Hong Kong investors are always looking for the next 'hot spot' in which to invest, whether it be Phuket, London or Sydney.
Typically, it is extremely difficult to pinpoint exactly when one should make their move into a property market and many people rely on their friends or the general media for information.
In Australia's case, this is often a fatal error. Research reports and media stories are often based on statistics. Statistics by their very nature are from the past. By the time these figures are collated and published, there can be a serious time lag, often by as much as six months.
But statistics can of course highlight past trends and point to the future. For example, statistics show us that the Sydney house market has been 'flat' pretty much since it peaked in mid-2003.
That means for the past four years in Sydney there has been little real price growth on average and history shows us that the longer Sydney goes without growth the faster the upturn when it comes. Is it going to be this year, next year, or 2009? The word on the street from industry insiders, agents and property developers is that premium locations have already started their upturn and other suburbs are likely to follow later this year, or early next. It is unlikely this will be reported in the general media until statistics for the past six months have come out, and are analysed.
So we believe that history will show us that the Sydney market 'peaked ' in 2003, remained flat until this year, then start its upturn next year. The astute investor would try to move ahead of this trend and invest now. Our experience is that most investors in Sydney wait too long to move into the market, and then miss the early capital growth that tends to explode in Sydney quite quickly.
Other cities in Australia do follow similar if slightly different cycles. In Melbourne, the market took a breather in 2003 but has continued to move upward since then, albeit at a slower rate than usual, so we expect this upturn in the Melbourne housing market to gain momentum through this year. Rental occupancy rates are at record highs, with rent rises already starting to be seen. Australian investors in recent months have been surging into this market, and overseas buyers would be well advised to follow.