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Hold or sell?

Why it's better to hold than to sell

Did you know that there have only ever been three times in our history as a nation when Australian property prices suffered significant falls? They are shown in these graphs:

Each of these price falls was precipitated by an economic crisis – there was the Great Depression in the thirties, the sixties Credit Squeeze and the more recent Global Financial Crisis. More significant is that each of these crises followed the same sequence of events – firstly the share market crashed, then there was rising unemployment, falling wages and salaries and a curtailing of housing finance.

It was the lack of housing finance which actually caused housing prices to fall, and as you can see from the graphs, the only really big price fall was during the Great Depression, which incidentally was followed by the biggest rise in housing price history a few year later, when house prices trebled in ten years from 1945 to 1955.

What we are witnessing right now is a cut in housing finance – there has not been an economic crisis, nor a share market crash, neither are wages and salaries falling or unemployment rising. The banks are simply responding to the tighter APRA regulations and the Royal Commission by cutting their lending to property buyers.

The only eventual outcome of this is that rents will rise, as we are not building enough dwellings to meet the demand from our growing population, and if new households can’t buy, then they have to rent.

Once rents start rising, governments will come under pressure to increase lending to owner occupiers and investors, and so prices will start to rise again. It will just as easy for the banks to increase lending as it has been for them to reduce housing finance.

In that regard, it is important to see that the growth in house prices has averaged 8.3% per annum since 1901. This equates to a doubling in house prices every ten years and that is exactly what has occurred in Sydney and Melbourne, except that virtually all the growth has taken place in the last five years. This means that we haven’t had a boom in Sydney or Melbourne at all, while prices have only been marking time in the other capital cities.

So hang in there, investors – the next boom is not far away.

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Our Accuracy

My published predictions - an unequalled record of accuracy

In the Australian Property Investor magazine’s Hot One Hundred Issue of April 2012, I was the only expert whose predictions all rose in price over the next two years.

I also picked the hottest performer of all the experts – Highgate units, where prices rose by nearly 50% in a no-growth market.

 

 

In the Australian Property Investor magazine’s Hot One Hundred Issue of May 2013, I was the first expert to publicly predict Sydney’s imminent housing market boom.

My predictions also revealed which of Sydney’s suburbs would be the first to rise in price, heralding the boom to come.

 

 

My published articles have correctly predicted booms for Hay and Berri where prices doubled in a year or less and Byron Bay, Weipa and Highgate, where prices doubled in just a few years. 

 

 

 

In Property Observer Issue of 27 May 2016, I correctly predicted that Hobart was the next property hotspot and would boom in 2017, just before the growth kicked in.

Hobart was the best performer of all capital city housing markets in both 2017 and 2018.

 

 

In Your Investment Property’s Annual Top 100 suburbs guide Issue of January 2018, I picked the top performer, which is Karuah.

Karuah is not only the top performer of the Top 100, but has been one the best performers in the whole of Australia, with the median house price increasing by nearly 50% in less than one year.

 

All of the above predictions were authored by John Lindeman and published in the sources quoted, with the results independently verified by CoreLogic published data.