An Interesting Year in Property Investing in Australia

Well 2008, and even more so 2009, have and will proove to be very interesting years for property investors.

What have we learned in 2008: property is more stable than shares?  I think the eye opener for anyone too young to have lived through the 87 crash was just how little investment, whether it is shares or property, has to do with the market fundamentals. Its all driven by people i.e. emotions, greed and fear particularly.

I’ve been lucky (?) enough to see the cycle more clearly than most as I am living in Western Australia’s Perth - capital of the great 2008 minerals boom. Watching the local mining industry - it went something like this

• early October private investors paying for the drill program - results looking good, team on site for the end of the field season
• one week later program cancelled, team de-mobbed, drilling and catering contract cancelled
• several weeks after that admin supprt cut from 5 days to 2 days a week and database support from 3 to 2 days a week.

Meanwhile we have directors selling houses and other toys to try and stave off margin calls. Cottesloe, Perth’s most prestigious beachside suburb has more houses for sale than in living memory and reports are that mortgage repossessions are starting to creep up.

Meanwhile though the State is still in surplus, just, and the unemployment rate is only forecast to rise from 3 to 4%. In fact its suggested that there will still be new jobs being created for at least the next 18 months.  There has been such a labour shortage for so long it really is going to take that long to balance that out.

My Picks for 2009

In fact the good news is that at the lower end of the market those who couldn’t get into the market are starting to buy thanks to the $21k hand out from the government  - so long as jobs hold up the Perth developers may finally move some stock

The Pilbara’s property market will collapse - in direct proportion of how much pain China inflicts on the Iron Ore Producers

Other mining towns will be very dubious property investments: but then they always were.

2009 will be a great year to pick up a bargain in millionaire’s row - even better if its a second house at a desirable seaside town.

As interest rates continue to drop they must be near bottom - the US is practically at 0%  - that’s a hint that 2009 might be a very good time to fix a long fixed term interest rate.

Hope you have a great holdiay season - Australia goes for a long hot barbeque this time of year so we won’t be posting in the Australia category until next year!