We are experiencing an 18 year-high property price rise in almost all of Australia’s major cities. Nationally, prices have gone up by 7.5%, which is incredible.
The boom is really kicking into gear, and it’s not showing any signs of slowing down.
Back in 2016 when the property industry was also growing quickly, the government got involved in trying to cool down the market.
– They raised interest rates
– They made it harder to borrow money
– They tried to literally control the market
But it didn’t work. So what can we learn from the rest of the world?
What The Global Signals Are Telling Us
On the global scale, a lot is happening since Biden has taken over the Presidency from Trump, in particular Biden intends to raise corporate taxes. But in reality for the last 40 years, corporate taxes have been going down across the world.
It’s called trickle-down economics. Which is basically the theory that taxes on businesses and the wealthy in society should be reduced as a means to stimulate business investment in the short term and benefit society at large in the long term.
This strategy is what has made America a super economy. But the difference between America and Australia is that there is a huge wealth disparity. In America, there are super-rich people and extremely poor people.
Here in Australia, we have a large middle class which is a good thing.
Even still, what America does affects almost every other part of the world. The Western world in particular always follows what the US does.
– America legalized marijuana. Now it’s happening around the world.
– America legalized gay marriage. The rest of the world is following the same steps.
– America started dropping corporate taxes, and now it’s happening all over the world.
In the last four decades, in France, German, the UK, Japan, and the US, corporate tax has been going down. Some years ago, Germany’s corporate tax was 50%. Now it’s 15.825%.
So what does this mean in terms of property investing? Well, lower tax means people put more money into property. Which drives up prices, sure. But it also drives up capital growth. And that’s great news for property investors who are already in the market.
But what about those who are aspiring investors, waiting for the right time to act?
Weighing Up Opportunity Costs
As with a lot of choices in life, we’re faced with not only the obvious costs of investing in property, but also the opportunity cost.
Opportunity cost lies in the realm of inaction. Most people choose nothing—they choose to sit on the fence. But the cost of inaction is often much greater than the cost of taking that first step.
And the truth is that even during this boom, there are still opportunities to get into the market. If you buy a 500K property now, it’s going to be worth a million dollars in ten years – maybe less if you get a really good investment.
The fact is we are experiencing the biggest property boom in 50 years. If you missed the previous booms, there’s nothing you can do about it now. But if you miss this, it’s your mistake.
However, I’m not saying you should go out and buy anything you can get, just because you’re desperate. You need to follow a proven plan and educate yourself according to what has worked for someone like you in the past.
What Type Of Property Should You Buy?
Most people ask me why I advise them to rent while I own my home. I want to be honest with you. I own my property, but the truth is I rented my house for many years. It saved me over $15,000 every year. This is because I lived in a very expensive beach house.
The reason why I own my home now is that I have saved enough to buy my home. The way I look at it is, why should I still be renting while I have over ten properties bringing me a ton of money every year?
But if I didn’t have the passive income that my properties are bringing me now, I wouldn’t buy a house to live in – I’d build my portfolio first. And that’s what I’d do if I started all over again, and again.
Don’t take out a mortgage to buy a house. Save on the rent, invest, and make money to buy your home later, when your portfolio is giving you the cash flow to afford it.
Remember rule number one in investing—don’t lose any money!
Take Advantage of The Markoski Method
If you’re interested in learning more about how to set yourself up to invest in property safely and with carefully mitigated risk, I’d love to help.
My Markoski Method is a tried and tested way to profitably invest in property while protecting your income and assets at the same time. It’s part of my BlackBelt coaching program that educates and coaches members to get their first, second, third and fourth property (and beyond).
We only work with a certain number of active members at a time, and we’re currently taking applications for the next round of new members.
If you’d like to find out more about the program, or see if we might be a good fit, get in touch with my property concierge Charmaine for a 15 minute ‘getting to know you’ call. On the no-pressure, no-obligation call, she’ll assess where you are now, and give her honest opinion if you’re in a position where we can help you build your portfolio.
Here’s the link to Charmaine’s calendar – book a convenient time to chat now.