Who invest knowing recession is on the way - 2019-2020

Reasonably sure a recession isn't priced in, thats media bluster at this point.

RBA's statement of monetary policy has growth going at 2.75 per cent this year and next. Latest data that just came out had growth running at 0.40 per cent for the quarter. There's also pretty significant monetary and fiscal stimulus to come that'll play its role in the later part of this year.

A recession per se, seems a long way off what anyone with any real credibility is actually forecasting. Most of the actual forecasters have growth running a little below the RBA's forecasts & unemployment peaking well below 6 per cent. RBA's also noted that consumption is soft - which is the variable in econ growth models that impacts the retail sector the most.

Thats not to say the economy isn't soft, but its nonsense to call a recession with any degree of certainty at the moment. It would be a very big outlier prediction at this point.

 

Part of the contributing factor for the GFC was a very loose financial regulation behaviour across the globe.

With so many reforms being implemented after the GFC, our financial system is actually a lot more stable. Thanks to the royal commission, big4 banks are now forced to do something about all the previous frauds that was driving up price bubbles.

However, I feel like there are more reforms should be enforced within the institutional level.

With the recent new Comprehensive Credit Reporting, it actually surfaced a lot of dodgy accounting practices within credit providers of how they fraudulently extending/reseting customer's credit facility to inflate thier own balance sheet to push up their value while they seek for other larger financial institutions to acquire them.

Becuase of these outstanding credit facilities, it has actually caused a bit of financing issues for some of my clients when they got a Latitude active credit facility that actually belongs to GE Money few year ago as an example.

 

No not confusing at all!
Some of us buy if we find the right deal, some for longer term... concept known as 'land banking', some just buy because they have the funds and wish to accumulate, some have gone through divorces and may need to re-enter the markets, some receive money from estates, some relocate for jobs or schools....I could go on and on!
Many, many, many reasons....!
Just answer for your self, were people buying in Sydney in the past when world events, recessions, economic downturns occurred (like during 1987 crash, tech crash, 9/11, GFC, etc....just to name a few)?
The answer is of course 'YES'!
I bought our PPOR at GFC in 2007 and couldn't be happier and wiser now looking back in retrospect, as nobody bid at auction, made a lower offer, purchased much below median price, wished to downsize, found a place which was owned by first and only owner for 60 years! Just some reasons, now imagine I waited for this house another 60 years if and when it would come up on the market...I would be dead then!
My strategy was always to buy if I could afford to and the right deal came around! Property is a LONG term game!

 

I didn’t see the GFC coming.

TBH, I don’t take much notice of all the noise in the media. I analyse each investment on its merits, always conduct thorough risk assessment, ... and if I believe it is a goer, I get on with it, irrespective of all the noise.

In July 2007, I made my biggest business investment ever. Ten months later, we were looking at $1M loss. It was scary times. I believed in the business, I believed in the staff, I believe in its clients, I believed in my ability to make the business a success, ...

Over the next year or so, we turned the business around. In August 2010 (3 years after buying it), we sold the business and we were able to retire.

I think too many people take too much notice of all the noise. With investments such as property, they won’t buy in when prices are rising because prices might fall, they won’t buy in when prices are falling as they might fall further, they won’t buy in when prices stagnate because prices are going up, ...

That is, they have media paralysis. We have friends who were looking a property when we bought our first IP in 1992. They still haven’t bought one 27 years later. The one we bought is now valued at more than 5x the purchase price.

IMHO, more people need to back themselves, take an educated risk (all investments have some degree of risk) and hang on for the ride .

 

Like others have said above - investing in property is a long term game and that's what we continue to educate our clients on.

If someone expects to buy low and sell high to exit with lots of profit in a short period of time - that's not investing in my opinion, that's called trading. And if you want to trade you're probably better off looking at other asset classes such as shares or Crypto instead where transaction costs are low.

Purchase when you can afford to and keep it with a long term view - that's my KISS (keep it simple & stupid) principle with property

Cheers,
David