In the face of higher interest rates and chilling news saying the property market is due for a crash… we talk about three ways property investors can navigate the present market.
As a property investor, you always want to buy the best properties in the best locations.
But what does that even mean in the current market of rising interest rates? Not to mention the media saying the Australian property market is probably going to crash soon?
Well, the first thing you need to know is that there’s been no significant decrease in market activity… regardless of how much fear the media is trying to sow into the hearts of investors.
The heat is still there. And it’s not difficult to understand why.
See, the rise in interest rates is almost always reported as a negative thing. But in reality, a rise in interest rates also causes an increase in rents. In fact, most areas in Australia have been growing at an annualised rate of 10% to 20% per annum.
While some people might dismiss these numbers as an anomaly, it’s actually happening everywhere. Rents in almost all areas in the U.S. and Europe are going through the roof, as well.
And that’s not the only prevalent trend in global property markets today.
You’ve also got more and more end-consumers transitioning to more affordable lifestyles. There’s less competition for higher-priced properties.
No one wants to pay a million dollars for a property in the city when they can buy a property the same size for $500,000 or less in a regional centre. Especially now that more and more people are realising they actually don’t want to live in a city. After all, being in the regions and rural areas provide an awesome lifestyle boost, as well.
Now, the exodus to a more affordable lifestyle isn’t just about people moving and buying houses in the country to live in. It’s actually exacerbated by the idea that people now have a platter of opportunities for places to live in.
This is why some people are choosing to rent a place in Perth for a year before moving on to live in Adelaide for a year… and then moving on to another city for the next year.
This level of optionality for flexible living is creating a massive megatrend towards access and less into ownership. More people are choosing to rent more…
And that’s good news for property investors.
Now, how can you capitalise on this situation?
The 3 Ways
It’s true that many investors fear the rise in interest rates and a property market crash that may or may not happen as a result of that. But it’s clear as day that there are still a lot of ways to navigate — and even win — in today’s property market.
From a strategy perspective, there needs to be a mindset shift in order to overcome the culture of fear that’s been gripping property investors. Here are three ways to do that:
Way #1 – Have a static mind when dealing with a dynamic environment
Being a property investor in today’s market is like being a parent of four screaming kids at the mall. There are a lot of stressful things happening. And if you let all the external stressors freak you out… Chances are you’ll flip out and lose your mind!
So, when the environment is dynamic, you need to have a still mind. One that is capable of sound, fundamental reasoning regardless of the media hype peddling doom and gloom.
If you could have a calm and centred mind that can survey the landscape and understand the context of why there’s a lot of fear going around, you can come up with the best way to approach the property investing market and win.
Way #2 – Buy with a long-term view since current market conditions are temporary
Current market conditions are temporary – they always are.
We can wake up tomorrow with news of another global tragedy bringing the world economy down. Or, we can wake up with a series of good news signalling growth across the board. In any case, the current condition of the property market can change anytime.
What doesn’t change are the nuts and bolts of what makes a location a good place to invest in.
That said, always buy with a long-term view. There’s more than one way to skin a cat, for sure. But always go for strategies that have been proven time and time again, particularly:
Buy the best properties in the best locations.
If you could beat the herd at an emerging market before it blows up and hordes of other investors start to drive prices up… all the better.
Way #3 – Find a portfolio strategy that works for YOU
Finally, don’t let other investors decide all your investment moves for you.
Just because you see other people pulling 70% or higher yields than the national average doesn’t mean you should copy someone else’s portfolio strategy. After all, you might not be working with the same capital or risk appetite as these other investors.
What you should be looking for is a portfolio strategy that works best for you.
Go for investments that make sense for you at this specific point in time. And always cover your bases. Respect your own strategy and risk appetite so you can get results as expected.
Take Your Place in the Market Today
That said, one thing you should NOT do is let fear take over you as a property investor.
The media has been talking about an impending property crash for years now, but there are no signs of it actually happening soon.
We leave you with this brand new definition of FEAR: False Events Appearing Real.
What strikes fear in the hearts of many investors only appears real because they actually prevent people from making good investment decisions. So, if you could overcome this fear and stick with smart investing, you can navigate and win even with the current market conditions.