We have been saying for some time now that we would much rather be ‘in’ the Perth property market over the next decade than ‘out’ of the property market.
Yes, we know some of you will be thinking that owning property here in Perth over the previous ten years probably hasn’t been the very best investment you could have made.
You may be right!
The share market has certainly out-performed the Perth property market over that period.
And that is especially the case if you were smart (read ‘brave’) enough to buy during 2009 after the effects of the GFC had filtered through and share prices had significantly dropped.
Further, for many people who have purchased property at some point during the last five years, they have likely even seen the value of their property decline!
Now we would argue those facts still don’t necessarily mean you made a mistake investing in property during this time, especially if you have been able to use your property backing to assist your business endeavours.
But for now, let us just explain why we are so eager to own property today and well into the 2020s and beyond.
…because the time to buy is when prices are down.
First and foremost, because the time to buy is when prices are down, or arguably even better, just before prices start to improve.
As we said above, if you started investing heavily in the share market in 2009, after the price declines brought on by the GFC, AND you invested for the long term and avoided the temptations of reacting to daily market movements since then and not sold out (a big if), you will likely now be sitting on some very healthy profits (Note: the ASX All Ords fell to around 3100 during the GFC, it is now back above its previous highs, presently sitting just under 6900).
So while everyone was in a panic as a result of the GFC, the truth is it represented an opportunity.
Continuing that theme, we suspect that having seen 10 years of little to no growth in the Perth property market, and generally depressed prices over the past few years, we may well be approaching a reversal of fortunes.
It has just been announced that the Perth property market has hit what some say is the technical definition of a ‘crash’… as of July 2019, prices have now fallen 20% from their peak.
But what normally follows a ‘crash’ in investment markets? A ‘recovery’?
Of course, there is nothing that says a price rise has to happen, and there is nothing that says if it comes that it will be this year, or next, or even the next.
Therefore, you need to decide for yourself, do you think the current state of the market can and will continue? Or do you think things will improve? And if you think they will improve, do you think it will be at some point in the foreseeable future, or will it be many years ahead?
See Part 2 for some facts and figures to help you make your assessment.