My prediction for real estate prices in the next 12 months is very different to the ones being published by mainstream media.
While there are forecasts from the usual suspects – mostly economists with poor track records in forecasting – that prices will fall 15% or 20%, my prediction is that property prices will rise in the next 12 months.
For a long time now there has been a serious disconnect between what’s happening in real estate markets in Australia and what mainstream media says is happening in Australian real estate.
But right now, that gap between media perceptions and reality is greater than ever before.
My view, very strongly, is that now is a time of great opportunity for property investors in Australia.
In many locations, the heat has come out of the market, so that investors can buy with less competition and urgency, meaning there are prospects to buy at better prices than a year ago.
At the same time, vacancies right across Australia are the lowest ever recorded and rents are rising faster than I have seen in my four decades of researching real estate.
There is a serious shortage of homes in Australia and all the projections suggest it will get worse before it gets better.
This means there is an accumulation of factors likely to create price growth in the near future and in the longer-term.
So this is a time of opportunity for investors who can tune out all that media white noise and think and act independently.
Here, in short form, are my Top 10 reasons why I expect prices to rise in the best markets with growth credentials:-
1. We have the greatest shortage of rental properties ever recorded
2. There is also a shortage of listings of properties for sale
3. Developers are deferring major projects because of shortages and cost escalations
4. The projections for new home building suggest that Australia will build much fewer new dwellings that the nation needs for the next two years
5. International borders are open again and migrants and overseas students are returning
6. The Federal Government intends to lift the migrant intake to fill job vacancies
7. There is a massive program of major infrastructure projects under way with more in planning, generating economic activity and employment
8. Australia will host 5 global sporting events in the next 10 years – a Commonwealth Games, 3 world cups and an Olympic Games – enhancing the infrastructure spend and bringing a global focus to Australia
9. There is still considerable government stimulus in the economy, including the boost to FHBs in regional areas
10. Interest rates are rising but remain at low levels in historic terms – and are likely to come down again within the next 12 months
With all those factors in play, I think it’s nonsense to suggest that prices will collapse in Australia, as the usual suspects are forecasting.
I expect the opposite. I expect prices to rise.