I'm not joking! l've seen information, stats, data and numbers that could be a leading indicator to where the real estate market is heading.
This information is critical – especially right now.
Allow me to explain…
The big talk at the moment in the investment circles is all about the boom and the pending bust of the real estate market right here in Australia.
I have news for you that l know you'll find interesting.
Of course any one with half of a portfolio would read all the dooms day reports and wonder if there was any truth in it.
Should you sell everything right now…?
Let's face it, there is a lot of evidence around.
The USA market took a hammering 2 years a ago and has yet to recover… still with no sign of life even today.
Talk to a person in the USA about investing in real estate and they look as if you're from another planet.
Same goes for England, Ireland, Greece, Spain, etc…
Recently I was in Greece and they are in bad shape. Everyone I spoke to was worried to death about what the future will bring… They literally wake every day to yet another story about a pending strike or a budget cut that will reduce their pension, wages, or some other entitlement that they have come accustomed to.
The nation is a state of paralysed fear of taking any positive action forward.
Uncertainty is all they are sure of.
Now, my family, friends, and taxi drivers would ask me how things were in Australia, is it just as bad?
The Greeks are not renowned for there global perspective. To give you an insight, most have never holidayed on there much acclaimed 11,000 Mediterranean islands let alone travel to other part of Europe (no jokes).
When l spilled the beans on how things were back home, many insisted that what is happening to Greece and other parts of the world would eventually happen in Australia… Guaranteed.
In fact I found myself in some pretty heated, almost fully-blown arguements about why Australia would collapse just as the Greeks an others have done so.
So l wondered, is a real estate collapse on our door step?
My personal opinion is ‘no', but can I be wrong?
At times like this I go back to one of the key fundamentals to real estate, supply and demand.
Now l won't go into a 5,000 word essay on this subject, but today I want to look at one of the BIG drivers of supply and demand.
The value of real estate is significantly influenced by population growth.
Here are some interesting facts:
The all-time high for the biggest expansion of our population was in the year to June 2009 with around 476,000 people added to our population.
Most of these guys where housed in the major cities around our country.
What happened to our real estate prices in most parts of Australia in most of 2009..?
Since June 2009, the population growth has been around the 400,000 mark.
The figures in 2010 show a significant slow down in net numbers being added, with the figure likely to be around 350,000.
So what happened?
Well, we're going through a bit of a baby boom at the moment and people are living longer so the drop hasn't come from within the country. The obvious place to look at is how many new migrant are coming into the country from overseas.
In 2009, 313,000 of the 467,000 added where from overseas. The numbers for the 2010 look like to come in at 218,000.
Net migration has dropped by about 30% in 12 months… around 100,000 people less than our bumper year of 2009.
Could that be the reason why the heat has come out of our market?
Most would think that intrests rate are the main reason why, but this evidence of net migration number could have had more of an impact that most would think.
So what to make of all this data?
The hardest hit of our states, the one with the biggest fall in numbers is Queensland (it fell by 42%) and Western Australia was down by 47%.
With Queensland in particular, not only have they suffered from less overseas migration they have also suffered the double whammy of less local migration as well.
Now add to that the recent flood disaster and property values in certain parts of QLD may see a sharp reversal as demand dries up in the short term.
Ok, that may sound like doom and gloom and l admit the picture doesn't look bright – especially if you live in Queensland.
…But if you're a long term investor you can look at this moment in time and see it is as a big buying opportunity.
If you want a tip that will probably make you lots of money in the next 5 years and if you want a holiday home then the Gold Coast, Sunshine Coast and South-East part of Queensland are good buying.
The sentiment in those areas is really negative… And where there is negative sentiment there is a good deal around the corner.
Now to clarify, l'm not advocating taking advantage of someone's misery or preying on the flood victims by going around and making all these low ball offers. No doubt that is already happening if l know anything about human nature.
What lm taking about is being prudent and proffesional and buying value.
So, if you agree with me that the migration numbers may be a valid tool in assessing the current and future direction of the real estate market, then l suggest you look at the quarterly numbers on migration and see if there is an increase or decrease.
My bet is as soon as we see these numbers start to grow in line with our now long-term trend, we will see real estate prices climb again.
For now, time to accumulate, buy value and simply wait for the great times ahead.