Property Market trends: Where the market is going and specific evidence that supports it.
We are in a Global Financial Depression.
It’s official – the GFD is here. And despite what the media says, now is the best time to buy properties, says Nathan Birch of Binvested.
With interest rates starting to drop around the world, policy makers are gearing up to kick start the next cycle of growth. And while uneducated people are sitting on their hands, those in the know are accumulating assets.
Down, down, rates have gone down.
Not too long ago Nathan made a bold prediction. He said that by May or June this year we would see the cash rate fall. He was right.
“We’ve seen interest rates come down last week for the first time in three years,” he says.
“We’ve now got the lowest interest rate in history – and that’s only the start of it.”
Nathan believes we will see rates fall even further by Christmas this year, before turning negative by mid 2020.
“I think that stimulus packages in the form of lowering interest rates to negative interest rates is the biggest tool that they’ve got.”
But lower rates are only one part of the package, he says.
“We need to look at the drivers from here on and ask where are we heading.”
“I think our best attempt to keep away from recession is to stimulate the economy.”
He says policy makers tend to do this via quantitative easing and building infrastructure as well as lowering interest rates.
Minimum wage increases and tax breaks.
In recent times, we have seen the minimum wage increase as well as tax breaks that will help workers save $1,000 a year.
This “helicopter money” is another way that governments try to stimulate the economy during times of recession.
Will house prices drop further?
In some areas of Sydney, Queensland and Melbourne, property prices have dropped by as much as 25%.
The media says it could get even worse – but will it?
“We need to look at the real data,” says Nathan.
He says construction has declined and there are less buyers as well as less properties on the market. With rates coming down and rents likely to go up in the near future, it will become cheaper to buy rather than to rent. He says, this will cause the next real estate boom.
“I personally feel that we’re at the bottom of the market,” he says.
“We’ve hit the bottom and now is the time to be very heavy.”
In fact, he goes as far as to say the following:
“If you don’t buy property now and you want to get into the market – you’re stupid, because the next 12, 24, 36 months is where the party is at.”
“This is a time for asset accumulation.”
While all those uneducated people are scared from listening to horror stories about prices crashing, the savvy ones are out there using this to their advantage to negotiate bargains.
It’s so simple, it’s kind of ridiculous.
“There won’t be a better time than now to be buying,” he says.
While the whole market hasn’t dropped by 25%, there are areas where you can buy properties for 25% less than they were selling not so long ago.
What about those lending restrictions?
Nathan believes there will be some easing on this front. He says policy makers are already talking about lightening up on some of the restrictions introduced by APRA 36 months ago.
Will the banks follow through on rate cuts?
But what about those banks? Recently we saw lenders move independently from the RBA to increase rates.
According to Nathan, this was because the cost of lending was higher at that time due to global credit factors.
Now, we are seeing markets crack globally. Property prices are falling and recession is threatening economies all over the world. Once interest rates are reduced in line with this it will bring down the cost of credit and allow our banks to drop their rates.
Why haven’t I heard any of this in the news?
Nathan says it is important to remember that the media didn’t say anything about the GFC until after it happened.
By the time things are reported on in the news, it is too late to take proper action.
He says now is the time to be cautious and pessimistic by making educated and calculated decisions.
“Educated people make a lot of money in these sorts of times,” he says.
“If they are not educated, the market could take advantage of them.”
And any savvy investor will know that having the upper hand in this sort of scenario is key.