Transcript:<\/strong><\/h4>\nKevin:<\/b>\u00a0 Not getting sidelined by short-term thinking is going to be one of the big obstacles that property investors will have to look at next year. That\u2019s according to Rich Harvey, who is the president of REBAA \u2013 the Real Estate Buyer\u2019s Agents Association of Australia \u2013 and his website is PropertyBuyer.com.au.
\nRich, welcome to the show. Why do you think that\u2019s going to be a challenge for property buyers?
\nRich:<\/b>\u00a0 Thanks, Kevin. Great to be on the show again.
\nI think this year has been quite a challenging year, and next year will be probably an even greater challenge. We\u2019ve had really significant price rises in the Sydney and Melbourne market. The rest of the country is coming along in different phases. The challenge for investors is knowing where they\u2019re going to get the best return for their dollar, not just next year but for the next 10 years.
\nThat\u2019s why I talk about short-term thinking. Some people get very hung up about a statistic that might come out from a property provider and latch onto that one statistic and then make a decision only based on very short-term thinking.
\nKevin:<\/b>\u00a0 There is a lot of information available now for buyers and sellers, I guess. Has that made it a bit more difficult trying to work through what you should be paying attention to, Rich?
\nRich:<\/b>\u00a0 Absolutely. There\u2019s just so much noise out there in the media from different providers. CoreLogic will put out a report saying there\u2019s been a substantial drop in prices in Melbourne, and so everyone runs from the Melbourne market, or Sydney\u2019s due to have a crash. They\u2019re just sensational headlines.
\nYou have to look at the underlying factors that drive the two big behemoth markets, and if you can\u2019t afford those markets, there are plenty of other markets that investors and home buyers can get into around the country.
\nKevin:<\/b>\u00a0 One of the big mistakes we\u2019ve seen during 2016 is that people tend to think that it\u2019s one property market as opposed to a whole lot of different ones.
\nRich:<\/b>\u00a0 Exactly.
\nKevin:<\/b>\u00a0 Have you got a preference? Would you be investing in a house or a unit?
\nRich:<\/b>\u00a0 Great question. The answer to that question is it depends. I think generally going forward, houses will probably track at a faster appreciation rate than apartments. However, if you\u2019re buying an apartment in an area where 95% of the stock is apartments \u2013 like for example, if you\u2019re in Sydney and you\u2019re buying in Elizabeth Bay or Potts Point or Kirribilli, you\u2019re not going to be able to afford a $6 million or $7 million house in that area, so apartments will probably do equally as well in those really tightly held inner city areas.
\nDon\u2019t fall for the fallacy that land always appreciates, because you can easily go and buy a house out in the sticks \u2013 suburbs out at Longreach or Mount Isa \u2013 and do pretty poorly over time, as well. It all depends on the underlying drivers of supply and demand in the market that you\u2019re looking at.
\nKevin:<\/b>\u00a0 Do you think that we could be at risk? You talked there about units or apartments. Particularly inner city, we\u2019ve heard a lot of stories about oversupply. Do you subscribe to that?
\nRich:<\/b>\u00a0 No. Great question. I actually addressed that in my last newsletter, as well. A lot of people are asking me questions, \u201cRich, is the market oversupplied?\u201d I think there\u2019ll be little pockets of oversupply, and that doesn\u2019t diminish the whole market.
\nAn example, again back in the Sydney market, if you\u2019re looking at places like Parramatta, or Homebush, Blacktown, Liverpool, Auburn, Zetland, Mascot, those areas will potentially have a small oversupply. In fact, SQM is suggesting that we might have an oversupply of only 4000 dwellings next year and about 9000 dwellings in 2018.
\nBut you have to consider that Sydney\u2019s population is 4.9 million. So that oversupply is a very temporary blip in a long-term trend of undersupply. We\u2019ve had almost a decade of undersupply and a lot of the growth has been catch-up. Going forward we\u2019re going to hopefully get a more balanced market, and I think then regulations are tightening up now and I think you\u2019ll get to a position where we\u2019re going to be undersupplied yet again in, say, 2019 or 2020.
\nKevin:<\/b>\u00a0 How do you feel about the regional markets around Australia? Once again, I\u2019m not asking you to put them all into the one box but compare regional to cap city markets.
\nRich:<\/b>\u00a0 I think there are some good opportunities in some of the regional markets. Again, you have to exercise a lot of caution in those regional areas. Just because they\u2019re attractive to visit doesn\u2019t always mean they\u2019re going to go up. But I think as long as they have a stable economy and really good growth drivers going forward.
\nThere\u2019s small regional and large regional. What I mean by the small regional, it might be like a Mudgee or an Orange, or if you\u2019re in Queensland, it might be some of the smaller areas. The larger regionals are places like Sunshine Coast or Newcastle or Wollongong. They\u2019re much safer bets in my view because they have a bigger population base and a more diversified job market, and that\u2019s going to help drive the property market in those areas.
\nJust be really careful of mining towns. That would be my one tip. Again, sure, commodity prices are potentially recovering in some sectors, but it\u2019s just such a volatile market.
\nKevin:<\/b>\u00a0 Speaking of mining towns and mining markets, what\u2019s your feeling about the West Australian market for 2017?
\nRich:<\/b>\u00a0 I still think it\u2019s going to be pretty lackluster. I think the time to buy in the Perth market is not now. I think it\u2019s probably going to be another 12 to 24 months before you could start to look at that one. And the same for Darwin. They\u2019re the two markets that I would say are still suffering.
\nIf you want to be super countercyclical and go in two years early, then go for it, but for my money, I wouldn\u2019t be putting it there at the moment. Just too much tied to the resources sector to really go forward.
\nKevin:<\/b>\u00a0 Of course, in some of those markets \u2013 and you made that point just now about being countercyclical \u2013 there are some great buying opportunities, provided you\u2019re going to get in there for the long haul, Rich.
\nRich:<\/b>\u00a0 You have to make sure if you are countercyclical, you have to know it\u2019s not going to have a dead-cat bounce and just stay down. For my money, I like to be more conservative and know that I\u2019m going to be investing in a town that\u2019s going to have a very, very long future. So Sydney, Melbourne, and Brisbane are the three key markets that really attract most of my personal investment strategy because I know that all of those markets have a very, very long-term future. Yes, there might be some small corrections along the way but they certainly rebound with a bang and like I was saying, particularly in Sydney, and gone off.
\nI don\u2019t see it slowing down much next year. In fact, everyone\u2019s saying Sydney is going to grind to a halt. Well, I think we\u2019re going to have pretty reasonable growth next year because we have a constriction in supply.
\nKevin:<\/b>\u00a0 That probably answers my next question. My final question to you is if you were looking for a property for yourself right now, where would you be looking and what price range would you look in?
\nRich:<\/b>\u00a0 Again, it depends on your individual strategy. For me, I look for value-adding strategy. I\u2019m still looking in western parts of Sydney. Anything to do with the Badgerys Creek area, that\u2019s really going off really well. I love to buy in blue-chip suburbs where I can do a small reno. I love to try and do things where I can do a duplex. I also like the positive cash flow.
\nI really like the Brisbane market, particularly around the Logan Shire. We\u2019re doing quite a bit up there in adding granny flats where we can buy houses and get around 6% yield but adding the flat, we get 8%.
\nNewcastle, I\u2019m also pretty keen on because I think that market has some strong legs and getting really good rental returns, as well.
\nKevin:<\/b>\u00a0 Good talking to you, Rich Harvey. Thanks for your time.
\nRich:<\/b> \u00a0My pleasure. Thank you, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"
President of the Real Estate Agents Buyers Association thinks that successful investors will need to curb any short term thinking next year because they will need to start thinking about where the best returns will be in the next 10 years not just next…<\/p>\n","protected":false},"author":176692471,"featured_media":10185,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[34,10,11,13,36,17,22,25],"tags":[102],"class_list":["post-10183","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-property-investment","category-research-topic","category-sponsored-channels","tag-podcast-featured"],"yoast_head":"\n
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