{"id":6846,"date":"2016-01-25T01:00:36","date_gmt":"2016-01-24T14:00:36","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=6846"},"modified":"2016-01-25T01:00:36","modified_gmt":"2016-01-24T14:00:36","slug":"the-formulae-for-investing-success","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/the-formulae-for-investing-success\/","title":{"rendered":"The formulae for investing success – Michael Yardney"},"content":{"rendered":"

 
\nAs 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. \u00a0Today he details his top down approach to select the best market.
\n <\/p>\n

Transcript:<\/h4>\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.<\/p>\n","protected":false},"excerpt":{"rendered":"

  As we try to make sense of the mixed messages about the property market, Michael Yardney gives us details of his formulae to work out where to invest and which properties are the best. \u00a0Today he details his top down approach to select the…<\/p>\n","protected":false},"author":176692471,"featured_media":6847,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,11,13,36,17,25],"tags":[101],"class_list":["post-6846","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-property-investment","category-sponsored-channels","tag-podcast"],"yoast_head":"\nThe formulae for investing success - 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\/the-formulae-for-investing-success\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The formulae for investing success - 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