The Big Picture

Posted by Dominic Cavagnino

When making a decision we are influenced by many variables. Often, the best approach is to take a step back and look at the big picture.

Common questions we are confronted with as a property investment research house include: ‘How do I secure my future?’ and ‘Where do I invest my money?’

These are decisions we need to make at some point in our lives; however, unfortunately, much of your exposure to information comes through the media, the emotive and exaggerated language of which plays a significant part in developing your perception and your decision making.

For us at Blue Wealth Property the answer to the above questions of how and where is simple: property.

For a moment, remove yourself from the perpetual chatter about oversupply and the risks of the property bubble bursting. Instead, consider that we are in a market where:

interest rates are at historic lows, so holding a property has never been cheaper
the median house price in Sydney has increased by 70% in the last four years, evidence of the market’s potential where demand inducing market fundamentals are present

With these in mind, who’d have thought that confidence in real estate would be at its lowest point on record?

A study conducted by Commsec, Melbourne Institute, suggests that only 10.5% of people now see property as the wisest place in which to invest their savings. In 1993 this figure reached 48%, dropping to only 20% in 1996.

Consider the long-term performance of property, in the table below.

	1996 – 2016 Median House Price Growth	Average Annual Growth
Sydney	373%	7.9%
Melbourne	411%	8.5%
Brisbane	247%	6.8%

The results speak for themselves.

It is now more important than ever that you as an investor seek accurate information derived from research rather than emotionally driven media reports.

Last week, the Financial Review released an article that discussed past predictions. Two and a half years ago there were warnings of a 15,000-apartment glut in Melbourne. This has now been reversed, with BIS Oxford Economics indicating that rather than a 20,000-dwelling oversupply we are seeing an undersupply of about 2,000.

Investing in an opportunity requires courage and often means operating counter-cyclically. As declared by Warren Buffet: ‘Be fearful when others are greedy and greedy when others are fearful.’

Posted by Dominic Cavagnino, on 18th Sep 2017