2022 Property Wrap-Up and Year Ahead
December 23, 2022
As we close out 2022 and prepare for the new year, it's a great time to reflect on the past year's highs and lows and look ahead to what's in store for real estate investors in 2023.
2022 saw several shifts and changes in the property market, and there's no doubt that 2023 will bring further evolution. In this blog post, we'll review the highlights of 2022, examine key trends, and discuss market conditions and strategies to help you prepare for success in 2022. We'll also provide an outlook on what to expect in the year ahead for those looking to invest in real estate.
2022: A Year in Review
The Sydney Hills Shire property market has remained relatively firm in 2022, despite the downward price pressures from rapidly rising interest rates. Prices have mostly held and, in some areas, even gained value modestly, partly due to Sydney's escalating housing shortage and local Hills Shire market integrity.
A key reason we choose to operate in this region is that the market has solid fundamentals. This Hills Shire Council has one of the nation's most successful and wealthiest LGAs with a mandate to drive quality infrastructure development and population growth.
The region has low levels of mortgage stress, lower than other Central and Western Sydney Local Government Areas. This lack of pressure to sell is why we are seeing such little stock on the market right now – down over 70% on pre-covid levels. While at first glance interest rates may seem 'high', there is not enough quality stock to meet buyer demand – which puts a hard floor on property prices.
The shortage of stock is an ongoing trend that will likely continue into 2022 and beyond due to the impact of Covid-19 on the development pipeline, rising construction costs and difficulties accessing affordable finance for developers. This situation is further compounded by the return of immigration, adding to an already growing housing shortage.
For buyers looking to enter the Hills Shire property market in 2021, it's essential to be realistic about the current conditions. Competition for quality stock is still robust – even if not as frenzied as in the 2021 market peak. It's essential to ensure you secure the right advice and strategy to give you the best chance of success.
What To Expect in 2022
Before Covid, it is estimated Sydney was short by 100,000 dwellings, with almost all LGAs consistently failing to meet annual government growth targets for new housing. By continuing this business-as-usual approach, Sydney is projected to be an additional 80,000 dwellings short by 2032. Imagine a property shortage twice as dire as today. That's the barrel we are staring down!
While this is bad news for renters and possibly first-home buyers, it will benefit investors. Rents are rising, and asset values are on a rapid upward trend (if we smooth out the minor bumps along the way).
While prices appear high compared to what we are used to, we can't ignore that our prices are still relatively affordable compared to many international cities, and incomes are rising.
So, in contrast to popular media sentiment, now is an excellent time for investors to buy property. The properties available now are more likely to have sellers that are motivated to settle. Times like this are when you can get significant bargains or favourable terms.
It's also important to remember that the current property prices are still well below what is forecast for the future. With this shortage of dwellings, most economists acknowledge prices will continue to rise in the future. According to an analysis by PRD Nationwide, the average Sydney home will cost $2.4M in 2030.
So, investing now could be the best way to get ahead of the competition and gain a secure financial future. Don't forget you should look to make money when purchasing a property by buying at a discount, which will increase the effectiveness of future gains. With the right advice and support, your investment can create profits now while also pay-off in the long run.
When The Media Says Don't Buy, Do the Opposite
The media always loves to bash property. If the market is weak, the headlines call is a bust. If the market is strong, they are calling it a crisis. Very rarely does a rational analysis make headlines. This rhetoric creates a negative sentiment and scares many people out of the market when they should be taking advantage of it.
Right now, media sentiment around the property is gloomy. We saw similar feelings in the 2020 property slowdown. Ironically, this is when we found some of the best deals and delivered bargains to our clients. For example, land lots purchased in Box Hill in 2020 now have over $400,000 in equity (supported by current real-world bank valuations). Likewise, clients who purchased units around that time have realized profits of $150,000 or more.
With most property owners having experienced equity gains over the last 24 months, it is important not to become complacent. Now is not the time to 'sit and wait'. Indecision is an action that could cost you $100,000s, and lost time is something you can never buy back.
For example, we currently have deals that could make their buyers anywhere from $150,000 to $1.5M in net worth in 24 months. We have units, land in Box Hill, large prestige lots for upsizes and bespoke offerings. Each is at a significant discount to the going market rate. We also have deals with low deposits and options for extended settlements as far away as late 2023.
If you're looking for an investment that will make you a substantial return in the short term and provide you with security for the long-term, then one of our deals could be a perfect choice. Talk to one of our experienced advisors to discuss what options may be available to you. We can also help you to strategize and plan for a secure and prosperous future. Contact us now to find out more!
Our #1 Tip For Property Investors
It is no surprise that our #1 tip for property investors is to buy at a discount. Not only does this mean you make gains from day one of settlement, but it is also the essential ingredient underpinning a rapid leapfrog acquisition strategy.
Why? Because it means you can take advantage of the bank lending policies and access maximum finance. If you can buy 20% below market value, then you are immediately at the 80% Loan to Value ratio. This means you can put very little cash down to secure a loan, rather than the usual 20% deposit a bank requires. This allows you to grow your portfolio quicker and leapfrog from one property to the next by leveraging your equity as a cash deposit for your next property. By applying this strategy, some of our clients could buy multiple properties and over $2M in property within a few months with just $17,500 cash down.
Leveraging other people's (the bank's) money is a standard component of many wealth-building strategies. It lets you multiply your gains by purchasing more investment stock than you could with cash savings alone. The most successful investors understand that the most significant limitation to their wealth-building potential is their ability to access finance.
Easy access to finance is also why we almost always recommend that if you can withdraw your equity, you put it aside so that you are ready to strike when you see a great deal. It can make or break a negotiation. It is essential to consider a financial strategy as part of your acquisition plan.
Think Finance Before Property
When planning to buy property, you need to first and foremost think in terms of finance.
1. Will this property help or hinder your ability to access finance for further property investment?
2. If you buy this today, what will you need to buy in the future to complement it?
3. How can you structure the deal to overcome any immediate financial limitations?
For most buyers or investors, these are not straightforward questions to answer. They require an intimate knowledge of the financial regulatory landscape, underlying financial and property market factors, individual lender policies and local property knowledge. That's all before you even start looking for or vetting any properties.
Your choice of property and lender should be informed by research rather than impulse. You should also take the time to find a finance strategist and property mentor who understands your goals and can detangle all the factors to create a clear action plan.
It's also essential to consider the long-term when investing in property. As we saw this year, the market can be volatile, and prices can shift quickly. It's essential to make sure your property investments and financial foundations are built to weather the storm.
Make 2023 Your Year
Take control of your future and put yourself in a better financial position by taking action today.
Contact us now to find out how you can start planning your financial security for the year ahead.
Property investment is a powerful tool for creating a stable, secure future for yourself and your family. Take the first step and schedule a Strategy Session with us today to explore the possibilities.
We guarantee you will gain valuable insights, no matter where you are on your wealth creation journey. Our team of experts can help you assess your current financial position, set goals and create a personalized strategy to get you to where you want to be.
We provide a holistic wealth creation approach, incorporating property investment and finance strategy. With our help, you will be confident to make the best decisions for your future.
Don't underestimate yourself and your ability to create the future you want and deserve. The most challenging part is taking the first step and asking for help. There is no right or wrong way. There is just knowledge and possibility.
Contact us today, and let us help you unlock your potential and create a secure and prosperous financial future.
From the team at Wealth 360°, we wish you good health, wealth, and happiness in the coming year.