We all know that Nathan loves to make a good prediction – not just about the property market, but about the economy in general. We thought we’d take a look back at some of the ones he has made over the last year or so to see what came true.
Why Nathan grew a beard.
According to Nathan, he locked himself away for most of the last year trying to understand the deeper workings of the global economy.
Hence, the beard.
Now, he has a whole heap of new economy and property predictions he is itching to expose to the community – but he doesn’t think you should blindly believe them.
“I encourage people not to believe what I say, but to question everything that they see.”
“Go and research what I am saying,” he says. The only way you can get ahead financially is to inform yourself about what is happening in the economy.
He says, it is important that we break away from the habit of simply listening to the media and believing everything that is said.
Doing your own research and making informed decisions is what it is all about.
So, let’s take a look at six big predictions Nathan made to see if his beard was worth growing after all.
This was probably one of the best calls Nathan made over the last few months. He said that thanks to tighter lending regulations keeping more and more buyers out of the market, 2018 would mark a drop in demand. This would mean a window of opportunity for those who are finance ready to buy plenty of properties, not just for sale, but, “on sale.”
According to CoreLogic, housing values fell for five consecutive months up to the end of February 2018.
Sydney values dropped by 2.4% during this time.
We are now able to get plenty of great opportunities for our buyers – and this is set to continue for some time.
Over the past couple of years there were countless doom and gloom stories in the media about a so called property bubble in Australia. Each few weeks a new expert would predict a crash.
Nathan was one of the few who said this wouldn’t happen – and he was right.
According to CoreLogic head of research, Tim Lawless, Sydney values have dropped by 3.7 per cent since peaking in July 2016. This can hardly be called a crash – a sentiment which Mr Lawless himself expressed in the February 2018 Home Price Index report:
“It’s not like the Sydney market is crashing — it’s more a controlled or managed slowdown, largely due to a reduction of investment in the marketplace.”
Nathan says much of the damage has already happened, indicating that a massive crash is unlikely to occur.
“I think the market has taken half of its hit already, and we’re going to see it play out for another 12 to 24 months with very strict lending policies.”
Looks like this hasn’t happened – yet.
However, Nathan was certainly on the money when he said that rates wouldn’t rise for a long time.
In his 17 April 2018 Grogonomics blog, Guardian columnist, Greg Jericho wrote, “We are now experiencing the longest run without a rate rise in the RBA’s history.”
He says, it has been more than seven and a half years since the RBA last raised the cash rate.
It has been set at the record low of 1.5% for almost 21 months in a row – and according to many economists, it will stay there for the time being.
Alan Oster from NAB says, “No increase until we get better wages and more consumer activity.”
John Hewson from ANU says: “[The RBA] simply can’t move given level of household debt. The economy is still mixed.”
Paul Dales of Capital Economics says: “There are still no real signs that inflation is heading back up to the middle of the 2-3% target range, so interest rates need to stay low to give it a bit of a boost.”
Nathan’s new prediction.
While Nathan believes rates will eventually drop to zero per cent (or even lower), he believes there will be a small increase or two by the second half of this year. We will elaborate more on this in an upcoming post.
Nathan said that with fewer people buying, more will need to live in rental accommodation. Also, if there are less investors in the marketplace, there will be fewer rental properties available.
In other words, rents will go up – and at the time of this prediction, they had started to go up substantially.
Since then, however, they haven’t continued to rise that much. In the second half of 2017, the Domain State of the Market report showed little or no increase in the median rent for Sydney, Melbourne and Brisbane.
So, while rents did go up at the time of Nathan’s prediction, they didn’t eventuate into a future boom.
In his yearly market outlook for 2017, Nathan said he was expecting continued price growth in the Queensland markets of the Gold Coast and much of the greater Brisbane area.
Not all Brisbane suburbs would do so well, he cautioned, with some metro areas at risk of oversupply.
According to a Real Estate Institute of Queensland (REIQ) report that rated performance in the state’s markets throughout 2017, the median sale price in the Gold Coast at this time increased by 7.7 per cent.
Brisbane recorded an average increase of 2.6 per cent, with many suburbs surging in price while others dropped.
The suburb of Teneriffe, for example, became the city’s first $2 million suburb in 2017 after the median sale price surged by 30 per cent to $2.4 million in the space of one year.
Kangaroo Point and Kalinga also did very well, with median values rising by 28.4 per cent and 22.5 per cent respectively.
REIQ media manager Felicity Moore said “supply issues” were possibly to blame for inconsistencies in price growth across the city.
At the time Trump was voted in as President of the United States, Nathan called it “An interesting victory”.
He said, with many of Trump’s policies centred on bringing industry and jobs back into the US, major trading partners, such as China, would likely be affected. He said that this would possibly cause political strain between the two countries.
Trump has threatened to impose trade tariffs on $150 billion worth of goods exported from China, while China has been making its own threats. The two super powers have pretty much become engaged in a trade war, causing a lot of stock market volatility.
According to CNBC reporter, Bryan Borzykowski, an ensuing trade war with the US could cause major damage to China’s economy.
He says, nearly 20 per cent of the country’s exports go to the US. If the US does impose the tariffs, China’s economy may drop by as much as 0.5 per cent – instead of topping 6.6 per cent this year as projected by the IMF in January.
China’s debt to GDP ratio is now at more than 300 per cent – almost twice of what it was in 2008. Many people, including Chinese officials, are warning of a financial sector debt bubble that is about to burst.
But, that’s another story …