downside risks to Australian property prices<\/a>, SMATS Group executive chairman Steve Douglas said investors should be positioning themselves to prosper from further future growth.<\/p>\nMr Douglas said the main factor shaping his opinion was that Australia\u2019s national property price growth of 25.3 per cent in the 12 months to the end of October was that the vast majority of the buyer demand had been coming from owner-occupiers.<\/p>\n
\u201cIt\u2019s not an investor-driven surge, it\u2019s absolutely owner-occupiers looking for a place to live that\u2019s better than what they used to have to survive any future COVID lockdowns or issues,\u201d Mr Douglas said.<\/p>\n
\u201cWe are also seeing a lot of activity by owner-occupiers because the low interest rates mean that it is now cheaper to own a property than it is to rent one.\u00a0<\/p>\n
\u201cHave you missed the boat? I don\u2019t think so; I think we are at the beginning of this push, not the end, and that\u2019s because it\u2019s not a boom or bust mentality, this is genuine demand with lack of supply, with a market where one of the biggest stimulation factors, population growth, is at record low levels.\u201d<\/p>\n
Mr Douglas cautioned, however, that Australian property markets were not without risk.<\/p>\n
\u201cYou\u2019re going to have to buy something that is really nice at a price\u00a0 that is more than you are willing to pay, but you have got strength in the quality of that asset,\u201d he said.<\/p>\n
\u201cBut if you just go \u2018that\u2019ll do\u2019 and pay a crazy price for it, I\u2019m not sure you will be happy with that decision later on.\u00a0<\/p>\n
\u201cWhatever you buy, recognise that there is risk and the single best way to mitigate risk is through quality. Buy the best property you can afford, whether its location, size, view, features, whatever it is, get the best property you can afford and then enjoy it, that\u2019s the key.\u201d<\/p>\n
For prospective investors, Mr Douglas said now was a good time to buy in any Australian market, even as many remain on the sidelines unwilling to purchase because of the recent rises in values.<\/p>\n
He said migration was currently on pause, but with borders starting to open and movement between states likely to be free within the next few months, a significant amount of capital was ready to start flowing into Australian property.\u00a0<\/p>\n
Mr Douglas urged investors, however, to act judiciously when they are considering what sort of property to buy.<\/p>\n
\u201cJust always be mindful that the key decision-maker at the moment is lifestyle, so pick a property that is extremely liveable, is extremely well-located and the best value you can get for your budget,\u201d he said.<\/p>\n
\u201cOne of the things that you do want to be mindful of is what I call the release and relocate bonus.\u00a0<\/p>\n
\u201cParticularly in NSW and Victoria, people are selling their properties in good quality high value suburbs and then relocating to Queensland.<\/p>\n
\u201cFor those buyers, everything in the Queensland market is unbelievably cheap.<\/p>\n
\u201cThose people with money are not going to buy second-rate property. They\u2019re not going to buy other people\u2019s mistakes. They are going to want to buy the best properties in the best suburbs and they\u2019ve got the cash to win at auction.\u00a0<\/p>\n
\u201cIf you want to be in that market then they will take you on the ride to more profit.\u00a0<\/p>\n
\u201cThat\u2019s what you want to look for, you want genuine buyers looking for genuine homes to live in and upgrading their lifestyle because they can afford to.\u201d<\/p>\n
The easiest way to identify which sub-markets to look at is to follow the money, Mr Douglas said, and look at where expats are buying in Sydney, or where upgraders are buying in Perth, as two examples.<\/p>\n
\u201cLook at where the money is going because the money will take profit with it. It will improve suburbs and drive regeneration … it will do all sorts of wonderful things that usually end up in higher than average profit.<\/p>\n
\u201cThat\u2019s what you want to do, enjoy the lifestyle, get a better area, maximise your budget and you\u2019ll be fine if you make the right choice on the right property.\u201d<\/p>\n
For those concerned about the prospect of higher interest rates, Mr Douglas said Australia\u2019s lending regulations had ensured that the availability of cheap credit had not created a property bubble.<\/p>\n
While he said higher interest rates would impact the market to an extent, the sheer numbers of people in a low debt or a no debt position meant that any change in the cost of finance would only affect certain market segments.<\/p>\n
Looking forward to 2022, he said genuine buyers with capacity would underpin further gains, but not at the same rate as what occurred this year.<\/p>\n
\u201cI would suggest that it\u2019s not going to be double digits, growth should temper back to sub-10 per cent growth.<\/p>\n
\u201cHopefully it will be in the range of 6 per cent to 8 per cent, which is sensible and moderate.<\/p>\n
\u201cThe market will naturally readjust and it\u2019s hard to get double digit growth on top of double digit growth.\u201d<\/p>\n
The other factor that will drive price growth is housing supply, Mr Douglas said, with building approvals starting to trend down since government stimulus packages had been wound up.<\/p>\n
\u201cThere aren\u2019t enough approvals coming through now to satisfy the market,\u201d he said.<\/p>\n
\u201cLuckily we are at a time when migration is low, but it has a knock-on effect.\u00a0<\/p>\n
\u201cIf it\u2019s not getting approved now it\u2019s not going to be delivered in two to four years\u2019 time when migration normalises and people start coming back in.<\/p>\n
\u201cThere is a big problem brewing here which is bad if you are waiting to buy but it is fantastic if you have already bought.<\/p>\n
\u201cThese are factual elements that are keeping the market very strong in a real sense.\u00a0<\/p>\n
\u201cIt\u2019s not hope or a wish, it\u2019s not a speculator\u2019s dream, it\u2019s in a real sense, and that\u2019s why I\u2019m so confident in the Australian property market and I\u2019m sure we\u2019ll have a very good year next year.\u00a0<\/p>\n
\u201cIt won\u2019t be as strong as the last year, which was phenomenal, but it will be a good year of at least 6 to 8 per cent growth in every state.<\/p>\n
\u201cI\u2019ve picked Queensland to be the star, with all that money flowing from other states, and WA will hopefully continue its recovery because it\u2019s been waiting a long time for that.\u201d<\/p>\n<\/p><\/div>\n
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