Want to know what the experts are tipping for 2015? Michael Yardney has been successfully investing in property since 1971 and has over 43 years of experience. He is regarded as one of Australia’s foremost leading property commentators and Australia’s most widely read property investment blogger. Jason Penna has had the opportunity to ask Michael for his thoughts on Property for 2015, his responses are both insightful and inspiring and contain excellent advice for both the novice and experienced property investor.
Michael’s new book “Michael Yardney’s Rules of Property” has been a no 1 best seller on PropertyBooks.com.au since it’s release in 2014, a property investment book that will stand the test of time and reveal new insights each and every time you read it.
1) Going into 2015 what is the biggest things on your mind that you feel may affect property prices and investor returns?
“I see 2015 as a year of lower capital growth and even more fragmented markets.” – Michael Yardney
I see falling consumer confidence reflecting in lower buyer demand for properties but this could be a good opportunity for investors with a long-term focus.
Remember what Warren Buffett said: be fearful when others are greedy and the greedy when others are fearful. In other words I see a window of opportunity for property investors with a long-term focus to take advantage of a time when others are sitting on the sidelines. Clearly our property markets were fragmented in 2014, performing strongly in Sydney and Melbourne while other regions languished. In fact they were even more fragmented than this – with only certain regions in these 2 big capital cities performing strongly. I see this trend continuing in 2015, as property markets in new homebuyer locations, blue-collar areas and regional Australia underperforming in line with a weaker economy, rising unemployment and jobs uncertainty. On the other hand there will still be a large group of Australians with rising disposable incomes because they work in the type of industries that will still be growing strongly. In general these people will work and live in the inner and middle ring suburbs of our big capital cities. These are the property locations that should still perform well in 2015.
2) It is important to know the strategies that will and won’t work well, what strategies do you feel won’t work well in 2015?
The strategies that will not work in 2015 include:
- Hotspotting – in other words looking for “get rich quick” locations. On the other hand this is never worked even if you look at the history of previously touted hotspots such as Mandarin, Moranbah, Port Headland, Gladstone and Cairns.
- Buying generic apartments in large high-rise off the plan projects – there is an oversupply of this type of property looming especially in Melbourne, Brisbane and Sydney. This will limit capital growth and rental growth
- Buying house and land packages in the outer suburbs of the capital cities. These, typically first homeowner locations, a likely to under-perform as people living in these locations are already struggling a little with their mortgages and are likely to continue to do so next year as our economy stumbles along and wages growth remains low.
- Buying properties in regional Australia with economic growth is likely to under-perform the powerhouse economies around the capital cities.
3) What property investment strategies will work well in 2015?
To ensure I buy a property that will outperform the market averages I use a 5 Stranded Strategic Approach.
- I would buy a property that would appeal to owner-occupiers. Not that I plan to sell my property, but because owner-occupiers will buy similar properties pushing up local real estate values. This will be particularly important in 2015 when the percentage of investors in the market is likely to diminish.
- I would buy a property below its intrinsic value – that’s why I avoid new and off the plan properties which come at a premium price.
- In an area that has a long history of strong capital growth and that will continue to outperform the averages because of the demographics in the area. This will be an area where more owner occupiers will want to live because of lifestyle choices and one where the locals will be prepared to, and can afford to, pay a premium price to live because they have higher disposable incomes. In general these are the more affluent inner and middle ring suburbs of our big capital cities.
- I would look for a property with a twist – something unique, or special, different or scarce about the property, and finally;
- I would buy a property where I can manufacture capital growth through refurbishment, renovations or redevelopment rather than waiting for the market to deliver me capital growth.
4) Is there any Government reforms/changes you are watching closely that may impact investors?
“I don’t see any Government reforms/changes coming into play this year.” – Michael Yardney
While there has been talk of introducing macro prudential controls limiting investor finance or removing negative gearing and more recently changes in the ability for Self Managed Super Funds to borrow to buy property investments (as recommended by the Murray enquiry), I don’t see any of these coming into play this year.
5) Your latest book Michael Yardney’s Rules of Property, has been a great success, if I was to ask for just ‘one rule’ a property investor must live by to help them stay focused what would it be?
“learn the power of personal development” – Michael Yardney
My book contains all the “Rules” I’ve learned over the years that have helped me become a successful property investors. It’s the book I would have loved to have not only when I started out investing, but also as I grew my now substantial property portfolio over the years.
People often ask what’s the one “Rule” I must really know – they want the “secret.”
Well.. the most important Rule – if I had to pick just one – and it really doesn’t get prominence in my book – the Rule I would have liked to have a better understanding of 30 or 40 years ago has nothing to do with property, tax, finance or location.
Of course all those things are important as are the 51 other rules…
But…everything changed for me and my portfolio grew exponentially when I learned the power of personal development, the importance of improving yourself and of getting mentors around me.
I know years ago when I was trying to become a successful property investor, in my effort to achieve more and more success, I discovered that my own learning and experience weren’t enough. So I started to look elsewhere and turned to books, teachers, mentors and even consultants for advice, and they all seemed to point in one direction – you can learn from history. Books recounted stories, teachers explained research, mentors taught from experience and consultants cite best practices. What this meant was that I didn’t have to start from the beginning and learn from my own mistakes. I could start where someone else had left off, I could give up my need to “do” in order to learn. In fact I could learn faster.
You see… when I first started investing I wanted to do it all myself. I guess there were two reasons behind this – one was I thought it was the best way to learn. And to be honest the second reason was that I was “cheap”. I thought it would save me money doing it all myself – in fact it cost me lots. Experience is an expensive teacher. When I recognized I didn’t have to do it myself or learn from my own mistakes – it was one of my biggest “ahas”. In fact I jokingly say some of my best thinking was done by other people.
6) Can you tell us a little about Metropole and how it may be able to help investors in 2015.
“We are a full-service property investment advisory” – Michael Yardney
The team at Metropole has been helping Australians become financially free through independent & unbiased property advice since 1979. Over the years we’ve been voted Australia’s leading Property Strategist as well as Australia’s Leading Buyers Agents, Finance Broker & Property Managers. As we DO NOT sell property we have no vested interests or hidden agendas. We help beginning investors buy their first property, experienced investors add to their portfolio and sophisticated investors “manufacture” capital growth by becoming property developers. We are a full-service property investment advisory.
Using our proven 8 step strategic approach we help our clients create financial independence by building lasting wealth through growing a high-performing property portfolio. Metropole’s 360 system has stood the test of time.
Over the years the Multi Award Winning Team at Metropole have bought, sold, financed, developed, advised, negotiated for and project managed close to $2 Billion of property transactions to create substantial wealth for their clients.
We customise solutions to meet our clients’ specific investment needs. You can find out more at Metropole.com.au
7) How can our readers learn more from you, other than your books where else can you be heard?
I suggest they join over 78,000 other subscribers and get my weekly newsletter Property Update by clicking here
I also have a daily market commentary with regular property insights from all of Australia’s that I recommend to anyone serious about property. Subscription is free by clicking here
DISCLAIMER: Information here is for general use only and should not be relied upon. One should see an accountant/financial advisor for their own personal circumstances which will be unique to their circumstances, please refer to our full legal disclaimer for more details.