Nathan’s predictions for 2019.
It is hard to believe 2018 is almost over. The past year has been an interesting time for property, and as Nathan reveals below, there are plenty of things to watch out for in 2019.
This time last year…
At the end of 2017, Nathan made some big predictions.
Thanks to his unfortunate beard, many people thought he had lost the plot. But, throughout the course of 2018, these predictions began to ring true for many property owners.
The market has stayed flat.
Nathan accurately predicted that many property markets would stay flat or sideways for the year.
But, this was not bad news for all. Many property investors continued to make money during this time thanks to well-thought out strategies and being able to buy the right properties at a competitive price.
Interest rates did not fall.
While Nathan thought that interest rates would drop twice by August 2018, the RBA kept its cash rate at 1.5% throughout the year.
Banks went on to increase rates independently of the RBA, which Nathan attributes to quantitative tightening.
The GFD hasn’t begun … yet.
He says people thought he had lost his mind when he did his five-part webinar on the looming threat of a global financial depression.
But while this hasn’t happened just yet, Nathan believes the global economy is gearing up for one over the next 12 months.
What does 2019 hold for property?
According to Nathan, the next 12 months will be a time of opportunity and optimism for those who are prepared to take advantage of the current market.
But, for those who have overstretched themselves during the boom, the next year will not be so good.
There will be volatility across all markets.
Nathan says, property has copped a beating in the media recently.
While the downturn seems pretty recent, the real market has been winding back in price since the Sydney and Melbourne markets peaked in September 2016, he says.
This is where the opportunity now sits. Markets are likely to keep coming back in price until regulators step in with some stimulus measures.
Once this happens in the form of lower interest rates, government incentives and grants -and maybe even the introduction of a universal basic income – prices will begin climbing once more.
We are going to see ‘the big crash.’
Nathan says that in 2008 we saw some companies and institutions fold because of bad business practices.
This time, he says, we are likely to see countries and currencies go backwards.
All stock markets and currencies peaked around January of this year. Nathan says, every currency has been going backwards since.
2019 will be a time of major corrections.
Nathan says don’t be surprised if large banking institutions go under during the next year. Many have got too many derivatives on their books and are at risk of folding if a derivative or stock market bomb goes off.
Enter the stimulus phase.
Property has been getting bad press across the globe thanks to a lack of liquidity – but this can’t go on forever.
Nathan says that more money will inevitably be printed to cope with the economic crisis at hand. This will bring up property prices once more.
He says, in 2007, interest rates were at 7.25% in Australia. Over the course of five months, they were cut down to 3% – wiping 66% off the cost of money.
He says this is the main reason we had a property boom.
Nathan is now looking forward to the next phase of stimulus that occurs.
He thinks that within six months or so of the big crashes occurring, we will see stimulus happen in the form of rates heading down to zero – or maybe even into the negatives.
Watch out for some major infrastructure projects.
This will also be a time where road, bridges, train lines and other major infrastructure projects are built. The Government is likely to invest in these things in order to keep tradespeople employed. This should have a trickle-down effect on the economy in order to keep it afloat.
A year of global financial turmoil is ahead.
Nathan also thinks the next 12 months will be a “big bumpy ride” on the stock market, with geopolitical issues probable. The GFD is a result of the GFC being kicked down the road.
The property market for 2019.
Despite all the doom and gloom, there will be some markets that have good growth, Nathan says.
There are areas that have been impacted over the past decade because of the dollar declining in value. Thanks to more income coming into these markets, property values may begin to rise.
They may not be the usual foundation property markets, he says, but they are ones that are likely to benefit in this cycle.
This is definitely not the time to buy a property in Sydney and hope it will go up, he says.
The top end of the market is likely to be hit hard during this time. Similarly, markets that are invested heavily with those who have overstretched themselves are likely to go down as people flock to sell off and downsize into something more affordable.
Blue collar areas that are family focused and have more affordable entry prices are the most likely to benefit during 2019 as there is always a need for affordable housing, says Nathan.
The road ahead.
The opportunities that now exist are very similar to those of the GFC, he says. While those who are unprepared or who have made some bad financial decisions will be the losers of this market, those who are well informed and on the right trajectory have the advantage.
It is important to make sure you are in a well-protected financial position before you take advantage of falling prices to secure some bargains.
Once stimulus begins to come in, prices will start to go up and those in a good position will benefit.