{"id":13613,"date":"2017-08-29T01:00:47","date_gmt":"2017-08-28T15:00:47","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=13613"},"modified":"2017-08-29T01:00:47","modified_gmt":"2017-08-28T15:00:47","slug":"where-is-the-property-cycle-right-now-damian-collins","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/where-is-the-property-cycle-right-now-damian-collins\/","title":{"rendered":"Where is the property cycle right now? – Damian Collins"},"content":{"rendered":"

What is the property cycle doing right now? \u00a0It is made more complicated because supply and demand varies so much around the country and that is what impacts the cycle. \u00a0So how do you read it?\u00a0 Damian Collins<\/strong> is our guest as he speaks from experience having witnessed the roller coaster WA market twist and turn.
\nTranscript :\u00a0<\/strong>
\nKevin:<\/strong>\u00a0 Look, we all know that there is a property cycle, but let\u2019s try to get a bit of a handle on what makes the cycle, where are we at, does it change, and what impacts it? To answer some of my questions about this, Damian Collins joins me from Momentum Wealth in Western Australia. You can catch them at their website, MomemtumWealth.com.au.
\nDamian, thank you very much for your time.
\nDamian:<\/strong>\u00a0 Glad to be here, Kevin.
\nKevin:<\/strong>\u00a0 Demystify this thing for me, the property cycle. What\u2019s a cycle in period of time?
\nDamian:<\/strong>\u00a0 Kevin, the property cycle is generally over a longer period of time \u2013 anywhere from 5 to 12 years \u2013 and during that cycle, you will have periods of time where property demand is outstripping supply and then you will have periods also where supply is outstripping demand.
\nOne of the big important things with property is it takes so long for a product to come to market. If you want to provide more properties, developers bring them to market. By the time they get them through planning systems and so forth, it\u2019s a couple of years, and that\u2019s why you can have then, periods \u2013 like Sydney and Melbourne, particularly in the last couple of years \u2013 of seeing a shortage of stock and that has caused their prices to go up. Conversely, in Perth particularly, but to a lesser extent Brisbane, we\u2019ve seen an oversupply in the mining era. That has caused too much supply, and that has caused their prices to stagnate or even decline.
\nKevin:<\/strong>\u00a0 There is no one property cycle. We\u2019re all at different stages in different parts of the country, aren\u2019t we?
\nDamian:<\/strong>\u00a0 Definitely. You would suggest that Melbourne and Sydney, if you look at the old economic clock or the circular clock, they\u2019re towards their peak of their cycle, if not at the peak, and Brisbane and Perth \u2013 and particularly Perth \u2013 are at the bottom. Brisbane really hasn\u2019t done much in this last cycle, so I think that has still got some legs.
\nBut also, Kevin, interestingly, even different types of property within a market can have different cycles. In Perth at the moment, some sectors are running very strongly; other sectors are running very softly. In Brisbane, we\u2019ve certainly got oversupply issues with apartments but general houses are still going okay.
\nYes, there\u2019s not one property cycle across the country, and even in a particular city, there are different cycles within the property market as well.
\nKevin:<\/strong>\u00a0 When you are looking at investing for the people who work with you, is the cycle one of the things that you look carefully at and try to pick where a market is and where it is likely to go?
\nDamian:<\/strong>\u00a0 Definitely. Look, when you\u2019re investing in property, generally, for our clients and most people out there, for passive investment, you\u2019re looking generally at a ten-year time frame. So, the first point is to go down to what are the best locations that are likely to out-perform over a ten-year period? We have a number of cities, four major cities in Australia, that have the demographics, the population growth, the industries to sustain long-term property price growth.
\nBut then, from there, you start to look at where are they in the stage of their cycle? For Sydney and Melbourne for the last 18 months to two years, they have been getting towards the top. Who knows exactly when that is going to finish. Obviously, Brisbane has gone up a little bit, and Perth has actually come back a little bit over that last 12 months. So, you do certainly look at that.
\nI guess it still comes down to investors\u2019 confidence. A lot of investors still like to stick with their home city. And if you have got a ten-year horizon and investing in Sydney, Melbourne, Brisbane, or Perth, I think you are going to do pretty well, but it is nice to get that free kick of a nice 15-plus percent upswing if you get in early enough in the cycle in that particular city.
\nKevin:<\/strong>\u00a0 Yes, I guess you wouldn\u2019t be terribly concerned about the cycle if you were really in the market \u2013 not trying to time the market necessarily but just spending time in the market, Damian?
\nDamian:<\/strong>\u00a0 That\u2019s right, Kevin. I\u2019ve seen a lot more money lost by people trying to time the market than by buying at the wrong time, particularly again, in major cities. Obviously, a difference in regional areas where they can be far more volatile, but in major cities, I\u2019ve seen people hold out and go \u201cOh no. I will wait for it to drop.\u201d Well, property doesn\u2019t often drop, and when it does drop, residential in the major cities doesn\u2019t generally drop a substantial amount. I have seen people wait and wait, and they end up often doing nothing, and they miss out potentially 30% or 40% growth over a cycle.
\nCertainly, everyone wants to buy at exactly the bottom of the cycle and sell exactly at the top. It\u2019s just realistically not likely to happen, and the best thing to do is when you\u2019re ready and comfortable, as long as you have a long-term horizon and do your research, look carefully and get into the market.
\nKevin:<\/strong>\u00a0 You have mentioned earlier in our chat that supply and demand is a big indicator. Is that, in fact, one of the major indicators about what\u2019s going to happen on that clock?
\nDamian:<\/strong>\u00a0 It definitely is. Your demand is driven by population growth. That is the big one, and that\u2019s one of the reasons why Melbourne is strong \u2013 their 100, 000+ population growth a year. Sydney is not far behind.
\nSo, you have population, but to get the population growth, you need strong industries. The mining cities did very well in the mining boom. Obviously, that has tapered off, but actually, the mining sector is starting to recover again, so we\u2019re starting to see marginal changes in population there.
\nSo, you need the population growth, the industries, but of course, as I said earlier, the developers start releasing more land or bringing more apartments to market, but because there is such a long time period, often by the time they\u2019ve built them, the cycle could have changed.
\nBut I think one of the big things is an intangible one. It\u2019s not just about number of houses and jobs; it\u2019s confidence. Sometimes you do see people, particularly when they\u2019re in that particular market, the confidence is perhaps over-optimistic or too pessimistic. It\u2019s very much human nature; we tend to look at most recent history. People in Sydney and Melbourne at the moment, probably think it is going to keep going up forever, and people in Perth have the negative mentality, \u201cOh, it\u2019s never going to go up again.\u201d
\nHistory shows it always recovers and always peaks again. It\u2019s been doing that for hundreds and hundreds of years, and it won\u2019t change because that\u2019s the nature of humans.
\nKevin:<\/strong>\u00a0 Always good talking to you. Damian Collins, from Momentum Wealth. Thanks for your time, Damian.
\nDamian:<\/strong>\u00a0 Pleasure, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

What is the property cycle doing right now? \u00a0It is made more complicated because supply and demand varies so much around the country and that is what impacts the cycle. \u00a0So how do you read it?\u00a0 Damian Collins is our guest as he speaks from…<\/p>\n","protected":false},"author":176692471,"featured_media":14746,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[32,10,11,13,36,22,25],"tags":[101],"class_list":["post-13613","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-property-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-research-topic","category-sponsored-channels","tag-podcast"],"yoast_head":"\nWhere is the property cycle right now? - Damian Collins - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/where-is-the-property-cycle-right-now-damian-collins\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Where is the property cycle right now? 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