Michael Washbourne:
Tell me a bit about yourself, how you came to be where you are today, your interest in property.

Jamie McIntyre:
I5 years ago I was almost bankrupt, $150,000 in debt from a failed telecommunications business and about to give up on my dreams, when I come across my millionaire mentor.

He taught me how to become wealthy using many strategies, in particular, real estate. Within less than 5 years, I’d achieved my goal of becoming a self-made millionaire in my 20s.

I’d acquired over $10million worth of properties over time, with my main strategy buy and hold.

MW
How did you come to realise Australia had just started the beginning of another property boom?

JM
The fact property prices had started to rise consistently in the last 2 quarters, particularly in Sydney and Melbourne and in the bottom end of the market under $500,000 price range.

MW
Did you recognise any similarities between previous “triggers”? What was the biggest factor you considered?

JM
Very low interest rates is obviously the biggest trigger for a property boom again, but what was holding the potential boom back was the fear of rising unemployment from the recession, which would cause the market to remain flat.

However, once the unemployment figures came out last month, so much better than expected, it means this break is removed to some degree. Plus, many don’t realise that despite much higher unemployment in the last recession, Australian Property prices rose regardless and that was without low interest rates.

Some of the reasons some commentators, especially people like Professor Keen, were suggesting Australian Property prices were going to collapse by 40%, were simply not accurate. 6 months ago I was saying I’d bet that Australian Property prices would be more likely to rise 20% within the next few years, than crash the 40% some were predicting.

And after my announcement that we are likely to experience another property boom, Glenn Stevens of the Reserve Bank came out a week later raising concerns that we could experience another property boom.

Also, another trigger is because rents were hitting their peak recently and in some places starting to soften. This means the next cycle is a new capital growth cycle to catch up to the increased rents from the last few years where we have experienced a rental boom.

MW
Where do you think the property market is headed?

JM
The Australian Property market is headed for some consistent growth for next 18 months, perhaps longer.

There is a massive shortage of houses and we still have high immigration and natural population growth. And what has been a very subdued construction industry, that even with a pick up, will take years to deliver sufficient stock.

MW
What have you noticed about the WA and Perth property markets?

JM
The WA market and Perth is on a somewhat different cycle.

Perth is generally the last city to boom and thus why it continued to boom, whilst Sydney in particular, was flat for over 4 years.

Melbourne, followed by Sydney, tend to boom first in a cycle and Melbourne has been experiencing very good consistent growth for over 18 months. And now Sydney is starting to take off again after little growth for 4 years.

So the Perth market is not likely to boom, like perhaps the Eastern seaboard, as it has had a lot of growth already over the last 4 years, despite a pull back in recent years. So the Perth market has some more stabilisation to do for a while yet and market conditions will help prevent Perth Property dropping to the extent it would have otherwise.

Perth Investors should consider some exposure to Eastern markets to take advantage of the property cycles, however Perth has undoubtedly been the best Property Market for the last 10 years. And it will continue to be long term, but it is more exposed to the commodities and resources markets, thus a more volatile market.

MW
Who (i.e. type of buyer, etc) do you think will most benefit from this most recent property boom?

JM
I think residential property investors that are buying for long term and don’t over leverage can generate some very good rental returns now, plus get a some consistent property growth in the short term.

First Home Buyers need to be careful they don’t over pay for their first home based on low interest rates, which will rise.

MW
Does it have a set period like previous booms? When will people know the right time to buy or not buy?

JM
I think the next 18 months can have some good growth.

But if prices take off too quickly, then it could lead to an unsustained Property bubble, which is why The Reserve Bank is concerned, as it doesn’t want the low interest rates to create a surge in home prices. But rather boost construction to meet the property demand to keep prices sustainable.

MW
What should people be looking to do at the moment (i.e. invest, build, rent, etc)?

JM
With low interest rates and high rents, it’s a good time to buy, as long as one budgets for rising interest rates.

Building a home is often a good option, as the increased value you make once a home is built on land creates instant equity.

Re-developing property though is quite tough at present, due to the very strict lending conditions imposed by banks making it a nightmare for many developers and almost impossible in some cases.

MW
What lessons of advice can you give people from the experiences and knowledge you have developed over your career?

JM
If you’re buying property, to buy and hold for the long term you will do very well in Australia. We have a fast growing population and a construction industry that can’t keep up and Government policies that make new developments so expensive causing a lack of properties and high prices.

However, I don’t believe the huge Property boom Perth experienced in recent years will ever be repeated again, so investors should be looking to buy properties that produce good rental returns and tax benefits and treat capital growth as a bonus.

MW
Is there anything else you think you could add which may be relevant to the topic?

JM
And don’t over leverage.

One of my friends has just lost over $8million from being forced to sell half his property portfolio, as he had over leveraged and was stuck in high interest rates.

If he had been more conservative, he could have avoided these losses and made more, owning less properties.

The $8million in property he had to sell is likely to be worth $16million within 10 years or less, so over time it will be a significant loss.

Plus I rarely suggest investors should fix interest rates.

It makes little sense to fix and pay more interest immediately, from fear you may have to pay higher interest rates later.

Statistically in Australia, those who have ridden the variable rate have been a lot better off.