A CEO of a Gold Coast based property investment company is urging Australians to “do whatever you can to buy more property now” before a price explosion hits.
Custodian CEO John Fitzgerald, who also penned 7 Steps to Wealth, predicts property prices to continue to perform well despite the current COVID-19 pandemic.
“I’m pleading with you to do whatever you can to buy more property now while it is cashflow positive, and before the price explosion I can see, as clearly as the nose on my face,” Mr Fitzgerald said.
“Post COVID-19, like other countries now, house prices will explode due to low interest rates and strong migration.”
Here he shares his top reasons to invest:
1. Record prices are being set
On the Gold Coast the riverfront record was smashed with not one but multiple $12 million plus sales and a beachfront home that is under contract for $25 million.
Mr Fitzgerald said around the country, street and suburb records were being broken.
2. Interest rates are at record lows
“We have never seen the borrowing rate under 2.5 per cent,” he said.
“More importantly, prior to COVID-19, prices were going up one per cent per month around the country when that average borrowing rate for investors was circa 4.5 per cent.
“Borrowing $1 million in January would cost you $900 per week.
“Today’s interest costs for $1 million are as low as $400 per week. That’s massive.
“It’s the biggest game changer we have ever seen, given liquidity levels.”
3. Liquidity is at an all-time high
“The household savings rate has jumped to a 46-year high of 19 per cent,” he said.
“A record $48 billion in government cash flowed into households in the three months to June. “On top of that, early access to superannuation added $18.1 billion, while loan and rent deferrals helped households save another $1.5 billion.
“And this is separate from the rent and interest rate reductions that have boosted cash flow since the start of the pandemic.
“Households are awash with cash, and the numbers have only increased since the June quarter.”
4. Listings are down 20 per cent
Mr Fitzgerald said agents were reporting their biggest challenge is that listings are down in some markets.
5. New stock coming onto the market is at 50-year low
New apartment project launches totalled 23 nationally in the June quarter, down from 60 in the same period a year ago, the Urbis Q2 Apartment Essentials Report shows.
6. Population growth is higher than forecast.
All forecasts about migration have not taken into account the 1 million expats potentially returning.
“Normally we have 500,000 new migrants and 300,000 Australians leaving each year,” he said.
“No one is leaving and as many as 4,000 per week are coming home, which is a normal year.”
7. First homebuyer stimulus is underpinning any supply
“With the stimulus from State and Federal Government as high as $50,000 per house, land sales and even apartment projects are selling fast,” he said.
“On the ground we have seen land prices increase $20,000 – $40,000 per lot since June.”
8. Rental market is much tighter
“I have had a number of tenants in my houses asking if they can buy the house,” he said.
“One has been there 11 years. Of course I said no.
“Rental vacancy rates where we invest are below one per cent and rents are going up in our markets.
“Yes, rental vacancy rates reported in some areas at two per cent but mostly CBD apartments.”