2010 Property Outlook

When you consider what has gone on in the world over the last 2 years Australian property has remained remarkably resilient. Despite the dire predictions of doomsayers that property values would collapse by 40% most markets held their ground and by the end of 2009 had begun to increase.

The only sector of the market that did get hit fairly hard was the multi-million dollar luxury market. There were certainly bargains to be had there. But just watch how quickly this segment will bounce back.

If we gaze into our crystal ball there are a number of factors pointing towards a very positive 2010 ..

1. The Recession we never had
It is pretty remarkable when you consider the magnitude of negative global economic forces at work that Australia actually avoided a recession. Whatever it was - the rate cuts, the stimulus, China, maybe all the above kept the recession at bay.

It's also pretty remarkable that we have begun to increase rates. No one likes rate increases but this is a reflection of an improving economy. More on that below. We have also seen unemployment slide backwards. Again there were predictions of unemployment going to 7%, 8% some even suggested 10%. It would seem unemployment peaked at somewhere around 5.7 - 5.8%. Seasonally adjusted it now sits at 5.5%.

2. Record population growth
Australia has been experiencing record growth in population. In 2009 the population grew by 2.1% up from 1.7% in 2008. Making it the highest growth recorded in over 40 years. The problem however is we are not building enough new housing to accommodate all these people. This is due to a couple of issues.

Banks continue to remain very restrictive with their guidelines for property development. Whereas prior to the financial crises lenders would assume some risk in the deal they are now essentially looking for high profit, zero risk deals.

Government, primarily state and local also present the other major roadblock for development. According to the Property Council of Australia's Development Assessment Report Card Australia is underperforming in the delivery of efficient, fair and consistent planning and development assessment systems. This essentially means increased red tape for developments which causes delays, increased costs or undermines viability. Queensland for example received a score of 5.8 out of 10

These factors mean a tightening supply with an increasing demand which is expected to put pressure on property prices.

3. Rents expected to rise in 2010
The boost to the first home owner grant did see a number of people shift from the renters into property owners. This softened some of the pressure that had been on rents over the last few years. With the boost to the grant now over and most lenders now requiring at least a 10% deposit we will see the rental market start to tighten again over 2010 and rents will begin to increase.

4. Interest rates are still low

While it is likely we will see some rate increases this year rates still remain relatively low. The cash rate is still sitting at 3.75%. There's also a good chance that the RBA will see banks have done some of their work for them by increasing rates beyond cash rate movements.

5. A new wave of investors is going to hit the market
Because of the underperformance of superannuation of the last few years voluntary contributions to super have plunged by more than 55 per cent over the past two financial years. Investors are looking to place their money elsewhere. Many will have observed how property has held up throughout the crisis and see it as a safe haven.

According to a recent survey by Australia's largest mortgage insurer 47% of property owners think 2010 is good time to buy investment property. That's almost half the current property market thinking about buying an investment property this year.

According to Australian Finance Groups Mortgage Index the percentage of investment loans has shot up by 21% from December 2008 to December 2009. So the savvy investor has been sneaking along underneath the radar picking up property last year.

But don't panic you haven't missed the boat just yet. But equally I wouldn't be sitting back for too long. Remember the last property boom that started in 2001. Median property prices in Brisbane rocketed up by 96% in the space of 3 years. Everyone did pretty well but the big winners were the ones who bought in 2000 - 2001.

Are you interested in?

• Paying off your home loan and reducing personal debt?
• Reducing your tax?
• Creating wealth?
• Having a plan for the future that will give you financial security and independence?
• Replacing your income with a passive income stream?
• Learning how to turn $80 a week into $300,000 - $400,000 in the next 10 years?

If you are then you should apply for MTA's Property Plus programme.

Property Plus is MTA's Premium Wealth Creation service specifically designed to provide you with a structured, systematic and managed approach to building an investment property portfolio. Our approach is underpinned by sound budgeting processes and safeguards, and is supported by an experienced team of professionals to ensure that wealth created is sustainable and protected.

How to get started

1. Complete and return the Property Plus Customer Action Form 
2. MTA will conduct an initial financial review to determine your capacity and readiness to commence your financial plan
3. If you have capacity to invest we will arrange for you to meet with our Property Investment Specialists for an initial overview and needs analysis.
4. If you agree to go to the next step this will be followed by an in depth analysis of specific properties, investment performance, and tax-effectiveness for your specific situation, including recommendations and provision of investment report. This report is valued at $595.
5. If you do not have capacity at the present time we will discuss with you steps to become investment ready.

Complete the Property Plus Customer Action Form today.

The information provided is general in nature only and is not a substitute for independent professional advice. We disclaim liability to all persons or organisations in relation to any action(s) taken on the basis of this information, or any loss or damage suffered in connection with that information or material. You should make your own enquiries before entering into any transaction on the basis of this information.