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Picking the right city is more important than the right suburb if you want to make good money from investing in property.

That’s a key lesson learnt from a new study of the past decade of house price performance.  Property Investment Professionals of Australia chairman Peter Koulizos examined the 10-year price movements of homes across thousands of suburbs and towns and found trends that can help investors make decisions.

For example, don’t always follow the old saying that prices double every 10 years.  Prices in once-booming mining towns – including Port Hedland, West Gladstone, Roxby Downs and Newman – are still more than 40 per cent below their levels of a decade ago, the research found.

“Successful property investment is about long-term economic fundamentals, not supposed short-term financial gains,” Mr Koulizos said.

“And that usually means investing in locations with diverse, multifaceted economies, and not areas that financially ebb and flow depending on the strength – or weakness – of a single industry.”

He also found that:

  • HOMES close to city centres did better than those near the beach or in outer suburbs.
  • HOUSE prices rose stronger than unit prices in most capital city suburbs.
  • CHOOSING the right city was vital to tap into its stage in the property cycle.  “Pick the right city, then the right suburb and street,” Mr Koulizos said.

Metropole Property Strategists CEO Michael Yardney said people should not generalise about the property market because there were submarkets across Australia.

“Each state is at a different stage of its property cycle and within each state the markets are segmented by geography, price points and type of property,” he said.  Mr Yardney said a lot could happen in 10 years, and key lessons included:

  • NEITHER  booms nor busts last forever.
  • BEWARE of doomsayers who, for decades, have been claiming that prices will plummet.
  • PROPERTY investment is a game of finance rather than real estate, best illustrated by recent tougher lending restrictions.

“If you can’t get more finance, you can’t buy more properties,” he said.

Another lesson was that the popular view was often wrong.

“Crowd psychology influences people’s investment decisions, often to their detriment,” Mr Yardney said.

“Investors tend to be most optimistic near the peak of the cycle, at a time when they should be most cautious.”

He said most investors knew less than they thought about property, finance and economics.

“The markets will humble you if you don’t check your ego at the door.  Always continue learning,” Mr Yardney said.

 

Anthony Keane, Cairns Post, 8 October 2018, Page 28
Anthony Keane, Daily Telegraph, 8 October 2018, Page 33
Anthony Keane, Courier Mail, 8 October 2018, Page 37
Anthony Keane, Adelaide Advertiser, 8 October 2018, Page 39
Anthony Keane, Mercury (Hobart), 8 October 2018, Page 19
Anthony Keane, Northern Territory News, 8 October 2018, Page 31