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What\u2019s ahead for our property markets in 2022?<\/strong><\/p>\n Clearly, there will be continuing issues with Covid 19 affecting our local economy, and the socio-political problems that plagued the world last year plagued the world last year are unlikely to disappear.<\/p>\n Yet most analysts and economists agree that our property markets should continue to perform strongly in 2022. Sure property values grew significantly over the last year, in fact, house prices are up 22% around Australia over the year, and even more in certain locations.<\/p>\n But let\u2019s put this in context\u2026<\/p>\n Australia\u2019s property markets had been sluggish for the previous three years.<\/p>\n This started with the APRA<\/a>-induced credit squeeze prior to the Haynes Royal Commission into Banking in 2018, followed by the fright of a Labour government changing property tax laws in 2019, and finally the Coronavirus induced property market lockdowns of 2020.<\/p>\n Then in October 2020, our property markets started moving out of their downturn phase driven by falling interest rates, pent-up demand, and rising consumer confidence that we were getting through our Covid related challenges.<\/span><\/p>\n So what\u2019s ahead for property in 2022 and beyond?<\/span><\/strong><\/p>\n There are clearly signs that some of the heat is coming out of our property markets and while there are still many active buyers, for the first time since the pandemic began, the strong ramp-up in new listing says given them more choices.<\/p>\n While price growth has peaked, I still see property values rising throughout 2022, but eventually, this cycle will end, so I\u2019d like to look back and share 10 lessons I learned from previous property downturns that could be helpful in 2022.<\/p>\n Whether it\u2019s property, shares, or bitcoins \u2014 booms just don\u2019t last forever, neither do downturns.<\/p>\n The thing is, downturns are just one part of a cycle, so they will always end at some point.<\/p>\n Every boom sets us up for the next downturn, just as every flat period provides opportunities to get set for the next upturn.<\/p>\n The trick is to maximise your upside while preparing yourself for the next downturn.<\/p>\n 2. Stick to your strategy<\/span><\/h2>\n Don\u2019t change your long-term investment strategy because of short-term factors.<\/p>\n Look for what\u2019s always worked, rather than what\u2019s working now.<\/p>\n Your long-term wealth will be created by the capital growth of your property portfolio increasing your asset base.<\/p>\n Sure, cash flow is important \u2013 it will keep you in the game.<\/p>\n But it\u2019s capital growth that will get you out of the rat race.<\/p>\n Let\u2019s be honest, almost anyone could have made money during the boom years as the market covered up any mistakes.<\/p>\n But as Warren Buffet says: \u201cYou only find out who is swimming naked when the tide goes out.\u201d<\/em><\/p>\n In other words, if you\u2019re not following a strategy that works in all market conditions you will be caught naked when the market changes and it will \u2013 because as always the good times we\u2019ll experience in the next few years will also come to an end.<\/p>\n Successful property investment takes time.<\/p>\n Be wary because, just like at the beginning of every other property cycle, there\u2019s a new breed of spruiker out there looking to lure the uneducated into parting with their money by offering them a shortcut to riches.<\/p>\n Don\u2019t let emotions drive your investment decisions.<\/p>\n Remember in early 2020, during the peak of the scare regarding Covid19, when the fear started to rear its head.<\/p>\n People who had made poor investment decisions, or those who bought near the market peak, started to panic.<\/p>\n Then, as the market picked up, FOBE (the fear of buying early) kept home buyers and investors out of the market, they were worried that property prices could still drop further.<\/p>\n Then throughout 2021 as it became clear that our markets are on the move again, FOMO (the fear of missing out) set in \u2013 many homebuyers and property investors were concerned that the market will take off before they get a foothold.<\/p>\n Let\u2019s face it: emotions of any kind are not a good idea when investing.<\/p>\n The secret is to keep your eye on the long-term horizon and not worry about any short-term vagaries of the market, because they will pass.<\/p>\n Strategic investors don\u2019t only buy real estate\u00a0\u2014 they buy themselves time by having the correct finance structures in place including cash flow buffers to ride through the cycle.<\/p>\n Since the bulk of your property\u2019s performance will be determined by its location, rather than looking for somewhere cheap to buy, find a location where local economic growth will lead to jobs growth, wages growth, and population growth.<\/p>\n Look for a suburb where the local demographic can afford to and will be willing to pay for their properties because they earn high disposable incomes.<\/p>\n And in these post-Covid times, locations that will outperform will be desirable, aspirational suburbs that offer mobility and proximity.<\/p>\n By proximity I mean the ability to work, live and play all within 20 minutes\u2019 reach will be the new gold standard desirable lifestyle.<\/p>\n It seems that in our new \u201cCovid Normal\u201d world, people love the thought that most of the things needed for a good life are within a short public transport trip, bike ride or walk from home.<\/p>\n Things such as shopping, business services, education, community facilities, recreational and sporting resources, and some jobs.<\/p>\n We\u2019re in for a 2-tier property market moving forward.<\/strong><\/p>\n While most property markets around Australia have performed strongly so far this cycle (other than the inner city of high-rise apartment market), it\u2019s important to realise that moving forward we are likely to have a 2-tier property market.<\/p>\n In other words, not all property markets will continue growing strongly moving forward.<\/p>\n Properties located in the inner and middle-ring suburbs, particularly in gentrifying locations, will outperform cheaper properties in the outer suburbs.<\/p>\n While the outer suburban and more affordable end of the markets have performed strongly so far, affordability is now becoming an issue as the locals have had minimum little wages growth of the time when property prices have boomed.<\/p>\n In these locations, the residents don\u2019t have more money in their pay packet to pay the higher prices the properties are now achieving.<\/p>\n More than that, Covid19 has adversely affected low-income earners to a greater extent than middle and high-income earners who are likely to recover their income back to pre-pandemic levels more quickly, while many have not been hit at all.<\/p>\n Also, high-rise apartment towers in our CBDs, which were already suffering from the adverse publicity of structural problems prior to Covid19, will now become the slums of the future as they are shunned by homeowners and investors.<\/p>\n And as we start to emerge from our Covid Cocoons there will be a flight to quality properties and an increased emphasis on livability.<\/p>\n As their priorities change, some buyers will be willing to pay a little more for properties with \u201cpandemic appeal\u201d and a little more space and security, but it won\u2019t be just the property itself that will need to meet these newly evolved needs \u2013 a \u201cliveable\u201d location will play a big part too.<\/p>\n To many, liveability will mean a combination of:<\/p>\n A healthy ego can be a good signal of future success.<\/p>\n However, an over-inflated ego will usually mean you end up worse off than when you started.<\/p>\n If you\u2019re the smartest person in your team you\u2019re in trouble, so recognise that mentors and experts can help teach you the things that you don\u2019t even know that you don\u2019t know.<\/p>\n A big bank balance means someone\u2019s rich, right?<\/p>\n Many high-income earners live from one pay to another \u2014 and never have enough money \u201cleftover\u201d to invest in income-producing assets.<\/p>\n The truly wealthy not only have a capital growth portfolio behind them, but they have also learned that money is not wealth.<\/p>\n That\u2019s why they make time for their family and their health, and they give back to society and to their local communities because that is where true happiness lies.<\/p>\n And these lessons were brought home clearly to many of us as we were huddled in our Coronavirus cocoons.<\/p>\n When the good times seemingly turn bad the property pessimists and doomsayers come to the fore.<\/p>\n These \u201ccommentators\u201d predict the end of the financial world suggesting we should all sell up and hide under a rock.<\/p>\n On the other hand, sophisticated investors ignore the white noise because they are concentrating on the long-term, where the view is calm and clear.<\/p>\n Think about it\u2026 How often do we have to hear \u201cthis is the end of the world as we know it\u201d<\/em>\u00a0until we realise this is not the end of the world as we know it?<\/p>\n When the opportunity arises, strike.<\/p>\n Remember Warren Buffet\u2019s words: \u201cBe fearful when others are greedy and greedy when others are fearful.\u201d<\/em><\/p>\n Sure it\u2019s difficult to take action when others around you are talking doom and gloom, but it is during downturns that lifetime wealth is made.<\/p>\n So while the best time to buy a property may have been 20 years ago, the second-best time to set yourself up for financial independence and buy investment great property is right now.<\/p>\n But don\u2019t expect a bargain, as well located investment-grade properties are in strong demand as, Like after every downturn, there is now a flight to quality my buyers.<\/p>\n However, that property that seems reasonably expensive today will look like a bargain when you look back in a decade.<\/p>\n Strategic investors don\u2019t really care too much about market phases.<\/p>\n Instead, they concentrate on growing their portfolios and investing in the right type of properties, whenever it suits their finance, their strategy, and their long-term goals.<\/p>\n Over 2021 there was been a palpable change in market sentiment and this was reflected in strong buyer activity at a time when there is a little good stock on the market.<\/p>\n Moving forward, in 2022 there is likely to be the greatest selection of properties available, so don\u2019t let FOMO allow you to make bad decisions.<\/p>\n Only buy A-grade homes or investment-grade properties.<\/p>\n You can\u2019t expect to get wealth producing rates of returns from secondary assets<\/p>\n ALSO READ: <\/strong><\/span>I would have been a better property investor if I knew these 12 things earlier in life<\/a><\/p>\n![\"2021](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2021\/12\/2021-2022.png\")
<\/a><\/p>\n<\/a><\/p>\n1. Property booms don\u2019t last forever<\/span><\/h2>\n
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3. Get rich quick = get poor quick<\/span><\/h2>\n
4. Take a long-term perspective<\/span><\/h2>\n5. Property investment is a game of finance with some houses thrown in the middle<\/span><\/h2>\n
6. Invest in locations with a future, not a past<\/span><\/h2>\n
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7. You know less than you think you know<\/span><\/h2>\n
8. Don\u2019t mistake money for wealth<\/span><\/h2>\n
Well, no, it doesn\u2019t.<\/p>\n9. The sky isn\u2019t falling<\/span><\/h2>\n
10. Opportunity is knocking<\/span><\/h2>\nThe Bottom Line:<\/span><\/h2>\n
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