November 29, 2021

#129: What is contrarian investing and how can you make it work for you? Market updates: Melbourne and Sydney move into CBD, COVID's global

38 minutes

https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's episode Dave, Cate and Pete take you through: Market update 1. Expected end of year activity If you're committed to purchasing a property, now is not the time to take your foot off the pedal. There is a distinct determination of buyers, vendors and agents to get deals done prior to Christmas and with other buyers getting distracted with Christmas preparations and other plans, now may be an opportune time to purchase. Unlike last year, where many agents worked through January after the desperation caused by lockdowns, agents want to take a break and are motivated to wrap up sales before the holidays. 2. Melbournians and Sydneysiders are moving back to the CBD Today's episode is about the contrarian approach to investing and one potential opportunity, (although the horse may have bolted) is purchasing a quality unit in the inner-ring or CBD that has unique attributes to provide long-term growth. Rental stock on the market for apartments in inner Melbourne have plummeted by 76% since February and this same count is down 56% in inner Sydney, showing that buyer demand for city units is now starting to pick up. 3. How COVID has impacted overseas property markets The Property Professor outlines the striking similarities between Portuguese and Australian property markets and the impact that covid has had in relation to commercial and residential property. Contrarian investing 1. What is contrarian investing? Contrarian investing is an investment style in which investors purposefully go against prevailing market trends by selling when others are buying, and buying when most investors are selling. Contrarians may be seen as courageous, unconventional, counterintuitive thinkers, able to withstand herding pressures from crowd-following conformists. As Warren Buffet has said ""Be fearful when others are greedy, and greedy when others are fearful." Contrarian investing is often discussed within share trading circles, but it is entirely relevant in property too. 2. Real examples of contrarian investing in property The Property Buyer talks through her own personal experience of purchasing property during the GFC, when buying conditions changed dramatically and many were fearful. Also more recently, a client who purchased four properties at the beginning of covid, who saw the opportunity, while others put their purchasing plans on hold. 3. What would happen if you purchased half-way through a market fall? The Property Planner shares his research on how your assets would have performed if you purchased shares mid-way through the GFC and 2020 covid crash and purchased property during the APRA driven downturn in 2018. When a market is falling, it can be one of the best times to buy. But it is scary, due to the uncertainty of how far the market will drop or how long the decline will last before it swings back up. 4. Property market downturns Check out our show notes to see a graph of the last few decades of downturns. The downturns look like blips in the long run. When the market declines, the magnitude is not as great and the length not as long as when the market is on the rise. The most recent downturn lasted 18 months, which felt like a long time when you're living it, but in the scheme of our lives, is not very long. 5. Segmenting markets - contrarian investing is not just about market timing Whilst buying when others are fearful of buying is an obviously contrarian approach, there are also other strategies to within...

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