{"id":6832,"date":"2016-01-22T12:00:41","date_gmt":"2016-01-22T01:00:41","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=6832"},"modified":"2016-01-22T12:00:41","modified_gmt":"2016-01-22T01:00:41","slug":"the-signs-the-experts-watch-for-a-changing-market-the-formulae-for-investing-success","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/the-signs-the-experts-watch-for-a-changing-market-the-formulae-for-investing-success\/","title":{"rendered":"The signs the experts watch for a changing market + The formulae for investing success"},"content":{"rendered":"

 
\nOur experts line up again this week to tell us what they think will happen to property in 2016. I am keen to know where they got it right last year, where they will focus on investing this year, the signs they will be look for and any advice they can give us to ensure we don\u2019t put a foot wrong this year.
\nYou will hear from renovation queen Cherie Barber<\/strong>, John Lindeman<\/strong>, Josh Masters<\/strong>, Pete Wargent<\/strong> and Jan Somers<\/strong>.
\nAnd as we try to make sense of the mixed messages about the property market, Michael Yardney<\/strong><\/a> gives us details of his formulae to work out where to invest and which properties are the best. This week he details his top down approach to select the best market.
\n <\/p>\n

Transcripts:<\/strong><\/h4>\n

Jan Somers<\/h3>\n

Kevin:<\/b>\u00a0 Welcome into the show. Once again this week, we\u2019re going to be looking at a cross range of our experts as we enter into 2016, and we\u2019ll be looking at what their views are of the market post-2015 as we go into a brand new year.
\nMy guest to start the show off this week is Jan Somers, and Jan, of course, is from a great website, Somersoft.com.au.
\nYou get a lot of feedback from people around Australia, Jan. What were they saying about 2015?
\nJan:<\/b>\u00a0 A lot of feedback. \u201cUp and down\u201d would be the key word, and depending on what city you\u2019re in. Sydney and Melbourne were just unbelievable and I think beyond anyone\u2019s expectations.
\nKevin:<\/b>\u00a0 Was that the big surprise for you, the Sydney market in particular?
\nJan:<\/b>\u00a0 It was a big surprise, just the amount of surge that continued for such a long time in Sydney. I don\u2019t usually watch a market that closely except my son had a property in Sydney that he was selling because he\u2019d been there six years and he\u2019d moved on and was going to buy somewhere else. If ever there was a property sold when the bell rings at the top of the market, he sold it on that very night.
\nKevin:<\/b>\u00a0 Oh, wow. Is that right?
\nJan:<\/b>\u00a0 I was very astutely aware that the weekend before, there was a 70% or 80% clearance rate, as they say in Sydney, and the weekend after, it had dropped to 40%. He hit the nail on the head, and that was just amazing to watch.
\nKevin:<\/b>\u00a0 Yes. Incredible stuff. Let\u2019s have a look at 2015. Were there any areas or property that you became disappointed in \u2013 in other words, you thought that they would perform better?
\nJan:<\/b>\u00a0 Yes. Because I was involved in a small development, I would have to say that building new properties, one, the construction costs were exorbitantly high, and secondly, dealing with councils was just\u2026 I would have to say it\u2019s not my cup of tea.
\nThat was very disappointing because if they do want to expand the property industry in Australia, they need to overcome those two aspects of councils dealing with developers, even small developers like myself, and just the price of construction is exorbitantly high compared to the cost of an established property these days.
\nKevin:<\/b>\u00a0 Do you find that some of the regional councils are worse than the cap city councils, or doesn\u2019t it matter?
\nJan:<\/b>\u00a0 Possibly some of the regional ones who are trying to encourage growth might be a little bit easier to deal with than those that don\u2019t really care whether people or developers come and go. It could well be, and from my anecdotal evidence, that dealing in regional Australia where they\u2019re trying to encourage growth is probably better than dealing in the big city.
\nKevin:<\/b>\u00a0 Yes. Looking ahead at 2016, what do you think we\u2019ll be saying this time next year about this year?
\nJan:<\/b>\u00a0 It\u2019s a bit boring, but I think if you take a long-term view, then my view is we should be looking at the same as, same as. We don\u2019t need to be looking at the ups and downs of the cycles, although it\u2019s very interesting to observe. But if you\u2019re in it for a seven- or ten-year period, I think next year should be it should be the same as it has been for the last ten years if we\u2019re looking in decade lots of property investment.
\nKevin:<\/b>\u00a0 What are the markets? Are there that you\u2019ll be keeping your eye on during 2016?
\nJan:<\/b>\u00a0 I will. I\u2019ll be keeping a close eye on the Brisbane market. We have a lot of properties in Brisbane after watching happened in Sydney and in Melbourne where people get given this exorbitant amount of money for their property and then find that they want to spend it somewhere else where it\u2019s cheaper, and Brisbane right now is disproportionately lower than the Sydney\/Melbourne market.
\nKevin:<\/b>\u00a0 Always great talking to you, Jan Somers. Thank you so much for your time. Jan, of course, at her website, Somersoft.com.au.
\nThanks for your time, Jan.
\nJan:<\/b>\u00a0 You\u2019re welcome, Kevin.
\n <\/p>\n

Michael Yardney<\/a><\/h3>\n

Kevin<\/b>:\u00a0 As you know, last week and for the next couple of weeks, we\u2019re having a look around Australia at what the markets are going to look like in 2016 with a number of our experts. I\u2019m fascinated to hear so many different views about where we\u2019re headed. Obviously, the market, very, very fluid as it was in 2015. Michael Yardney joins me.
\nMichael, how do we make sense \u2013 or how do you make sense \u2013 of all of these mixed messages?
\nMichael<\/b>:\u00a0 Kevin, the first way is to have a system so that therefore, you\u2019re not getting sidetracked by all the news. But the next thing is to start with a macro approach of how the world\u2019s going, then how Australia\u2019s going, and then dig down to a micro approach of how segments of the markets are going and particular properties. I start with the big picture, Kevin.
\nKevin<\/b>:\u00a0 Walk us through that, Michael, because I think over this week and next week, certainly I want to dig a bit more into this to see how you actually determine that.
\nMichael<\/b>:\u00a0 As you say, the market is going to be different and the economic factors affecting the market are different. We start with the big picture of how is the world economy going and how is Australia\u2019s economy going? Because there are some stages of the property cycle and the world economic cycle that you may just sit on your hands. Sometimes the right thing to do is nothing, but I don\u2019t think 2016 will be that year.
\nWe look at how is the economy going? In Australia, we\u2019re not going to do the best, but we\u2019re still going to be the envy of most of the developed nations. Then we look at the states. We dig down to the right state and see one that is in the right state of its own property cycle.
\nKevin, as we know, each state has its own property cycle. I don\u2019t try to time the cycle completely, but I don\u2019t want to buy right near the peak where you\u2019re probably going to miss out on capital growth for a couple of years.
\nKevin<\/b>:\u00a0 Let\u2019s look at the current state of the markets or the current state of the states. Are there any states that stand out for you? Obviously, there are the ones where you probably wouldn\u2019t go \u2013 and maybe that\u2019s Perth and Darwin.
\nMichael<\/b>:\u00a0 Kevin, I think the property cycle is going to be driven by wages growth and economic growth. We know that in Sydney and Melbourne, the markets have been very strong, but over the long term, the way that property values can increase is by people being able to afford to pay more. That\u2019s partly happened by lower interest rates, and it\u2019s also happening in certain segments where jobs are being created and wages are going up.
\nI\u2019m following those areas where service industries, in particular, are creating jobs in certain segments of our big capital cities. It\u2019s very likely going to be Melbourne and Sydney this year, with Brisbane coming up a little bit, as well.
\nThen within that state, though, Kevin, I look at the right locations. I\u2019m wanting the suburbs that have not just had long-past history of capital growth; just as important to me are suburbs where the demographics, the people, are able to afford, as I said a moment ago, and are prepared to pay a premium to live. I think that is going to occur more close to the water, close to the CBD, close to where the economic activity is, so we then drill down to suburbs.
\nYou can actually see that Australian Bureau of Statistics provides suburb-by-suburb data from the census on disposable income and areas where disposable income increases more than average.
\nThen you really need \u201con the ground\u201d information because in every suburb there are three or four locations, some better than others in the suburbs, some districts better than others. I\u2019m not just talking about on main roads or close to shops, or schools, or commercial areas, but also why some streets slightly have more character, why one side of the street is worth more than others.
\nThen I dig into the right property. That\u2019s my five-stranded approach that we can discuss at another time. Then, Kevin, it\u2019s the price. I think it\u2019s going to be important to get price right this year. You can\u2019t overpay in a market that\u2019s not growing very much like it did in the previous couple of years. Inflation and high price growth isn\u2019t going to cover up mistakes in 2016.
\nKevin<\/b>:\u00a0 You mentioned there about the property, which brings in your five-stranded approach. I wonder if we could cover off on that next week because that\u2019s an important part or the next building block in helping us understand what 2016 is going to be like. Michael?
\nMichael<\/b>:\u00a0 I\u2019d be happy to do that, Kevin.
\n <\/p>\n

Cherie Barber<\/h3>\n

Kevin:<\/b>\u00a0 This time, Cherie Barber joins us. Cherie Barber, of course, is from Renovating for Profit.
\nGood day, Cherie.
\nCherie:<\/b>\u00a0 Hi.
\nKevin:<\/b>\u00a0 We\u2019ve got you in one of your breaks, I think, of one of your seminars. Is that right? Your workshops?
\nCherie:<\/b>\u00a0 I am, yes. Day one. Big day.
\nKevin:<\/b>\u00a0 How many days in this workshop?
\nCherie:<\/b>\u00a0 Three days. About 12 hours a day.
\nKevin:<\/b>\u00a0 Oh, goodness. We\u2019re privileged to have you on the show, so thanks for your time. Cherie, I wanted to talk to you about the 2015 market, your views on that, how you saw that. Was it an interesting year?
\nCherie:<\/b>\u00a0 Yes, definitely. 2015, at the beginning of the year, generally, most property markets \u2013 I think, Perth being the exception \u2013 were still appreciating in value. Definitely, what I\u2019ve witnessed out in the field is the hysteria has gone out of the marketplace. I think that\u2019s good because prices are stabilizing and probably getting back to where they should be.
\nWhen the market softens, moving forward, I think, for the next 12 months, property prices are probably going to come back in the order of 5%, particularly in the inner city ring. We just have to mindful that the property market is not one market, Kevin.
\nKevin:<\/b>\u00a0 Yes, that\u2019s right. What about the people you\u2019re working with around Australia? What markets are responding better? Are there any responding better to renovations than others?
\nCherie:<\/b>\u00a0 Definitely. What I\u2019ve seen, particularly in markets like Sydney and Melbourne, there\u2019s been so much hysteria in the property market over the last year and a half to two years where people were just paying ridiculous prices for renovated properties. What\u2019s happened is because of the inflating property prices generally across the country, a lot of people have been pushed into the outer metropolitan ring in most states, and so we\u2019ve seen a big boom in the outer metro ring, particularly from renovated properties. That is where it tends to work quite well.
\nThe problem is people have gone out into those outer metro rings, the prices have been rapidly going up in a lot of those outer metro rings, so what most people are finding out is they\u2019re completely priced out of the Sydney and the Melbourne property markets.
\nFor example, in Sydney, the central coast is now booming and the south coast of Sydney is now booming because everybody\u2019s been pushed out of the outer metro ring western-wise. It\u2019s caused a domino effect.
\nI think moving forward, I think the outer metro ring, a little bit further \u2013 50 Ks onwards \u2013 are going to get really good capital growth opportunities for anybody looking to renovate.
\nKevin:<\/b>\u00a0 Cherie, we\u2019ve heard a lot of talk about how more and more people are moving to units, the unit explosion particularly in developments around Australia. Are units still a good proposition \u2013 some of those older style units \u2013 for renovation and turning over?
\nCherie:<\/b>\u00a0 Yes and no. I think they\u2019re a good proposition if you\u2019re an owner-occupier and you\u2019re not really trying to build a property portfolio. Historically, apartments do get lower capital growth than a freestanding house, so you will always\u2026 Obviously, there\u2019s some exceptions to the rule, but generally, you do get lower capital growth.
\nI think for people who want a nice apartment to live in as an owner-occupier, not too interested in building a property portfolio, that would be a fine strategy, but for anybody looking to be more aggressive, my advice to them would be not to buy an apartment, but to try to buy a low-budget freestanding house in those outer metro regional areas, not too regional, to get a higher capital growth than what you will on an apartment. That would be my advice to them.
\nKevin:<\/b>\u00a0 Cherie, is it still overcapitalizing \u2013 or the potential of overcapitalizing \u2013 the biggest mistake that renovators make, even in this market?
\nCherie:<\/b>\u00a0 They do. This is the thing. Generally what happens when the market is going well and property prices are increasing rapidly \u2013 like they have over the last year and a half to two years \u2013 the \u201cbuy, renovate, and sell\u201d strategy becomes less viable, because with rising property prices, if you\u2019re paying a higher price, it gets extremely hard for the numbers to stack up when you\u2019re renovating to sell.
\nBut when the market softens and it comes back to more normal levels, that\u2019s when you\u2019ll find renovating to sell, the numbers will start to stack up. What I\u2019ve seen over the last year and a half to two years is that the \u201crenovating to sell\u201d strategy has become less doable and more people are transitioning into the buy, renovate, and rent strategy because that has a lot lower cost associated versus selling. That\u2019s what I\u2019ve seen.
\nLiterally, you adopt a strategy, renovate to rent or renovate to sell, according to what cycle the property market is in. Either way, the best strategy of all is to buy, renovate, and rent. Even if the market is booming, you always want to try and hold onto a property because it\u2019s compound capital growth that ultimately makes you wealthy, not just the renovation.
\nKevin:<\/b>\u00a0 What are your tips to anyone who wants to do that, Cherie, right now?
\nCherie:<\/b>\u00a0 In terms of renovating?
\nKevin:<\/b>\u00a0 Yes. You mentioned there about the buy, renovate, and rent. What are your tips on making sure that that is a successful venture for you?
\nCherie:<\/b>\u00a0 I think buying in the right suburbs, first of all, and I\u2019ve already given you some clues as to where quick cosmetic renovations tend to work better. They definitely don\u2019t work that well in the inner city rings, regardless of which state you\u2019re in, because of the high property values. I think paying the right price, buying them in the most lucrative price range that you can for cosmetic renos.
\nThen, I think just knowing how to manage the renovation, I think that\u2019s what most Australians struggle with. They don\u2019t know whether to renovate one room at a time, the whole house at a time. They don\u2019t know how to manage tradespeople. It\u2019s trying to learn the whole process from start to finish, and that is the reason why I am in the middle of a workshop.
\nKevin:<\/b>\u00a0 That\u2019s what it\u2019s all about, of course. It\u2019s learning what those skills are. That obviously varies property to property, or is it more of the investor profile, Cherie?
\nCherie:<\/b>\u00a0 It\u2019s more your strategy. I think once somebody makes the decision to do renovating as their property strategy, generally your strategy remains the same. Typically, you will just focus on a small cluster of suburbs, so instead of being a jack of all trades, you become a master of one. You focus on a small cluster of suburbs, so you\u2019re not spreading your wings too fine.
\nYou\u2019d be looking for the same sort of property deal after deal. In an ideal world, you do renovating that property in same manner, so almost adopting a cookie-cutter approach to how you renovate.
\nWhat I teach my students is not to get fancy on any cosmetic renovation, to work with a template that works, and that comes down to color schemes, the type of kitchen cabinet you put in, the type of floorboards, what color you sand them, all that sort of stuff, and all you do is replicate that project after project so that your renovation projects become a production line, a cookie-cutter mentality.
\nThis cookie-cutter mentality, while it may not win you any design awards, what it will do is make you money. People don\u2019t need to reinvent their strategies property after property.
\nKevin:<\/b>\u00a0 My guest has been Cherie Barber.
\nCherie, thanks once again for your time.
\nCherie:<\/b>\u00a0 Awesome. Thanks so much, Kevin.<\/p>\n

<\/h3>\n

John Lindeman<\/h3>\n

Kevin:<\/b>\u00a0 Welcome back to the show. Joining us this time to give us his view on 2016, John Lindeman who is the Director of Property Power Partners. Let\u2019s get all the Ps in line there.
\nJohn, how are you?
\nJohn:<\/b>\u00a0 I\u2019m very well. Thanks, Kevin.
\nKevin:<\/b>\u00a0 Good. Happy New Year, too.
\nJohn:<\/b>\u00a0 Thank you very much, and yes, I wish you all the best for the coming year, as well.
\nKevin:<\/b>\u00a0 Well, that\u2019s what we\u2019re going to talk to you about to make sure that we get all of our ducks in a row. What do you think we\u2019re going to be saying about 2016 this time next year, John?
\nJohn:<\/b>\u00a0 I would hope you\u2019d be saying, \u201cWhy didn\u2019t we buy in the areas that John Lindeman predicted?\u201d
\nKevin:<\/b>\u00a0 That\u2019s right.
\nJohn:<\/b>\u00a0 Or \u201cWhy did we buy?\u201d which would be even better.
\nKevin:<\/b>\u00a0 We\u2019ll get to that in just a moment. John, you\u2019re predicting what? A fairly healthy market for 2016?
\nJohn:<\/b>\u00a0 I think so. I think in some parts of the country, it will be very, very healthy indeed and in others, there will be a time of continuing price correction, so I really see two markets going in the different directions.
\nKevin:<\/b>\u00a0 Is it going to be much different from what we\u2019ve seen in 2015, last year, as to where those markets will emerge \u2013 the good ones and the not-so-good ones?
\nJohn:<\/b>\u00a0 I think that the good one will continue to be New South Wales. I think Sydney is pretty much over its high growth, record growth that it\u2019s had over the last few years, but I don\u2019t think it\u2019s going to be a bubble. The growth will probably slow down there.
\nBut I think New South Wales is where the money is. It\u2019s a budget that\u2019s very healthy, a booming economy, and there\u2019s a lot of infrastructure development occurring in Sydney and New South Wales generally, which are some of the biggest infrastructure development projects we have going at the moment, and I think they\u2019ll continue to drive the regional house markets in New South Wales upwards over the next few years.
\nKevin:<\/b>\u00a0 John, what do you think will be the enemies of the market this year? Is it likely to be consumer confidence? Is it interest rates, or is it affordability? What\u2019s going to put a dampener on the market, do you think?
\nJohn:<\/b>\u00a0 I think what\u2019s happened over those two years \u2013 and will continue to happen \u2013 is that with the ending of the mining boom and a lot of the construction workers returning back to the cities they came from and then moving more into housing construction, what I\u2019m seeing is I\u2019ve just come back from a trip to Perth and massive unit development occurring over there and housing development, as well.
\nWhat that\u2019s leading to is a surplus of supply. To a lesser degree, we\u2019re seeing the same thing in Brisbane, but we\u2019re seeing the opposite occurring in Sydney, so there\u2019s just still not enough housing being built.
\nI think they\u2019re the two main things. The ending of the mining boom is changing the nature of housing markets in terms of these areas that had huge shortages of supply now going to experience surpluses. I did not predict a boom for Brisbane; I said it was one of the areas that would continue to have moderate growth, and I think that\u2019s going to slow down over the next year. Perth is likely to continue going backwards, unfortunately.
\nKevin:<\/b>\u00a0 You said at the opening that hopefully people will be delighted with the fact that they moved into the areas you\u2019ve suggested. Are you going to suggest a couple of areas for us, John, that we might want to focus on in 2016?
\nJohn:<\/b>\u00a0 What I can see happening is that, as I mentioned before, the New South Wales government has a huge cash injection from stamp duty. They\u2019re embarking on huge infrastructure developments around Sydney. I don\u2019t think that\u2019s going to turn the market around there because it\u2019s already booming anyway and these are really catch-up improvements.
\nBut when you look away from the capital city to the massive infrastructure development projects, such as the duplication of the Princes Highway south and the Pacific Highway north all the way to Brisbane, these are massive projects.
\nWe recently drove along both of those highways to have a really good look at what was happening. What you can see is the rent demand is escalating as thousands of workers have to live in towns like Kempsey, Taree, Coffs Harbour, Grafton, and Ballina while they\u2019re working on the highway duplication. The local authorities there are urging investors not to engage in rent gouging, but of course, they are. There\u2019s very, very few rental vacancies, so you can see rents really starting to ramp up in those cities and also price rises will then follow.
\nThe difference I see between this and, say, a mining boom is that the improvement of the highway will actually convert these towns into very desirable holiday and retirement areas. I think that price growth will occur after the highway is completed in the next four years. Those towns that I mentioned, Kempsey, Taree, Coffs Harbour, Grafton, and Ballina, when you go south now at Jervis Bay and Batemans Bay, all have a lot of growth coming their way in the next few years.
\nKevin:<\/b>\u00a0 That\u2019s an area for you to focus on then. John, on that point, we\u2019ll say thank you so much. All the best for 2016. Look forward to working with you through the year, as well.
\nJohn Lindeman, thank you so much for your time.
\nJohn:<\/b>\u00a0 It\u2019s been a pleasure, Kevin, and may I wish all of your listeners a very prosperous 2016.
\n <\/p>\n

Josh Masters<\/h3>\n

Kevin<\/b>:\u00a0 Joining me as we continue to have a look at the market 2015 looking into 2016, Josh Masters from BuySide.com.au joins me.
\nHi, Josh.
\nJosh<\/b>:\u00a0 Good morning, Kev.
\nKevin<\/b>:\u00a0 Good morning. Just before we start, love your app, the Suburb Investor. I downloaded it and have just been playing with it. It\u2019s a great little comparison if you\u2019re looking at comparing different suburbs.
\nWhat\u2019s the idea behind it, Josh? Who do you see as the ideal user?
\nJosh<\/b>:\u00a0 What we wanted to show people and property investors out there was that it\u2019s not always about the short-term gain in terms of what the rental is and how much money you\u2019re going to get back in your pocket every week. We\u2019re really long-term investors. We\u2019re definitely buy and hold. We\u2019re focused on that capital growth.
\nI thought it was really important to show investors how suburbs compared against each other. For example, if you have $500,000 to spend in the marketplace, over the last ten-year period, where would you have gotten the best growth out of that?
\nThis little app, very simply, allows you to put in your investment amount, to put in your investment period, and then based on whether it\u2019s a house or a unit, you can actually compare suburbs against each other. You compare two suburbs across the whole of Australia, so you could compare a suburb in Perth against a suburb in Sydney, for example, if you were looking to invest in either of those spots and see how they turned out over the last ten years.
\nKevin<\/b>:\u00a0 Try it out for yourself. It\u2019s called Suburb Investor. Just go to the app store, put in \u201cSuburb Investor\u201d and it\u2019ll come up for you quite easily.
\nMate, because we\u2019re well and truly into 2016 now, let\u2019s have a look back at 2015. What do you think we\u2019ll be saying about this year, 2016, about this time next year?
\nJosh<\/b>:\u00a0 I think we\u2019re still going to see the momentum from Sydney carrying through. I always liken the property market to an ocean liner. If you look at the stock market, it\u2019s like a little Jet Ski. It zips up and down and it can change on a dime, whereas the property market, it\u2019s like an ocean liner. It takes a long time to get going. It also takes a long time to stop. There is a lot of momentum in it.
\nI think while Sydney has had that very, very strong growth, and even Melbourne as well, we\u2019re still going to see probably 5% to 7% growth over the period as that market slows down. There is still some money left in there.
\nI think we\u2019re also going to see a rise in premium homes, let\u2019s say above $1.5 million probably in Sydney and definitely in Melbourne. I think there is a lot of money and equity that has been generated over the last two to three years with people who have held property in that market and now have the ability to trade up or even invest elsewhere.
\nBut I think from an investment point of view, we\u2019re going to see probably a lot more influence from those APRA regulations, which really kicked in in the second half of 2015. The APRA regulations forced investors to do a number of things. First of all, it forced them to put bigger deposits into their investments, and it also forced them to look for more high-yielding properties because they needed stronger servicing to do that.
\nWhat we\u2019re probably going to see is a trend through 2016 to those more affordable markets with stronger yields. For that reason, I do see Brisbane\u2026 I know Brisbane is probably 50\/50 at the moment for a lot of people because we expected to see a lot happen in 2015 and it really didn\u2019t take off, but I do see that Brisbane market and even the Gold Coast market for some of the infrastructure projects that are going in there.
\nIt\u2019s been flat for so long, it\u2019s a very affordable market especially compared to a lot of the eastern coast cities. I think we\u2019re seeing a lot of strong yields there, which are 5.5%, 6.5% there, which are really going to be attractive for investors through 2016.
\nI think coupled with infrastructure projects from Toowoomba to Sunshine Coast down to the Gold Coast, I think that\u2019s going to be a real hot spot coming up into 2016.
\nKevin<\/b>:\u00a0 Are they the ones you highlight around Australia as the ones to watch in 2016 \u2013 Gold Coast and some of the southern suburbs of Brisbane?
\nJosh<\/b>:\u00a0 I do. Gold Coast is definitely coming onto my radar now for affordability, and not only that, for the interest that it\u2019s getting from the Chinese market on the residential level. You have that $1 billion Jewel residential and wholesale being built there. You have the Commonwealth Games coming in there. The light rail link from Southport to Broad Beach is improving connection there. Not just that, but the Toowoomba bypass is happening one hour west of Brisbane.
\nBrisbane has had about $19 billion worth of infrastructure put into it in terms of roads and connections through to the airport, which has been fantastic. We\u2019re seeing that university hospital being built up in Sunshine Coast, 3500 jobs being put into there, and I think it\u2019s going to be a real hub for activity in the coming year.
\nLook, coming into this period where we\u2019re going to see slow economic growth for the country overall because of the mining decline, I think we\u2019re going to have to look to areas that have that infrastructure injection into the economy because that\u2019s really where growth is going to be created.
\nThe same goes for Sydney, as well. We\u2019re seeing $1 in every $2 spent in that triangle in the western suburbs of Sydney, $26 billion between Parramatta, Penrith, and Liverpool and down to Badgerys Creek. That area is really going to be probably the future center of growth for Sydney as it moves through its current growth cycle.
\nKevin<\/b>:\u00a0 Great view there, Josh. Thank you so much for your time. Josh Masters from BuySide.com.au. Check out that app, as well, Suburb Investor.
\nJosh, great talking to you, mate. All the best for 2016. I look forward to talking to you as the year unfolds.
\nJosh<\/b>:\u00a0 My pleasure, Kevin. Thanks for having me.
\n <\/p>\n

Pete Wargent<\/h3>\n

Kevin<\/b>:\u00a0 With his view on what\u2019s happening with the market in 2016, Pete Wargent joins me. Pete, of course, is very active on the Internet with his predictions about what\u2019s happening with property, not only in Australia but worldwide.
\nHi, Pete. How are you?
\nPete<\/b>:\u00a0 Good. Thanks, Kevin.
\nKevin<\/b>:\u00a0 Good to be talking to you again, Pete. What do you think we\u2019ll be saying about the property market this time next year? What do you think 2016 is going to hold?
\nPete<\/b>:\u00a0 I think during some of this year\u2019s exuberance, I believe a significant number of investors would have bought off-the-plan properties with only small deposits to hand. I think 2016 could be a year when APRA\u2019s tightening measures towards investor lending could cause problems for some of those off-the-plan buyers who will end up with a deposit shortfall at settlement. There could be some fallout from that.
\nI think that 2016 will also be the year the media latches on that going forward, it\u2019ll be the immigration of international students rather than arrivals on 457 visas that are actually driving Australia\u2019s immigration and population growth.
\nEnrollments and grants for students are starting to ratchet up, so with hundreds of thousands of student arrivals over the next few years mainly headed for Sydney and Melbourne, that\u2019s going to create a lot of demand for rental property close to the city centers just at the same time that APRA is hosing down the investor sector.
\nFinally, I think 2016 could be a year to expect the unexpected. A lot of market commentary revolves around the notion that \u201cThis can\u2019t happen or that can\u2019t happen.\u201d But I\u2019ve been in Britain this month and a lot of things that weren\u2019t supposed to happen have happened, particularly in the investor space.
\nBack in Australia, we\u2019ve seen APRA introduce macro prudential measures this year. I wouldn\u2019t be surprised if there are more tweaks in 2016 in the wake of [1:43 inaudible]<\/b> resulting in tighter capital requirements and lower loan-to-value ratios. In terms of what this means for investors in 2016, they\u2019re likely to require substantial deposits.
\nKevin<\/b>:\u00a0 You mentioned there APRA, and there have been some reports that the moves by APRA have really played into the hands of the bank and that it\u2019s almost given them an open checkbook to increase rates whenever they feel like it because of these macro prudential controls. What\u2019s your view on that?
\nPete<\/b>:\u00a0 I think what we\u2019ll find in 2016 is investor lending will continue to slow. The banks will actually be looking to push owner-occupier lending harder to compensate for the slowdown in investor lending. There will be a bit of a switch in the market, but that may be no bad thing. I think the investor market \u2013 in certain areas, anyway \u2013 was getting a bit overheated.
\nKevin<\/b>:\u00a0 What are the markets you\u2019ll be looking at in Australia in 2016, Pete?
\nPete<\/b>:\u00a0 Well, 2015 was another huge year for Sydney. I think in 2016, all eyes will be on Queensland to see how the Brisbane market fares in particular. I think investors should be wary of some of those inner city suburbs where apartments are being overbuilt. Look at the middle ring suburbs, properties that are strong land value content, an owner-occupier feel, transport links, and reasonable yields.
\nKevin<\/b>:\u00a0 Are you a bit concerned about an oversupply of units in the inner city of Brisbane?
\nPete<\/b>:\u00a0 Yes, certainly. There are a number of former industrial suburbs. There has been a lot of re-zoning, record high building approvals this year, so there are a lot of apartments to buy in some of those inner suburbs, which I\u2019ve think we talked about on this show before.
\nKevin<\/b>:\u00a0 What about some of the regional markets around Australia, Pete? Are any standing out for you?
\nPete<\/b>:\u00a0 From a high-level point of view, just looking at the economy, we\u2019re going to see probably another weak period for the Aussie dollar. So if you\u2019re looking at regional markets, I\u2019d be looking at places like the Gold Coast that will benefit from the lower dollar. I think that would be on area in particular which could see some upside.
\nKevin<\/b>:\u00a0 Pete, thank you so much for your time. I look forward to working with you again in 2016. Pete Wargent, of course, and the book \u201cTake a Financial Leap\u201d \u2013 your new book \u2013 that\u2019s out by, is it Big Sky Publishing?
\nPete<\/b>:\u00a0 Big Sky Publishing.
\nKevin<\/b>:\u00a0 Whereabouts can we get that one, Pete?
\nPete<\/b>:\u00a0 At all good bookstores.
\nKevin<\/b>:\u00a0 Excellent. \u201cTake a Financial Leap,\u201d Pete Wargent.
\nPete, we\u2019ll talk to you again soon. Thanks, mate.
\nPete<\/b>:\u00a0 Pleasure, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

  Our experts line up again this week to tell us what they think will happen to property in 2016. 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