Why the Next 24 Months Could Be a Great Time to Buy Property | FUNdamental Fridays

Could the next two years be one of the best times to buy property?

In this Friday Fundamentals episode, Ben Kingsley is joined by Stuart Wemyss to unpack what's really driving property prices and why the current market could present opportunities for buyers willing to think differently.

While many Australians are waiting for greater certainty, Stuart explains why lending volumes, not headlines, are often the biggest driver of property price growth.

Together, they discuss why lower confidence can actually create better buying conditions, how credit availability influences markets, and why supply could be the biggest challenge facing buyers over the coming years.

They also explore:

✅ Why lending volumes are a leading indicator of property prices
✅ The impact of interest rates, credit policy and buyer confidence
✅ Why investors may be stepping back from the market
✅ How supply constraints could support prices
✅ Whether buyers should wait for the "perfect" time
✅ Lessons from purchasing during the GFC

Because when everyone is waiting for certainty, opportunities can often emerge for those prepared to act.

Got a question or a "hill" you'd like us to unpack? Send it through here 👉 https://thepropertycouch.com.au/topics/

⏱️ Timestamps

00:00 Could now be the perfect buying window?
00:45 What drives property prices?
01:31 Why lending volumes matter most
02:08 The three biggest drivers of credit growth
02:52 Why the next 24 months could favour buyers
03:14 Stuart's GFC buying story
03:37 The best time to buy property
04:46 Investor lending and market activity
05:06 Why supply could be the biggest challenge
06:10 Why prices may remain in equilibrium
07:20 Could APRA change lending settings?
08:08 What falling loan volumes could mean
09:15 Who benefits most from uncertain markets?
10:18 The danger of waiting for perfect conditions
11:05 Looking back from 2036
11:30 Supply, demand and market timing
11:42 Why it doesn't take much to move a market

#PropertyInvesting #PropertyMarket #PropertyPrices #LendingVolumes #MarketInsights #RealEstate #PropertyStrategy #FinancialFreedom #ThePropertyCouch #FUNdamentalFridays #PropertyInvestor #InvestingAustralia

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Transcript

Could now be the perfect buying window?

SPEAKER_01 0:00

If I'm interested in getting into the property market over the next twenty-four months, I think it could be perfect settings. The only challenge will be supply. The best time to buy really is when the everyone else doesn't have a lot of confidence.

SPEAKER_00 0:14

It doesn't take much to move a market quickly. So if you are in a position where you can act, maybe now's not a bad time. G'day Couch Crew, it is fundamental Friday, and yes, I have Stuart Wings with me. So not only did I have him yesterday, but we've also got him today, okay? Oh, fantastic to be here. Now we are going to be talking about where a property price is going to go in the short term. And we're going to make a case in terms of why you think they might go a little bit sideways for a while.

What drives property prices?

SPEAKER_01 0:45

Yeah, well, I think it's really important for people to understand what drives prices, right? Because if I'm thinking about getting into the property market, I really want to be thinking about what is the best time. When I say not the best time, I'm trying to time it perfectly, but obviously I want as less competition as possible. Yeah. And also to understand uh, you know, what's going to drive prices as well. Because obviously getting into a very buoyant, very aggressive market can be difficult. We know prices can literally change from one weekend to the next. And I've got to be agile enough to sort of navigate those changes. So lending supply, so loan volumes are the biggest determinant of property price growth. So when you chart these things, loan volumes and growth, access to credit, it's a leading indicator. Yeah, it

Why lending volumes matter most

SPEAKER_01 1:31

makes sense, right? Yeah. And so the things that um really promote access to credit, interest rate settings, of course. Um, uh credit policy settings, yes, and uh then confidence. Yeah, you know, and they're probably the the three biggest things.

SPEAKER_00 1:45

I I I definitely see what you're trying to say here. It's really clear that when we do see those lending volumes go up, and we're, you know, so the question for us then leads into with a potential drop-off of investor activity, where do you see that sort of playing out in terms of uh short-term demand? Um, given that's potentially what's gonna play out.

The three biggest drivers of credit growth

SPEAKER_01 2:08

Well, I'm gonna look at all those things. Yeah, interest rates are relatively high at the moment and relatively. There's no um no rate cuts on the horizon, at least not yet. No. Um, borrowing capacity and credit settings, I mean, I don't think they're gonna loosen up overnight. They're pretty, they're relatively tight, relative last say 20 years. And confidence isn't, you know, I don't think people are overconfident. I mean, confidence a hit. Any any changes like taxation changes tend to uh worry people. They like to see how things sort of play out. So I I think if I'm uh interested in getting into the property market over the next 24 months, I think it could be perfect settings. I mean, the only challenge will be supply.

Why the next 24 months could favour buyers

SPEAKER_01 2:52

Yeah. What what property is available for me to buy? Yeah. But but this sort of market is really the best market. Ben, I bought a property in Peran in, I think it was 2008, the week that Bear Stearns crashed. Like right in the height of like the GFC, and I wasn't even gonna go to the auction and I thought I'm not even in the money

Stuart's GFC buying story

SPEAKER_01 3:14

here, like it's gonna go for way too much. And I walked away as the only bidder. Yeah, yeah, yeah. Wow. Uh and negotiated after it was passed in and bought the property. And I had insigestion because I thought I just spent that much money on a on a property. Yes, you did. Uh, and but it all worked out, right? The best time to buy really is when the everyone else doesn't have a lot of confidence.

The best time to buy property

SPEAKER_00 3:37

Yeah, I did I did something similar. We um we bought our future family home, which was a a do-er up row in terms of a a 19 um 27 cal bungalow, yes, two bedroom, in almost original condition, and we bought it effectively four or five months after the GFC. Yeah, you know, so it was just rolling into late 2008, 2009. We were coming in, and again, no competition. The the property had passed in at auction um several weeks before. We spotted it opposite a park, city views, and I think it passed in for around that sort of 1.2 range, and we picked it up for I think a million and 13,000 or something along those lines. So it was a long time ago now. But you can see that's the type of thing where there is that opportunity. So um we coming back to you what you were saying before about um lending activity, we've seen self-managed super fund lending activity spike because obviously the the changes to the legislation. So we're gonna see that drop off. We're gonna see the investment lending drop off. So, where does that next wave of credit activity come from?

SPEAKER_01 4:43

Yeah, and I think, well, who knows? I don't think I

Investor lending and market activity

SPEAKER_01 4:46

don't think it's coming. Yeah, you know, I think not in the short term. No, not in the short term. And but but the I think it might be tempting for people that are interested in property to say, well, maybe I don't buy yet because if prices are gonna come back, can I pick the bottom of the market? I think the biggest challenge will be, as I said, supply. The will there be a property that is of sufficient quality

Why supply could be the biggest challenge

SPEAKER_01 5:06

that's going to be at my price point that I'm happy to buy. I think that's gonna be the thing that dictates when you make an investment decision. So I wouldn't be waiting necessarily for property to drop 10% before I got into the market. And and this and this comes back to my thesis around um borrowing and lending flows, right? Yeah. I think in markets where there's higher uncertainty, discretionary vendors pull out as well. So I think the market will still be at relative equilibrium. I know um auction clearance rates are lower, but auction clearance rates are lower in a in a in a shy market anyway, just because you know it's not as buoyant. Yep. Um, so therefore, I think more uh agents will pivot to private sale than auction for that for that exact reason. Agreed, agreed. Uh so I I think it'll be in relative equilibrium for a while. So I can say, I can see that there's gonna be sectors of the market that might drop 10%. There'll be sectors of the market that are gonna hold their value. But if you're looking to get in, I think the um understanding how lending volumes impact prices are critical because it gives you the confidence,

Why prices may remain in equilibrium

SPEAKER_01 6:10

I think, that the bottom's not gonna fall out of the market. Um, that I think there'll be that equilibrium and it's really a great time to buy because you've got less competition.

SPEAKER_00 6:20

Well, I mean, there's one variable in there that I think um the government might put some pressure on one particular regulator. I'll come to that in a second. Like if we are, if we think it's true, the wealth effect will play out, the economy will slow um further, job security will be a little bit more on edge. Certainly um there's gonna be a lot more challenging in a, you know, we're potentially seeing maybe around 20 to 30 percent less activity in real estate. So that's gonna have a flow-on effect in terms of that. So if the government is seeing a slowing economy, obviously we've got interest rates, but if inflation is not tamed, can't really do anything there. So the only other regulator that can potentially influence accessibility to credit is APRA and their 3% buffer rate. And so we're seeing in the UK and Canada and other markets where there has been price corrections based on the regulation that they've dropped their assessment rates down uh into that 1.5

Could APRA change lending settings?

SPEAKER_00 7:20

to 2%. We're still sitting at 3%. Yep. Now, seriously, um, it it makes no sense to me at all that we're assessing new lending at as high as 9%. Yep. We're not going to get to those levels. It's simply not possible. I mean, so that's probably one area where there could be a little bit of a lever pulled that will give further access.

SPEAKER_01 7:39

Yeah, and lending volumes, I think, will dictate that. So I think previously, maybe over the last couple of years, Apera said, no, we we don't think there's a reason to change the buffer. And fair enough, too, lending volumes were high healthy, higher than average. But if those lending volumes drop off, and I expect that they will significantly, that does give them a basis to say, well, maybe we'll loosen up credit a little bit. Um, and that will be that will certainly be good news for property prices, but also means more competition.

What falling loan volumes could mean

SPEAKER_01 8:08

So it's good to understand for property buyers to understand investors to understand these mechanics so they can kind of read the tea leaves a little bit, Ben, to work out what's going to go on over the next couple of years.

SPEAKER_00 8:19

So so uh obviously lending access and volumes are going to decrease. And we've even seen um Elisa Ellis from um Westpac um also come out and talk about potentially a 30% decline in these lending volumes. So that's obviously a headwind in terms of that. And we've spoken in general terms about when the tide goes out, maybe a good time to buy. That that this is unfortunate, isn't it? In these types of times where when we when we talk in blanket statements around median house prices and so forth, we then can actually look at the at the actual layers underneath that and we see the great streets, we see the great properties. And unfortunately, we see the people who can act in these times shrink, don't we? Like so, we see we see the people who are in a fortunate position where we've got job stability and like can can take advantage of these.

SPEAKER_01 9:06

Yes, yeah, and experienced investors. Yeah. So property investors that have seen the cycles before, they're confident enough to sort of play in those markets.

Who benefits most from uncertain markets?

SPEAKER_01 9:15

Um, but again, I think that's that's why we want to talk about it today, because it gives people some perspective, broader perspective that you obviously you and I have. Yeah. Um that that hopefully educates people to give them a little bit of confidence to still act in this market.

SPEAKER_00 9:30

Yeah, I I you know, I it's it's really interesting to see the behavior of what happens in these markets. And I think you also see it in the equity markets, don't you? When you know, so many people um make the wrong decision um in certain cycles, don't they? I mean, what's the evidence suggests they they panic and they get out and they don't stay the long term.

SPEAKER_01 9:51

Yeah, yeah. I was reading an article actually over the weekend about a particular fund manager that had a great run, right? Yes, we talk about most of the investors haven't enjoyed those returns because all the money's late to the party. Yep. So I guess the risk is that, you know, if we we see a lull over the next couple of years, if you wait for all the signs to be perfect. So if you wait interest rates to come down, maybe negative gearing um is reinstated,

The danger of waiting for perfect conditions

SPEAKER_01 10:18

you know, maybe the the uh confidence is a little bit higher, yeah, uh you'll miss the boat. Yeah, we move through the cycle. You move through the cycle. I don't want to be panicking people because it's not about time. You need to make a deliberate decision that's right for you. And if that's not entering today's market, if it's wait two years, so be it, right? But what I'm sort of saying is that um I I know you have, I know I have purchased property when the easiest time to buy good quality property is really when you've got no other competition.

SPEAKER_00 10:46

Well, you talk about investing in for decades, don't you? In the book, instead of looking at it in the short term.

SPEAKER_01 10:52

Yep. And so a great question would be in 2036, yeah, will I look back at 2026 and and feel like I made the most of my opportunities, or was I spooked and sat on the sidelines like most Australians?

Looking back from 2036

SPEAKER_00 11:05

So there you have it. When you think about what's going to be happening in the market, always remember that there is pent up demand when it comes to property. So Stu talked about the supply being a little unknown, but ultimately we've got construction cost challenges, we've got regulatory challenges, which is limiting that supply. So that might give us a little bit of a grounding in terms of where property prices go in some

Supply, demand and market timing

SPEAKER_00 11:30

markets, but you've got this pent-up demand. So if you think you can time it, well, it doesn't take much to move a market quickly. So if you are in a position where you can act, maybe now's not a bad

Why it doesn't take much to move a market

SPEAKER_00 11:42

time. Never a bad time to buy a good quality asset at a great price. So there you have it, folks. But before you go, just also remember don't forget to join the waiting list for our upcoming case study releases from our $3,000 book week. We've updated them with all of the latest information around negative hearing and capital gains tax changes. So to join the wait list, just go to the propertycatch.com.au forward slash case studies, and you're good to go. Until next week, always remember knowledge is in memory, but only if you're open. Like a member.