The Property Market is Crashing – So How are Investors Still Cashing In?
Did the headline grab your attention? I thought as much. The headline really should have said, “There is Currently a Minor Correction Occurring in Melbourne, and Sydney Property Prices whilst other Capital Cities Continue to grow”.
Not nearly as well constructed to gain your attention but hey as the saying goes, “don’t let the truth get in the way of a good story”.
In this blog, we will investigate the truth behind the fearmongering currently occurring in relation to the Australian residential property market VS what is actually happening.
There have been many misleading headlines in recent times designed to grab your attention, but the reality is that the majority of the publications surrounding the market are severely off the mark and here’s why.
Interest Rates are on the Rise – So What!
In one of our recent blogs, I wrote about interest rates in-depth so I will be brief on the topic.
No doubt interest rates are on the rise. However, they are still lower than what they were in 2019.
Yes, mortgage repayments are up, but so are rents, which will continue to rise for the foreseeable future as Australia grapples with a rental housing crisis.
Much of the media currently is positioned around interest rates being the major contributor to the supposed doomsday approaching. However, it’s important to note that interest rates are a tool used by the Reserve Bank of Australia to manage our economy.
You must understand that raising interest rates is simply the RBA’s way of ensuring a safe and balanced economy.
We’ve seen time and time again Australia’s ability to navigate turbulent financial times globally, such as the Global Financial Crisis (GFC), through the use of monetary policy and interest rates. This is nothing new and nothing to worry about.
Australian Property Prices Are Falling!
Whilst technically true, it doesn’t tell the whole story.
A recent article by a media outlet read,” In fact, property prices across the entirety of Australia fell a whopping 0.11 per cent. “
That whopping 0.11 per cent equates to just below $900 across a median-priced property in Australia. It sure does read better than Australian properties prices drop $900 shortly after growing by $200,000.
In all seriousness, nationally median values are dropping, but anyone investing using national figures as a guide or benchmark will be headed for a world of hurt.
Is There Still Money to be Made in Property?
Several markets continue to achieve capital growth currently around Australia. Whilst it’s not the 20% of 2021, gains of almost 0.5% were still achieved in Brisbane in May.
It’s important to remember that the RBA’s recent interest decision of a 0.5 per cent increase was designed to deliver a certain level of “shock factor” to slow down Australia’s rapidly growing economy. Therefore, it’s likely that there will momentary slow down as people adjust.
In the quarter of April – June 22, Brisbane saw a 2.7% rise in median values, whist other Australian cities such as Adelaide and Perth also saw an increase in their property prices.
Sydney and Melbourne did experience downturns in median values. However, they weren’t nearly as severe as the media has reported. Melbourne experienced a 1.8% drop, whilst Sydney saw property prices drop by 2.8%. Considering their relative price points, this is merely a correction and, again, is not something unexpected. This is quite normal and is all part of the property cycle.
What is the Key to Making Money in Property in the Second Half of 2022?
Are you only looking to make money over the next six months and then cash out? If so, then perhaps you should be looking at the roller coaster of cryptocurrency?
At Wealthology, we are experts in guiding clients in acquiring wealth through safe and long-term financial strategies.
Using residential property as the vehicle, we have guided countless Australian families into financial security.
Let us help you too.
