What property investors can learn from the 2018 market

An end-of-year message to investors from our CEO & Founder, Joseph Chou

In my experience, most people already believe property is a great investment option and wished they’d started investing years ago. But whether it’s because of the media, wider market uncertainties, lack of time, knowledge, or the confidence to make a decision and take action – so many people let opportunities slip by.

For example, there are so many people who did not make any money in the recent boom in the Sydney and Melbourne markets. By this I mean, there are so many people who were financially qualified to be able to invest, many who wanted to invest but who failed to act on their intention.

Of course, this is understandable. Property investment is a significant commitment and it can be hard for a new investor to take the first step.

But there are so many people out there who aren’t even aware that building wealth for the future is important. There are so many people who are not even aware of the possibilities and options for investing. If you are aware and have the intention, then this is a big step in itself.

If you have not yet managed to take the next step and actively get yourself into the market, what I would say is: make 2019 the year. I encourage you not to let another year slip by or let another cycle come and go without taking some action. Because at the end of the day, only action will bring results.

So what can we learn from 2018 to be able to take some action in 2019?

• Be selective about who you listen to

I read a great quote recently: “the media is never there to inform, it’s there to startle.”

As negative headlines of plummeting property prices dominate the media – now more than ever, it’s important to be careful who you listen to.

Because what we know from looking at the data is that there is a more nuanced story than what appears in the newspapers. Certain areas, suburbs and types of properties are continuing to outperform the wider market.

Look beyond Sydney and Melbourne and you’ll find the South East Queensland market is genuinely moving. There’s some simmering in Western Australia and to some extent South Australia as well. But you won’t find too much of that reported in the media.

• Embrace the opportunity mindset

There’s no doubt that there is some pain involved now in terms of credit, however there are signs of improvement.

Just this week APRA announced that it will remove interest-only lending restrictions as of 1 January 2019. This is the second time APRA has relaxed lending restrictions this year. In April, the regulator lifted the 10% annual ‘speed limit’ on investor credit growth. We would expect these changes to help relieve some of this ‘pain’ and help stabilise the overall market in due course.

Regardless, as our Director of Property & Research Grant Ryan detailed in length last week: wherever there are challenges, there are also opportunities that emerge from these challenges. Having the right mindset in your response to these challenges will still be very important.

For example, while some buyers will be scared off by the media headlines, this will leave others who are more informed to take advantage of the markets that are still growing.

Some may be deterred by finance, while others will take the opportunity to work on themselves, on their careers and better qualify themselves.

Investors with strong financial profiles will realise that lenders will be competing for their business and take the opportunity to negotiate better rates and secure a quality property before the market becomes highly competitive again.

•  Look for owner-occupier appeal

We expect to see a genuine difference between quality properties with owner-occupier appeal and ‘investor-focussed’ properties in 2019. In a booming market, any property you buy will probably perform. Now, investors will need to be even more discerning. At Ironfish, our focus is quality properties, and this is why we’ve been able to successfully help our investors settle so many quality properties this year – while others are facing 20% – 30% valuation issues.

Ironfish has never been a fan of student accommodation or serviced apartments for the same reason we steer clear of properties that will only appeal to investors. When you come to sell your asset, you want to be able to access the widest possible market. Property investors make up only a small percentage of the market, comparatively speaking. Investors also tend to make purchasing decisions less emotionally. Owner occupiers may be more willing to pay a premium for something they fall in love with.

If Labor gets elected next year and upholds their promised changes to negative gearing – which will favour new property – then owner-occupier appeal will be even more important for investors when and if they decide to sell.

• Surround yourself with the right people

This is now the third market cycle I’m coming into since becoming an investor and I can tell you now that challenges will always exist regardless of when or where you decide to invest.

But as an Ironfish investor, you are so much better supported than the many investors doing it alone. As an Ironfish investor you will be able to embrace those challenges and take advantage of the opportunities that will emerge. You are also backed by our comprehensive service, research, property selection and customer care teams for the life of your investment journey.

Our national reach means we can help you invest with confidence in other cities or learn more about ‘sub-markets’ in Melbourne or Sydney which are expected to outperform the wider market.

Our relationships with leading developers – long-standing brands – means we will continue to be able to offer you quality properties that are a cut above. Our property and research team ensure the properties we recommend have strong fundamentals – including properties favoured by owner occupiers – and offer genuine value for our investors.

In 2019, you can expect to find fewer property companies; particularly those without the scale, infrastructure, relationships and customer-centric approach that we have established over the past 12 years. As I’ve mentioned in the past, Ironfish is growing at a time when others are scaling back or closing their doors. We are doing this because we know there are opportunities for investors, it’s a time when investors will need professional help more than ever and we want to make sure that we are investing more into our people and services, so we can provide our customers with a better service experience.

Building wealth through property investment takes time, so even if you purchase the perfect investment property at the perfect time – this alone is not going to help you achieve financial freedom. The key is to build a portfolio strategically and then to hold those assets over the long term – and holding is easier said than done. But with the right support team around you, success in investment – as in anything in life – is far more achievable. We are here for the long term to ensure you achieve your goals; at Ironfish, our aim is to create customers for life.

So, as we finish up for 2018, I would like to take the opportunity to wish all our investors a Merry Christmas and Happy New Year. Thank you for taking action with us. I hope our continuing investment in Ironfish people and services will enable us to exceed your expectations in the new year and contribute to your further success in 2019.