Successful property investors must understand this Big Shift, with Simon Kuestenmacher

As we move through 2021, we’re still getting regular reminders that even though life is more normal, the effects of Coronavirus will be with us for a long time.

While some people are still looking back in the rear vision mirror to see what lessons we can learn to give us some guidance for the year ahead, today I’ll be looking forward into the future as I chat with leading demographer Simon Kuesetenmacher about what he calls the Big Shift – some major demographic changes that you should be aware of if you’re interested in the property or if you’re in business

But first, let me give you a couple of quick lessons from 2020 to help you take better advantage of our property markets.

1. Timing the market is hard.

Anyone who tried to time the top or the bottom of our property market over the decades I’ve been investing has usually missed out, so I would suggest spending your efforts finding the best asset you can rather than trying to time the market.

2. Don’t try and fight the RBA or our government.If you think about it, it’s a government job to look after its constituents and protect them – not just by providing police and hospitals and the judicial system; but also protecting their jobs and the value of their biggest asset - their home.
3. Economic depressions can be avoided.

Our regulators have learned a lot over the last couple of decades and 2020 proved it - a rapid, large and well-targeted economic policy response can protect an economy from a significant shock and enable it to rebound quickly when the threat abates.

4. Be careful who you listen to and turn down the noise.

Last year investors were bombarded with information and opinions around what the coronavirus would mean to our economy and our property markets but much of this was just noise.

Now that I have shared some of my lessons with you we are going to hear what Simon Kuestenmacher has to say, and even though we have discussed some of these concepts in previous podcasts, I’m sure you’ll get a lot out of my chat with him as he introduces some new concepts we haven’t discussed before that I think will help give you some clarity on what’s ahead.

And as always, I will share my mindset message with you at the end of our show.

There’s a big shift ahead for our property markets

If you’re like many Australians you’re probably wondering what’s going to happen to life beyond coronavirus.

What's going to change in the way we live, work, and organize our cities?

The simple answer is... quite a lot!

And if you're a property investor, or a business owner you must understand how Australian cities are reshaping to stay ahead of the game.

That’s what I going to chat about today with Simon Kuestenmacher, one of Australia’s leading demographers as I ask him for some insights into what his research suggests is ahead.

Simon is Director of Research at The Demographics Group, a columnist with The Australian, and a regular guest on this who is globally recognized as a rising star in the field of data management and insight and a regular guest here on my podcast.

Just to put some context to our chat…

It’s easy to forget that one year ago we have a government dedicated to balancing the budget and bringing in a surplus. Our property markets were rebounding, and business owners would looking forward to a great year ahead.

Then look what happened in 2020 - we experienced a pandemic, a lockdown and a recession, and then a rebound.

Fortunately, we controlled the health issues better than almost every other country in the world, and it seems that our government has minimized the impact of the coronavirus cocoon induced recession.

But the dynamics of our society have changed considerably.

So, what next? 

Global context

• What’s happening in the world economy?
• Australia’s economy has recovered remarkably quickly
• International capital and international talent will still want to come to Australia
• Based on sheer economic data, investors might want to invest in Australia, New Zealand, S. Korea, and maybe Taiwan

Local Context

• Lower population growth
• Some sectors of the economy are booming and others floundering
• Despite COVID & temporary low migration, the pie keeps growing in the 2020s. Demographics drive particularly high demand for family-sized homes. Low demand for small apartments before migration amps up again.
• COVID and working from home will reshape our cities. CBDs perform poorly for a few years; outer suburbs & regional towns benefit from millennial families seeking sizeable homes. Millennial values will transform suburbia. Expect more demand for active transport, hipster cafes, and family-friendly spaces.
• We will want future homes to be pandemic-proof

The rise of the 20-minute Neighbourhood

• Pre-Corona Fried Egg – Post-Corona Scramble Egg
• Location is critical to the long term performance of your investment.
• It seems that in our new “Covid Normal” world, people love the thought that most of the things needed for a good life are within a 20-minute public transport trip, bike ride or walk from home.
  • The ability to work, live, and play all within 20 minutes’ reach is the new gold standard desirable lifestyle.

Imagine being able to carry out your daily activities within a 20-minute walk from home. 

All the things you need in a day would be just a short walk away.

Things such as shopping, business services, education, community facilities, recreational and sporting resources, and some jobs.

In urban planning circles, it’s a concept known as the 20-minute neighborhood.

What type of property will be more in demand post-COVID-19?

• WFH will mean different desires – zoom room, gym, extra room for home office
• Some will see high rise apartment towers as “vertical cruise ships” - high-rise buildings were designed to organize as many people as possible in one place. With busy lifts, shared hallways, and communal facilities like laundries and garbage disposals, high-rise living is the ideal breeding ground for the virus, as we’ve seen both in Australia and overseas.
• So, it stands to reason that the buyers of 2021 and beyond might not be so keen to live in an apartment and be breathing the same air and touching the same lift buttons as hundreds of other people. Instead, they may prefer to purchase standalone dwellings that they can barricade and sanitize to their heart’s content in the event of another wave of the virus.
• Similarly, we’ll want to be able to separate work and living spaces. We all need a Zoom Room nowadays.
• I can only imagine what a nightmare the stay-at-home orders must have been for parents with small children living in apartments without a garden, or for gym junkies forced to substitute cans of baked beans for their usual weights in their at-home workouts.
• As such, room for a home gym setup, space for the kids to do their karate or dance classes online, and a reasonable outdoor area for the family to get some fresh air and vitamin D are likely going to shift from the “nice to have” category into the “non-negotiables” list for owner-occupiers.

The hollowing out of the Australian workforce

• Education determines your income and spending capacity
• The increasingly polarized workforce drives property prices and geographical segregation. Low- and high-income workers demand similar things from their homes but are driven to different locations. That puts social cohesion at risk.

Links and Resources:

Michael Yardney

Simon Kuestenmacher - Director of Research at The Demographics Group

As our markets move forward why not get the team at Metropole to build you a personalized Strategic Property Plan – this will help both beginning and experienced investors.

Shownotes plus more here: Successful property investors must understand this Big Shift, with Simon Kuestenmacher

Some of our favourite quotes from the show:

“How often have you heard me say over the last couple of years that you shouldn’t make 30-year investment decisions based on the last 30 minutes of news?” – Michael Yardney

“Sections of our economy are doing pretty nicely, and it’s the demographics that are going to drive demand.” – Michael Yardney

“Not one person said you should choose your work based on your desire for future earnings.” – Michael Yardney

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how