Our guest today: Patrick Bright from EPS Property Search and Property Management.
Kevin: Another one of our experts joining us to give us his impression of what the 2016 market is going to look like is Patrick Bright, who is a buyer’s agent from EPS Property Search and Property Management. They are Sydney’s number one buyer’s agency.
Patrick: Thanks, Kevin.
Kevin: Let’s have a look at what your thoughts are for 2016. But before we do, let’s have a look back at 2015. Any surprises in there for you?
Patrick: Yes. I think I was a bit surprised at the level of growth that we’ve had in Sydney for 2015 off the back of such a strong 2013 and 2014. Yes, I was a little surprised at the strength of the market that we ended up having.
Kevin: Were you able to ride that wave?
Patrick: Absolutely. I’ve been very happy, and our clients have been very happy. It’s been a good three years.
Kevin: They were happy surprises, weren’t they? Obviously, you got it right in Sydney. Were there any markets apart from Sydney that stand out for you, either as a disappointment or as a pleasant surprise?
Patrick: From a disappointment point of view from 2015, the things that highlight it for me when that comes to mind is the fact that the New South Wales government had a chance to stamp out dummy bidding and underquoting, and all they’ve done is formalize it with their new legislation that’s coming in and just starting this month. The federal government’s enquiry into foreign investment, too, was a bit disappointing. Those are probably the low lights. But otherwise, I thought the market was a good year.
Kevin: Yes. One does wonder about those rules with regards to bidding and underquoting and so on. There were some good case studies around Australia, particularly in Queensland, where the state government of New South Wales certainly could have gone that way, Patrick?
Patrick: Exactly. I think what they’ve done is that the rules that have just come into play essentially formalize underquoting. It’s not going to get rid of dummy bidding. They’re tinkering at the edges again.
Kevin: Well, back to the markets. What do you think we’re going to be saying this time next year about the 2016 market?
Patrick: Look, I’m someone who is not as stressed or worried about what the individual intricacies of the market will do year to year. I’m more of a buy-and-hold, long-term investor. If you stick with tried and tested fundamentals, you don’t speculate, you look for properties that you can add value to cost effectively, you buy in land-locked areas, areas where people want to be, where population is growing – the old supply and demand factor – if you do that, you’re going to be very happy over the medium and long term.
Kevin: What advice would you have for anyone who wants to start their portfolio? Basically, what you’ve just said is pretty good advice. Anything you can add to that?
Patrick: Yes. Markets to watch, things to watch out for for 2016 that always worry me: avoid anything that’s written up as a hot spot, especially if it’s in a property investment magazine or a newspaper. Any of these lists like “the top 100 properties coming up,” avoid that. If you avoid that, you’re actually going to be in front because most of those suburbs that are named underperform the average for those areas.
Now, I know that they do this because I check them from time to time and I’ve had conversations with the editors and journalists who write these magazines. They’ve told me that when they’ve gone to revisit the lists from a few years ago, it’s too embarrassing to publish the findings.
Kevin: It’s unfortunate, Patrick, because that is, in fact, what a lot of people think they need to chase, and that is the next hot spot. It’s almost like “I just want the quick fix.”
Patrick: Yes, that’s what people do. They know that they want the sugar hit. They want the above-average return. Unfortunately, they’re not going to get it doing that. They’re taking a speculative risk.
You’re better off buying and holding, sticking to investment fundamentals because we know that chasing these hot spots, they might be a hot spot now… The mining town is a great example. For about three or four years, they’re written up as the best spot to be. All these so-called experts are saying, “Buy here. Buy there.”
But a lot of these areas that were written up as recently as five years ago, two or three years on are actually halved in value, and they have 12%, or 14% vacancy. It’s there. The examples are there, but you’re not seeing them revisited.
Learn from history, people. Don’t go and follow these hot spots. If it’s being written up as a hot spot, it’s too late. The smart money has been made. It’s known in the industry that a lot of magazines and newspapers are advertorials and space is bought by big developers and marketing companies with something to sell.
You just have to have that awareness. Don’t trust everything that you see that’s written up. Check it out. Test it.
Kevin: That’s a great piece of advice, and we’re going to leave it on that note. Patrick, I want to thank you.
I look forward to catching up with you again as the year 2016 progresses, and thanks again for your time, Patrick.
Patrick: Pleasure as always, Kevin.