Boom towns: predicting the unpredictable

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Many investors think that it is simply impossible to accurately predict when or where booms are imminent. In fact, accurate prediction seems to be so risky that some investors refuse to buy properties anywhere, unless a price boom is already underway – and this could prove extremely costly.

Many of us buy lottery tickets, and while we don’t know who will win, we do know that some person must – and that lucky person could be us. The concept of luck also occurs in the property market, with many believing that investors who make quick and huge fortunes from property are just plain lucky.

John Lindeman, property market author, educator and commentator, and director of Property Power Partners, says that whilst waiting for an area to “boom” may remove one risk, it introduces even more dangerous ones.

“For example, the boom could be about to end and recent buyers may discover that they have paid way over market value in suburbs where prices are falling and no one wants to buy,” he shares.

“Knowing the causes of booms empowers us to predict the effects. If we know with some certainty what causes property market booms, busts and slumps to occur, then we can invest with confidence in areas about to boom and easily avoid those suburbs where prices are about to crash.”

The good news is that we can confidently make such predictions about the effects if we know what causes them to happen in the first place, he says.

“There are some types of events that can lead to dramatic changes in prices and rents. The first are natural events, such as droughts or floods and the second are market driven events, such as a retiree led boom,” Lindeman explains.

“Each of these events leads to predictable changes in local prices and rents, so by knowing when and where they are occurring, we can identify the location, intensity and duration of price and rent changes that will result.”

In the current issue, Lindeman looks at each of these in turn and see how we can predict the unpredictable.

 

For the full story of how to predict the unpredictable, read the complete feature article June 2019 edition of Your Investment Property magazine.

On sale at news agencies and Coles supermarkets 9th May to 5th June or download the magazine now.

 

 

 

Top Suburbs : murdoch , windale , westmead , whyalla , east victoria park

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Comments
  • Greg says on 19/05/2019 11:04:26 PM

    Hi Sarah,
    The market can certainly be predicted on when its going to crash and why!!
    If you would like to understand when and why, I highly recommend that you study anything from Fred Harrison. Especially his book, 'Boom Bust, House Prices, Banking and the depression of 2010'. Fred Harrison predicted the GFC back in the 90s.
    Phil Anderson is another person guy who made an accurate forecast of the GFC. He also has book out that I highly recommend you read and study, 'The Secret Life of Banks and Real-Estate'.
    Just remember, there is always a reason for why things happen. The reason why people don't figure this out is another reason why!

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