versus demand – Buyers are snapping up properties faster than vendors can list them for sale at present which puts further pressure on prices.
• Pent-up demand – Buyer demand is particularly strong at the moment because it has been pent up for a number of years.
• Demographic changes – Changes in demographics, the structure of family life, and what we want out of our home also shifted during the height of pandemic lockdowns. The desire to live in a 20-minute neighborhood shone through.

Fast forward 3 years - what can we expect next?

If we fast forward another 3 years or so, I expect we'll find that property values have risen significantly - as much as 25-30% higher than at the beginning of this current property cycle.

By then our economy will have rebounded even further, wages will have increased, and inflation will be starting to rise.

This means the RBA will most likely have stepped in and raised interest rates, but only a little.

Make way for a 2-tier property market

When this property cycle ends, I believe we'll be left with a 2-tier property market.

This is because on one hand there will be the more affluent people who will be able to afford to live in the more expensive discretionary, established money suburbs or the up-and-coming gentrifying aspirational suburbs.

On the other hand, we'll have the majority of Australians who will find property unaffordable as they've only experienced slow or sta