Is the property market really as dire as you think?
Michael Yardney, CEO of Metropole Property Strategists, and one of Australia's leading property experts, says, "Sure property values stall for a while, occasionally for a few years in a row. Sometimes they'd drop a little - especially in volatile holiday locations or regional and mining towns. But when you took the overall median price of Australian residential property it has never really collapsed (other than after the 2nd world war, but then it recovered quickly).
What could cause our property markets to collapse?
Yardney says "The factors that could cause an Australian property market crash are:
1. A recession - but I don't know anyone who suggests we'll be going into recession in the foreseeable future.
2. Massive unemployment meaning that people can't afford to pay their mortgages - again this is unlikely in the near term.
3. A significant oversupply of properties - other than on the Gold Coast and in a number of our CBD's with a rash of off high rise projects being completed, we don't have an oversupply of properties.
4. High interest rates - the prospect of this has now been averted by the world's financial turmoil."
So what should you do?
1. Don't panic with all that's happening in the world.
2. Learn from history - every stock market crash has been followed by a property boom in Australia
3. Review your current property portfolio and your financial plans in light of what is going on around you.
4. Refinance your property portfolio now if you can to top up your financial buffers. This will put more money in your kitty for any speed bumps that may come your way.
5. Take appropriate action -
a. This may be to sell assets that will underperform in the new financial era, or it may be to buy more assets.
b. Set yourself and your family up to take advantage of the inflationary times ahead by owning properties that will grow in value at above average rates of capital growth.
You can view Michael Yardney's latest video blog here http://propertyupdate.com.au/video-market-update.html
6 Sept 2011