https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's Ep#77 of the Property Planner, Buyer and Professor Podcast, Dave, Cate and Pete take you through: Market insights 1. Investors creeping back in Westpac lending numbers for February reveal that investor lending is up 4.5%, while first time buyers are down 4% and upgraders down 0.8%. It's still early days, but it's likely to be a sign that the tide is starting to turn from home buyers driving the market to investors. Investor lending at Westpac is still only at 35%, compared with 65% when APRA brought in macro prudential measures in 2015. We expect these numbers to continue to grow in the coming months as investors tap into increasing equity and the lower cash flow needed to service a loan, with increasing rental yields covering much of the cost of interest with rates at an all-time low. 2. Property cycles Sydney has recorded 6.7% growth for the March quarter, which when annualised is growth of 26% for the calendar year. You may think that's amazing and has never happened before, but according to ABS data, Sydney prices went up 50% in 1988. The following year, prices dropped by 6% before rising again, albeit at a slower pace. The property market is cyclical in nature, sometimes they spike, but it doesn't mean there will be a collapse afterwards. 3. The property peaks and troughs Looking at property data over the last few decades, it's clear to see that the negative periods are much shorter than the positive periods. Amazingly, despite all of the doomsayers, the covid downturn was one of the shortest and lowest downturns that we've had over the last 30 years. Our most recent property market price reduction lasted for almost two years from 2017 and 2019 and was predominantly driven by APRA implementing macro prudential measures and not economic factors. A poignant reminder of how our property market can be manipulated by government policy and stimulus. What will drive capital growth after interest rates rise? 1. Access to finance and consumer confidence These are two key drivers of the property market. If finance is restricted or there is a lack of consumer confidence, this will have a significant impact on demand, which in turn will affect property prices. Consumer confidence is largely impacted by low unemployment or the wealth effect, which is rising property and to a lesser degree share prices. This is why the RBA are so strong on keeping rates low through to 2024, until we see inflation growth of 2% to 3%. 2. Immigration Although we've had negative population growth due to Covid, we still find ourselves in the midst of a property boom. Whilst immigration can certainly increase demand, it will be heavily influenced by the number of 'skilled' workers that migrate. The Morrison government have spoken about specifically targeting this sector once borders open which is likely to have a positive multiplier effect on the economy. 3. Interest rate increases may not be significant Governor Lowe of the RBA has stated that interest rates will remain low for the next 3 years. However, important to remember, when we do see some increases, it won't happen overnight. Based on the interest rate environments we are seeing for many other first world nations, it's likely we will see gradual increases spanning years to come - and this will only occur if we have very low unemployment resulting in inflation hitting the target band, which has not been achieved for around a decade. 4. Mastering renewable energy Our ability to transition away from creating fossil fuel-based energy and move to more...