Our guest today: Chris Gray from YourEmpire.com.au.
Kevin: We take the opinion in the show of yet another one of our experts, Chris Gray from YourEmpire.com.au.
Chris, your take on the 2016 market – where do you think it’s headed this year?
Chris: Look, it obviously depends on where you are. There are lots of different property markets around Australia. But I think if you’re in the main markets of the Sydney, Melbourne, and Brisbane, then I think a lot of people are going to look back and say, “That was another great year. We maybe made 5% or 10% capital growth over the time, and so, yes, we should be pretty happy.”
Kevin: That was going to be my question. What do you think we’ll be saying about the market this time next year? You think we’re in for probably not a stellar year, but certainly a year when we’re not going to lose a lot of money?
Chris: Again, it really does depend on what market you’re in. I quite often look at the SQM research by Louis Christopher and his results. He was certainly predicting some pretty good property results for Sydney, Melbourne, and Brisbane. Obviously, some of the other markets – like Perth and Darwin – are not as great.
But I think it’s possible to make money in pretty much any market. Even if you’re in those markets that aren’t predicted to do wonderful things, then there are still opportunities there.
Kevin: What were the surprises for you in 2015? Were there any?
Chris: The biggest thing for me was probably APRA. For those people trying to get a mortgage, APRA came in, and they were worried about trying to cool the market and not get a boom going certainly in the Sydney market, so they put a lot of restrictions on people.
Some people, it didn’t affect at all. But other people, including myself, it did affect temporarily. That was the biggest thing. If you were just about to refinance, whether you did it one week or the other, could have made a massive difference.
Kevin: Of course, the markets that would have been probably most affected by that were the off-the-plan markets, as well, where people may have gotten approval to purchase and then found that the bank’s attitude toward lending the money had changed not long before settlement.
Chris: It’s the thing most people still haven’t realized yet. A lot of people were talking about the Brisbane market and the thousands of apartments that have been sold off the plan, but those people may not realize they’ve got a problem for another 6, 12, or even 18 months, depending on how long it goes on.
Kevin: Yes. They should be checking with their bank now, I would have thought.
Chris: Exactly. One thing I always say with the off the plan properties is get a valuation now. If you’re going to settle in 6 to 12 months, rather than have an issue at that time, just before you try and settle it, get a valuation now or from the local agent or even the developers because if you’re not going to get that property valuing up as to what you wanted, you’ve now got 6 to 12 months to try to fix the problem.
Kevin: What are the markets you’re going to be watching in 2016, Chris?
Chris: I’m very consistent with mine. My plan doesn’t change from year to year. It sounds very boring. It’s not news-worthy, but it’s just consistent. I’m going to carry on investing in the Sydney market. I still think if you’re into Melbourne or Brisbane, you need a cheaper market, and then I think there’s plenty of opportunity there.
I basically just keep refinancing every year. I pull my money out. I keep some as a buffer. I reinvest some. Literally, as they call in shares of dollar cost averaging, I just try and buy consistently from year to year.
Kevin: What are the market indicators you look at before you’ll invest in a property?
Chris: Most of mine is consumer confidence. Sure, you have interest rates, you have clearance rates. But even the experts at Residex, RP Data, and SQM, it’s all in the interpretation. I even had the head of News Limited for advertising saying, “Oh, Chris, the clearance rate is coming down. You must be happy.”
I said no, because two-bedroom units in Coogee, Bondi, and Clovelly are at 100% clearance rates all the time. When the clearance rate comes down, it’s all the properties that are on the wrong side of the street or without parking, which are the ones that sold in the good times but aren’t selling now. Clearance rate doesn’t really affect me in all honesty.
I worry about are people still confident? Are they still thinking long term that property is the way to go? But to be honest, I don’t really care about that either. I’d still just continue to buy. If you by the right property at the right price, whether it’s GFC or boom, it’s still a good time to buy.
Kevin: Chris Gray, thank you so much for your time. All the best for the New Year, Chris, and we’ll look forward to talking to you during 2016. Thanks, mate.
Chris: Great. Thanks a lot.