When Hard-Core Property Bears Become Bulls

When Hard-Core Property Bears Become Bulls

A mate of mine purchased a property a few weeks ago in Brisbane.

He also happens to be an economist.

He’s been a bear on property for years and years, always expecting the bubble to bust.

So when he called for advice on what/where to buy — well, what can I say?

I took it as yet more confirmation on what’s to come.

A boom unlike anything we’ve seen to date.

Spin forwards a few weeks, and he’s sending me pictures of his new investment property like it’s a newborn child.

Wishes he could buy a few more.

As he said, it’s a ‘no-brainer’.

At this stage in the cycle, yields in Brisbane pretty much cover his interest payments on the loan.

In his words: ‘I’ve shifted to the dark side.

He knows it’s hard to deny a vested interest in pushing prices skyward when you have skin in the game.

My mate isn’t the only property bear I know to decide ‘now is the time’.

I have another client right now that also held off buying for years fearing a crash.

Now in his 40s, he knows there’s no denying what’s to come. If COVID didn’t ‘pop the bubble’ — what can?

In fact, not only did COVID fail to pop the bubble — it’s shaking the market up big time!

By that I mean in ‘upwards’ in price.

I’ve seen values skyrocket over recent months.

Gains to the tune of $200K–300K in capital growth on suburban blocks of land in areas capturing an influx of home buyers fleeing lockdown capitals.

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This has caused vacancy rates to plummet.

SQM Research released its August rental report this week.

According to the data, vacancy rates are at a 10-year low — at just
1.6%:


Vacancy Rates of August 2021

Source: SQM Research

[Click to open in a new window]

The regions where the vacancy rates are lowest, are the regions you need to target if you’re looking to ride the windfall gains that will continue flowing to landlords over the coming years.

Rising rents feed into rising prices.

This is well known to those that study their real estate cycle history.

Not only do rising rents encourage tenants to become buyers…

The cash flow increases the amount investors can borrow.

And this in turn feeds the real beneficiary of rising property prices — the financial sector:

Instead of paying rent to the landlords, like you did ever since feudalism through the 19th century, housing now is bought on credit. So the rent that used to be paid to landlords is now paid to the banks as interest. Renters pay interest, and over the course of a 30-year mortgage the banks end up receiving more money and interest than the seller receives when he or she sells the property.

Economist, Michael Hudson

It’s onwards and upwards for the property market for the time being.

If you want to learn how to take advantage of the gains to come — click here.

Best wishes,

Catherine Cashmore Signature

Catherine Cashmore,
Editor, The Daily Reckoning Australia

PS: Australian real estate expert, Catherine Cashmore, reveals why she thinks we could see the biggest property boom of our lifetimes — over the next five years. Click here to learn more.