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Empower Wealth Blog post by Empower Wealth

5 Property Tips on the Today Show!

Peter Stefanovic: Property prices across the country are dropping at their fastest rate since 2012.

Allison Langdon: It’s transformed the market, giving the power to buyers for the first time in years.

Peter: But if you’re looking to jump into the market right now there is a big warning to proceed with caution. So joining us with some expert advice, Ben Kingsley and Bryce Holdaway from The Property Couch podcast. Ben, firstly you, what is causing the prices to fall so quickly?

Ben: Yeah good morning Peter. I think you know in terms of the prices at the moment, what’s really causing that, is the sort of credit crunch that’s going on. So we’re not seeing the lenders being having the appetite to lend money and we’re also seeing some markets especially like Sydney that is getting to a price point where it’s starting to get a little bit expensive. Those two combinations are playing with our sentiment and that’s obviously seeing property prices fall.

Allison: But if we have a look at what we’re coming off, I mean in in Melbourne and Sydney alone, prices have risen by 45% over the past five years. I mean that’s clearly not sustainable. Is this a necessary correction?

Ben: Yes, it’s not really a… I mean Sydney as an example is actually 73% up. Melbourne is over almost 60% up in this cycle. So when you talk about Sydney market being off say 5% almost 6%, we’re just going to stay a little bit calm. I’m very happy to take the 73% if I could get there the 6% correction.

Peter: Bryce, over to you. If you’re tempted to buy now, what is your advice?

Bryce: My first bit of advice is that generalised commentary doesn’t really help anyone because no one’s buying Sydney, no one’s buying Melbourne. They’re buying a property in a localized suburb in a localized street. So despite the fact that the headlines for the two biggest cities are sort of talking about plummeting, there are areas that still got strong demand from owner-occupiers and so there’s still some good opportunities. So the first thing is there’s hundreds and hundreds of sub markets across Australia, it’s not just one big market. So be mindful of that and secondly, I’d say that it’s important to think about the fundamentals. Primarily, buy the right property, correctly finance it, hold it for the long term and buy when your cash flow allows.

Allison: Alright Ben, I’ll put this one to you because I don’t think Bryce can hear. But if you are buying now, I mean what are the Five Golden Rules?

Ben: I think, yes they’re really important these ones. And the first one is you know basically buy the right asset. So buy the right property in the right location. We talk about the location doing 80% of the heavy lifting so that’s really important. Choosing that right property is going to be a really important decision first up.

Bryce: Now the second one is optimal financing. That’s really critical because we don’t want a borrowing capacity, we actually want a borrowing strategy. We always talk about the fact that it’s a bit like a game of chess. You need to think two or three moves in advance. Property is a game of finance just as much as a game of bricks and mortar. So you need to get that right but also have a buffer in place to make sure that your cash flows fine.

Ben: And then the third one we’re looking at is knowing the numbers. I mean it’s really important to understand your numbers from a cash flow point of view. You don’t want to overextend yourself because if you can stay in the property market for the longer term, it’s going to be really beneficial for you.

Bryce: Now that fourth point there around some defence if you want to protect the assets but you also want to protect your income and your lifestyle. So by that if you have a temporary time when you can’t earn your income, you might need some say income protection insurance or importantly, if something happens that you can’t earn an income for the long term, you need to have some defence around that and talking to a licensed financial planner will help you put that in place.

Peter: Alright fellas, we’ve got about a minute so if you can quickly take us through the states of our markets in our major cities?

Ben: Yeah sure! I’ll start it off and we’ll talk about Sydney. So it is definitely… two years ago it was basically, you know, buyer excitement and pushing the market. That FOMO, Fear Of Missing Out. Now we’ve got a changing and cooling market and the confidence is not there. So Sydney will probably continue to sort of fall slightly.

Bryce: So I think, in terms of being borderless. So Melbourne’s come off a bit. There’s really two tiers. The affordable areas are still going great but the top ends really come off. So keep an eye out of being outside the two biggest cities and there’s opportunity there for everyone. But don’t panic this too shall pass.

Peter: All right! That’s good advice. Yeah, like the Coldplay song. Don’t panic. Very good fellas. Some good advice there. Thank you very much for your time this morning and yes some important pointers.



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