USA Property Market Expectations - US REAL ESTATE TV

Uploaded by USRealEstateTV on 20.01.2012

The thing to understand when we’re talking about return on investment is that when we
are going into the US market we’re actually looking for a particular kind growth. There’s
two kind of growth that I’ll describe. There’s natural growth and then there’s growth as
a result of a return of market confidence. Now, natural growth is what we understand
here in Australia to be just growth from, you know, the economy doing better, peoples
income’s going up and so forth. And here in Australia we predominantly experience natural
growth. What’s happening in the US at the moment is that the property market is in a
complete shambles and really, the reality is that stability must return before natural
growth will return. So, even in the next 3 or 5 years, the expectation is that when we
see the return of market confidence, when we see a return of stability then we’re
going to see increase in price, but it’s going to be more about growth from return
of market confidence not the natural growth. So, what we want over the next 3 to 5 years
is we want people to come back into the market; we want all the initiatives that the government
have started, and try to encourage people to buy their own homes again, to start to
take effect. And we want to be able to recover any money in terms of any current market value
over that time frame. The bottom line here is that nobody has a crystal ball. People
who are expert in the market, who studied this stuff everyday, have a lot of support
and evidence to indicate that that 3 to 5 year time frame is probably quite realistic
but again you know, you got to go into this market understanding that it is an estimate.
Now the wonderful plan B that we’ve got with all these property purchases is that
we are not going to die in a ditch if it doesn’t happen in that time frame. The fact is that
predominantly, the sorts of properties that we are looking at are going to be earning
us a good income strain while we are holding them, so there’s going to be cash cows for
us in the immediate future and into the median term. Now you got to understand that market
confidence is complex and even if market confidence returns, it has to be accompanied by liquidity,
the two go hand in hand. There’s no point in the US population suddenly feeling better
about the housing market if the banks don’t ease up and actually start releasing money
to people so that they can start buying again.