Recently I got my hands on an internal document from the Royal Bank of Australia (RBA) that reveals potentially exciting news ahead for property investors.
Rest assured I didn’t put on burglar gear to get it – it’s available through the Freedom of Information Act. I’m always digging deep on my research into what’s going on in property… and I nearly jumped out of my seat when I found this report!
Basically, the RBA predicts that property prices could potentially jump by as much as 30% in the coming years.
This is big news folks.
According to the report, low interest rates, fuelled by job shortages and lower immigration, have increased inflation here in Australia. The knock on effect is that asset prices (such as house prices) are rising.
What does this mean for investors? It means we’re about to hit the biggest property boom in decades! And if you don’t have a different asset class such as property, it’s time to catch the massive wave that’s about to hit.
Don’t Fear the Rental Crash
It’s not all rainbows and sunshine across the wider property market.
Now, I’m not a big fan of commercial property. You need a big tenant, and the big players are so big that they can negotiate you down when it comes to rental agreements.
Sadly my intuition has been proven correct this last year as offices and shopping malls were hit hard by the COVID-19 crisis. Australian CBD based assets were hit with an 8.6% value drop in a period of six months as offices closed. Also, shopping malls’ value has shrunk at a large margin as COVID continues to bite.
With more businesses changing their model to using a home-based workforce, the future of commercial property is not great.
Residential apartment rentals are not doing great either.
Domain’s recent rental report shows that their Sydney’s unit rents have dropped by 5.1% in the first quarter of 2020. The yearly drop totalled 7.8% by December. This drop marks the steepest annual fall in Domain rentals since 2004.
The Domain report further reveals that Sydney has been hit hard in the east, inner west, and the city. The rent now is at its eight-year low. The lower north of Sydney is now the cheapest it’s been in nine years.
However, some areas such as Central Coast and Northern Beaches have hit a record high as more people are looking for good places to stay under lockdown.
The same blow was suffered in Melbourne, where a 3% quarterly decline and 7.6% yearly drop was recorded. With this blow, Melbourne is now the third most affordable capital city. This is a great decline considering that Melbourne was one of the most expensive cities to rent before COVID.
Now, these numbers are scaring a lot of Australians off of investing in property. They wonder how they’re going to find a tenant for their property.
But the truth is that there’s plenty of renters out there looking for a place to live. You’ve just got to buy where they want to live. At Positive Property Solution, we help our Black Belt Members buy the right properties, in the right areas, at the right time of the market cycle (or as many like to call it, the property clock.)
As with all successful investing, research is key. That’s why we do our due diligence to identify the top 100 markets in Australia at any given time, and analyse around 60 points of data to find the golden opportunities within those markets for our members.
And when you’ve got the right property in the right area – like our members get – tenants move in right away and the property is positively geared from Day 1.
Ditch the Bank and Invest in Growing Assets
The low-interest rate and increased inflation are disastrous to your bank deposit. Thanks to inflation, your assets rise in value, but your bank deposits decrease in value. That means if you continue keeping your money in the bank, then in 3 years, you would need 30% more to buy a property that you would have bought today with the money you have right now.
As you probably know, houses and property double in value every 7 to 12 years. However, due to tiny interest rates, money in the bank will take a whopping 80 years to double in value.
If you do the math, $10,000 in bank deposit will earn you $18 per year. But it’s even worse than that! Thanks to inflation, you won’t get the same value for that money as the years progress.
In short, you’re losing big time by keeping your money in the bank. First, you’re missing an opportunity to create a wealth-building asset portfolio. And secondly, you’re blowing much money value every day as inflation continues to skyrocket.
The lesson here? Get your money into property as soon as you can, or watch it dwindle in value!
How To Safeguard Your Cash From Inflation
The property industry in Australia is on the edge of a massive boom, with the RBA predicting a price rise amid the chaos accelerated by COVID. So, you can just imagine what will happen when the world gets back on its feet again.
Think about the growth in value for every house when the demand for rental kicks back in. When more students and migrants start streaming back into Australia, you can expect a huge boost in your property’s value when that time comes.
Now is the best time to invest in housing to:
– Safeguard your bank deposits from losing their value from the current inflation,
– Gain more wealth from the appreciating assets during the COVID-19 crisis, and
– Be in control of your financial future with assets that bring regular cash flow
If you want to gain more value for your money with property investment, we’d love to help you get started. Click this link to book a 15 minute ‘getting to know you’ appointment with our coaches.
It’s a quick chat to assess your goals and your current financial situation, and to see if we can help you. If you’re not quite ready to take the step yet, our 14 Day Positive Property Challenge is the way to go.
Over 2 weeks I personally guide you to create a blueprint for getting your first, second, third, fourth (and beyond) property. So when you’re ready to push the ‘go’ button on your plans, you’ll have all your ducks in a row and be crystal clear on what to do.
Click here to find out more about the 14 Day Live Positive Property Challenge