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A Year From Now You Will Wish You Started Today
By Carly Crutchfield
Well we all know it is interesting times as far as the economy is concerned. But with so many conflicting media reports it can be hard to work it all out and see what it means to you, and your personal finances and investments. So I am going to attempt to break down and simplify some of the recent media commentary right now...
The property market…
For those lucky enough to own up-market second homes, these economic conditions are rather harsh for them as many find themselves needing to sell their second home in order to minimize or stay out of debt. Those who were fortunate enough to own luxury and holiday homes are the hardest hit in these financial times and this has resulted in the top end of the property market crashing the hardest as vendors are in a desperate bid to offload stock and must do so below market value.
The increase in the first time home owners grant late last year has somewhat saved the lower end of the market and properties under $600k have remained fairly stable considering the financial recession that has been trying to close in on us. The decision to extend the first homebuyer grant scheme beyond it’s original June 30 deadline will help maintain strong activity in the lower segments of the property market analysts say. The First Home Owner Boost has supported employment and resulted in almost 60,000 Australian being able to buy there own home.
With top-end investors downsizing their investments to reduce the mortgage and the risk of debt they face, this, combined with first time buyers maintaining the strong activity of the lower segment of the market, will put pressure on the middle market and create more demand for the $600,000 to $1 million market.
Property Development…
This is all great news for property developers as distressed vendors needing to sell has opened up a bargain world for property purchasing, providing ample buying opportunities for those on the look out. You will notice many abandoned development sites, as people cannot get funding to continue construction and these sites are generally for sale for a price far below the current market value. Many vendors are being forced to sell for prices far below what they would like and it has resulted in many of them offering vendor financing in a bid to get what they feel the property is worth, even if it is not all up front. With much construction work coming to a halt there are more opportunities in the form of builder joint ventures to be found. There has never been such a great chance to jump onto the property ladder without using any of your own money.
While investment fads come and go, property remains a constant. Residential property has proven it’s resilience and while other asset classes have not been so successful in remaining stable investments, property has always been a good sound investment despite the numerous economic ups and downs.
As time goes by, Australians are realising that an economic downturn doesn't mean the end of the world. Investor confidence is growing. Markets always recover and this time will be no different.
Interest rates have now hit their lowest point in 50 years and according to Property Planning Australia Director, Mark Armstrong, 2009 will be remembered as the year of opportunity for first homebuyers and investors entering the property market.
Property Investors…
It is property investors who are dominating the BRW Rich List this time round. 62 people of the 200 listed last month have created, sustained and expanded their fortunes through property investing and it is the category with the highest number of entries, up from 51 in 2008. The BRW Rich 200 List was released last month and this year makes for some interesting reading. On average, each member of the list has lost more than $70 million. The plunge in wealth this year for the BRW Rich 200 is more than $25 billion. Never before has Australia’s elite lost so much money in one 12-month period.
With the rich getting poorer and some of the biggest names in corporate Australia selling off assets at a rapid rate, there is a light at the end of the tunnel for property investors as the prevailing opportunities extend right up to the top end of the scale.
Whilst the bottom has fallen out of Australia’s prestige property market, the market has been flooded with bargain after bargain. It is unfortunate but true that what is one person’s loss is often another’s gain and this has never been as true as the current conditions in the property market. Whilst Australia’s most wealthy have lost a significant chunk of their wealth in the past 12 months, those scouring the market for bargain deals finding owners desperate for a quick sale have been very fortunate and have made the nations financial difficulties work in their favour to create an even vaster amount of wealth.
Harry Triguboff, Clive Berghofer, Paul Little, John Van Lieshout & Lang Walker are just some of the names in the Rich 200 who have massively increased their wealth through snapping up deals that come from the vendor needing urgent sales. “Second houses and holiday getaways are just another asset relegated quickly to the ‘get rid of’ list.” There are many people who are very weary of getting into property development at this time but it is those of you who are thinking smartly and taking advantage of the weak market that are going to be the most successful in 2009. Triguboff says that it is the right time to be buying up vacant sites as many other developers are struggling, particularly in Sydney. There are so many people who can’t get finance for their projects and don’t know what to do.
Lang Walker claims to have always taken advantage of any drop in the market. “I’ve always been a counter-cyclical operator”. At 63, worth $2.04 billion Walker says that he “likes times like these.”
Harry Triguboff of Meriton Apartments, third on the list this year is worth $410 million more than in 2008 because of the increase in the rental market in the past year. He says that ‘there are ample opportunities to buy sites with development approval’ from those that have either too much debt or cannot gain construction funding any longer.
As Donald Trump says, ‘We have to think big so why not think anyway?’. Guys now is the time to start taking advantage of the current economic climate and using the downturn for what it really is, a wide open opportunity for you to jump on the property ladder and enjoy the success that this ‘recession’ is bringing to many. Success is not just for a certain group of people and it is not for an elite category of those who have money. It is for anyone who is willing to understand that the prevailing opportunities must be sought after, taken advantage of, worked hard at and most importantly not left as missed chances. To find out you can use this ‘economic downturn’ to create wealth and success for you, and how you can get into property development using none of your own money, email info@ccorp.com.au or call my office on 02 9371 4799 for a free DVD on Property Development.
