About once a week I get asked, “Nhan, what do you think is going to happen to the market?”
Of which my standard reply is : “It depends…” In truth having a crystal would be brilliant…
All I can do however is look at indicators, which gives me HISTORICAL data, and some
PROJECTED DATA…I read recently (in a book written by one of the founders of Paypal)
that “predictions say more about the predictor than anything else”.
That was a huge insight for me, I’d never looked at it this way before…my predictions in the
past really showed how conservative I am, and risk averse too, especially when markets
are bouyant and everyone is getting into “property development” when they can smell a
But before I show you some cool stuff, check out these 2 links about the Market’s
sentiment on the Sydney Market:
Article 1: Click Here to Read
Article 2: Click Here To Read
Here are a couple of indicators to check out:
1. Auction Clearance Rates: This is a really good “on the spot” check to see what people
are doing, via their spending. Part of this is knowing what is typical for the state. Vic and
NSW are happy to buy at auction, whereas Queenslanders prefer private treaty .
Also VIC and NSW often have over 1000 auctions each weekend whereas Qld has alot
less, checkout the clearance rates here: https://www.realestate.com.au/auction-results/
2. Development Approvals / Masterplans: This is a more of predictor of supply in the
short/medium/long term and access to this information will be different from state to state.
Units/apartments are generally oversupplied in the CBD first, whereas land oversupply
happens much further afield. Here is a cool link : https://brisbanedevelopment.com/
3. Postcode Restrictions (Financier): You may have to speak to your finance broker/
banker regarding getting this information, but I believe it is critical to get it. Banks know
exactly how much exposure they have to certain postcodes/suburbs, and talk about
being conservative, these guys win hands down. They know what is being lent and
when to restrict lending. Note “restrict”, not “stop” lending. They will continue to lend,
just at lower LVR ratios (more deposit required) to reduce their risk and increase the
investor’s risk. At the moment, CBD lending as well as certain mining towns require
more deposit due to various oversupply situations.
In summary do your homework and remember:
“You Make Your Money When You Buy, Not When You Sell”
Because when you sell…the market may have changed for the worse and you will
be left holding the baby!!!
Til next time,
PS: Our office will be closed from 21st December until 4th January 2016.