As many of you know, I practise yoga every day and have done so for many years. Yoga is misconceived in the west as practising Asanas, such as head stands as many do. Yoga actually means unity and, in its purest form, is simply the practise of being conscious of every breath.
The reason I say this is that for Custodians to build a portfolio they have to be conscious of subtle changes. Sometimes I think we can be our own worst enemies by not doing the basics. The basics are to visit your properties at least once a year and take in and be conscious of the changes.
A great long term Custodian client who is a young 70 year-old, just purchased another 2 properties. He comes and visits each year and organises a tour of his assets to see the growth and change for himself. I caught up with him when he visited last week, for coffee and to chat about 'things'. To me he seems younger than some 40 year olds I speak to. And yes he notices all the changes.
My mentors always counselled me to 'get out of the office see what's going on' and ‘walk the dirt’. Real good advice. They're the basics that very few people in property practice.
If you look properly when you visit your properties what you will take notice of is the changes in activity. Notice new developments, increased traffic congestion, roadworks, new schools and hospitals, existing home additions and renovations, and new businesses opening up. It gives you a picture of change and character.
I make a point of speaking to Custodians every week. What I notice is that many of them simply don't get out enough. They don't see and feel the change, and I see this translate to them, they're not changing!
Last week I went with my research team on a field trip to look at new and emerging areas. What I saw was new suburbs in being built in South East Queensland; a hefty 50km from Brisbane with 350m2 lots selling for $175,000 – and lots of sales. I notice Coles and Bunnings being built there, major roadworks and infrastructure upgrades including schools and transport.
On the way home the head of research asked me what I noticed most. My answer was that in these new precincts the starting price of land is $500 per m2.
I think back to one of my first blocks 28km from Brisbane CBD that I bought for $16 per m2 in 1986. It was 1,087 m2 and now 2km to a major shopping mall and one of Brisbane's best private schools. Land prices there in 2017 are circa $750 per m2 for 375m2 lots.
That land has increased more than 47 times in the same period while house prices have gone up 10 times. More importantly land sizes have decreased.
It's interesting and very important to watch and study land. My mentors taught me to notice land use change, study council applications and get out and see what's going on. It's so important and interesting. We see lot sizes in residential estates as low as 100m2.......... wait on John how do you see that?.... Well, I always look at frontages. I play a game with myself and my team to guess the frontages and if we can't agree we step it out. Then we calculate side boundary.
I strongly suggest you visit your properties at least once a year as our 70 year old very successful investor does. You will notice the change and be motivated to get ahead of the curve.
Some people think 'going online' is doing homework. It's not. It's two-dimensional and gives you a distorted picture at best of sales and activity. In fact most of what you read online is negative and doesn't give you a 'feel for things'. It's like me reading about Yoga every day, it could even be confusing; certainly not the same as consciously practising.
Visit your properties, walk around the block and notice the new houses, additions and renovations and any new developments. Drive around the area and see the change. Doing this is three-dimensional and gives you an intuition for how the area is travelling rather than speaking to an agent or going online.
And most important; it’s motivating. Have an experience every day that motivates you, and I don't mean anything to do with your phone or computer.
Numbers that matter
ABS updated population data had a few surprises
- VIC population growth at an all-time high of 2.4%
- NSW and QLD both a respectfully high of 1.6%
- NSW has the highest loss of interstate migration since June 2013
- QLD recorded its highest inflow of interstate migration since 2009
- WA and NT are seeing the greatest outflows of residents on record
My take: the migration from Sydney north to Brisbane is gaining momentum similar to other cycles. The overall increase of overseas migration is having a huge impact on the cycle pushing Sydney’s price growth above its previous cycle prices, despite reports of recent stalling. Melbourne is the main recipient of overseas migration.
We have the highest continuing population growth on record and the lowest interest rates. Whatever you can do, do it now. Have no doubt.