Michael Yardney<\/strong><\/a>, from Metropole Property Strategists,\u00a0gives us his take on that situation.<\/p>\n <\/p>\n
Transcript:<\/h4>\n
Kevin<\/b>:\u00a0 According to a report by economic forecaster BIS Shrapnel, Australia\u2019s house prices are expected to begin declining by 2017. It\u2019s a fascinating report. I want to get an insight into this.
\nJoining me to discuss that, Michael Yardney from Metropole Property Strategists. Michael, you\u2019ve seen that report. What\u2019s your take on that?
\nMichael<\/b>:\u00a0 Well, BIS Shrapnel has got a good track record of predicting markets, I guess, as good as anyone else. Sometimes they get it right, sometimes they get it wrong. But I think this time, the claim that this cycle will end in 18 months to two years is pretty spot on.
\nKevin<\/b>:\u00a0 What\u2019s the trigger behind this, Michael?
\nMichael<\/b>:\u00a0 Well, let\u2019s maybe talk about what\u2019s going to be ahead, and then we can see what\u2019s going to cause it. I think this next year or so, we\u2019re going to have some interesting times economically in the world. Recently, Greece has had its financial problems, and then China has. The world is having some economic challenges, which will impact on Australia.
\nSome people are even suggesting Australia is going to need one or two months of recession where our economy slows down in response to that. What that means is interest rates are going to remain low and probably drop one more time.
\nIn that context, I believe that our property markets are going to continue doing well, driven by lowish interest rates, but there will be some challenges with some consumer confidence, just with all the bad news happening.
\nBut what will eventually finish this cycle \u2013 like every other cycle \u2013 is when interest rates go up, and that will happen when eventually, after all the bad times, the good times start occurring and our economy starts to pick up and our property markets go up even further. So, there are some good times ahead before the markets ease.
\nKevin<\/b>:\u00a0 Michael, I\u2019m going to ask you before we conclude our chat here today to take a long-term view for me and tell me what you think is likely to happen in the future, but I\u2019d just like to know how we can prepare ourselves for a market slowdown if it\u2019s ahead.
\nMichael<\/b>:\u00a0 The market is made up of multiple submarkets and multiple states, so when eventually things slow down, different segments will be affected differently. As interest rates go up, I believe that the first-home buyers will have their challenges. It\u2019s likely with some economic challenges that regional and smaller areas and areas not underpinned by multiple pillars of the economy are going to have their challenges.
\nOne way to prepare is owning the right properties in markets that are going to still remain strong. Avoid first-home owner markets. Avoid second-rate properties, which end up having challenges when the markets turn. Avoid regional areas. And really be careful of off the plan because one of the things in the BIS Shrapnel report is that in the future, they see an oversupply of the inner CBD apartments that are being built, in particular for the overseas investors.
\nCorrect asset allocation is number one, Kevin.
\nKevin<\/b>:\u00a0 Number two?
\nMichael<\/b>:\u00a0 I wouldn\u2019t speculate, and definitely, don\u2019t over commit financially. Like every other property cycle, this one is going to leave some investors who bought near the peak financially embarrassed.
\nThe problem is currently our markets are strong, enticing a whole lot of new people into the markets. Therefore, be cautious of what you\u2019re buying and make sure you have substantial financial buffers to see you through. In other words, have a line of credit or an offset account, so that if the market slows or the rents don\u2019t go up as much or more, particularly, if interest rates go up, you can cope with it.
\nKevin<\/b>:\u00a0 Excellent. Correct asset selection, don\u2019t over speculate, and that financial buffer, Michael, that\u2019s fairly important, isn\u2019t it? I\u2019ve heard you talk about that before.
\nMichael<\/b>:\u00a0 Well, it is. What tends to happen is that people budget and push themselves to their limits with today\u2019s interest rate, but could you cope if interest rates go up a percent or two? Fortunately, the banks are protecting us. No one likes it when the banks say no, but more banks today are actually factoring that in to make sure that you can weather the storms ahead, because this too shall pass.
\nKevin<\/b>:\u00a0 This too shall pass. I\u2019ve heard you say that before, too.
\nMichael, just in closing \u2013 another minute or so \u2013 could you just get the crystal ball out, and what\u2019s ahead?
\nMichael<\/b>:\u00a0 Well, I believe that this next financial year, 2015\/2016, we\u2019ll see much the same as what happened in the last year. Melbourne and Sydney will be the leading property markets, but Brisbane is also going to catch up a bit. Melbourne and Sydney won\u2019t grow as much, but will have single digit capital growth.
\nI think that Perth is still going to have a year of flattened, slightly falling property values. Adelaide is going to be steady as she goes, probably going along with inflation. The smaller markets like Tasmania, Darwin, and Canberra, there\u2019s nothing really behind them to drive strong capital growth at the moment, Kevin.
\nKevin<\/b>:\u00a0 Michael, always good talking to you. Thank you for your insight there. Michael Yardney from Metropole Property Strategists. Of course, you can catch up with Michael\u2019s blog, just the address there, Michael?
\nMichael<\/b>:\u00a0 PropertyUpdate.com.au, and we now have an app that you can get on the iTunes or the Google store to get daily blogs, as well.<\/p>\n","protected":false},"excerpt":{"rendered":"
Australia\u2019s house prices are expected to begin declining in 2017 according to a new report from economic forecaster BIS Shrapnel. In today’s show Michael Yardney, from Metropole Property Strategists,\u00a0gives us his take on that situation. Transcript: Kevin:\u00a0 According to a report by economic…<\/p>\n","protected":false},"author":176692471,"featured_media":5275,"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,"_wpcom_ai_launchpad_first_post":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[10,13,25],"tags":[101],"class_list":["post-5274","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-latest-story","category-sponsored-channels","tag-podcast"],"yoast_head":"\n
Prices predicted to fall by 2017 - Michael Yardney - 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\/prices-predicted-to-fall-by-2017\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Prices predicted to fall by 2017 - Michael Yardney - Realty Talk\" \/>\n<meta property=\"og:description\" content=\" Australia\u2019s house prices are expected to begin declining in 2017 according to a new report from economic forecaster BIS Shrapnel. In today’s show Michael Yardney, from Metropole Property Strategists,\u00a0gives us his take on that situation. 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