In times of uncertainty, people retreat to safe haven investments. That’s when the best opportunities exist – especially if you know where to look.
The first time news broke about the war in Ukraine, along with it came headlines projecting property prices to fall by as much as 15%. This spurred serious fears that property markets around the world are due for a crash.
Not only did those fears fail to materialise but recent crises also tell us that, if anything, the war in Ukraine is more likely to extract higher prices on the Australian property market. After all, one clichè that has turned out to be true is this:
In times of uncertainty, people retreat to the safety and stability of brick-and-mortar investments.
We saw this in the wake of the COVID crisis, which is one of the biggest factors why we’ve had a recent property boom. There was a heightened sense of uncertainty with the share market crashing, and people were worried. So, they retreated to what they knew was tried and proven to be safe and solid: real estate.
This is proof that the direst of situations can turn into golden opportunities for property investing.
And while it may be difficult to put this into an economic formula, there are some things you can do to position yourself to gain from tough times and periods of uncertainty.
The 5 Ways
Times of great political and social unrest create waves of panic across many industries, and for good reason. However, this sense of fear and panic is unwarranted for those of us who are in safe havens like precious metals and real estate.
There are opportunities to be made for during these periods of unrest, as long as you could practise the following ways:
Way #1: Don’t give too much importance to “media data”
Negative situations are much more attractive to the media than positive ones.
As they say, no one likes to report good news because those just don’t make for catchy, emotional headlines. This results in the media’s tendency to skew data and ignore nuances to come up with a negative.
For instance, we all know that the total dollar value of real estate in Sydney and Melbourne is significantly large. And statistically, they’re more expensive than other parts of the country.
So, when Sydney property prices go down, the media can easily spin it and transfer that “significant” impact on other parts of the country. This will make it seem like the broader market is plummeting. But what that does is ignore the fact that in other parts of the country, properties are actually absolutely booming.
That’s why it’s imperative for property investors to look beyond what the headlines say and look at what’s actually happening in each market.
Way #2: Learn to read trends on a long-term scale
Another way to stop falling prey to what mainstream media says to be true is to learn how to read trends on a long-term scale.
See, most reports don’t just extrapolate numbers from Sydney and Melbourne and apply those to make judgments about the broader market. They also tend to focus on data points that support the negative slant of their headlines.
It comes as no surprise, then, that you might come across news reports that only look at one month’s worth of data from a single source. And then they conclude that property prices are falling across Australia.
So, you’ve got to take it upon yourself to look at trends on a much longer scale than what’s being reported. Don’t just rely on one source of information when studying property trends.
What you can do instead is look at actual property price reports from sources like CoreLogic. The data is out there, and it’s freely available. Just click and download those reports and see for yourself that there are many regional markets that are rising at a rate of more than 2% a month.
At around 25% a year, that’s still incredible growth.
Way #3: Tune out the white noise
Once you see for yourself what the data actually looks like on the ground, learn to tune out the white noise that will always accentuate the negative.
Once you know how to look at the real, hard data that lies beyond what has been pre-packaged and pre-framed for us to consume, the next step would be fairly easy…
Way #4: Don’t follow the herd
The reality is that while the smart investors were buying properties at the start of the global pandemic, most property investors out there simply followed the herd.
They didn’t do their own research, so they got stuck waiting. After all, they were told that property prices were going to fall due to the pandemic. But they are now left wishing they hadn’t waited for that to happen. Because when the boom actually happened, they missed the best time to buy in the best places.
So, don’t just follow the herd. Make good, independent judgments based on real estate data—not based on what others are saying or doing.
Way #5: Realise that real estate is widely considered a safe haven
You’ve got to realise that the property market will never move the same way as other industries during times of great distress.
See, when supply chains are disrupted and the cost of goods goes up, that results in an inflationary environment. While other markets may struggle to keep their heads above water during these times, know that you’re in an industry that’s widely considered the best inflation hedge.
When people don’t want to risk their money in an uncertain environment, real estate is one of the places they first go to.
And that’s when you act, instead of lying in wait for shady price predictions to happen.
Look Into the Future
Let’s face it.
A lot of things you’re used to hearing about real estate and property prices are irrelevant. What’s important to know is where the market is headed in the future.
Just remain focused on areas that have low vacancies, high rental yields, and strong local economies. Especially diverse economies that generate lots of jobs and major infrastructures.
Regardless of what may be happening out there in the world, you could find that these conditions exist in many places around Australia.
That means there are great opportunities for you to buy well and build a portfolio that will serve you well in the future.
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