When Wayne Gretzky was asked the secret to his success as an ice hockey player, he replied in what has since become a business cliché, “I skate to where the puck is going to be, not where it has been.

For property investors, this means trying to anticipate the future direction of property prices, and investing accordingly.


People don’t buy bottoms (though they should) – they buy momentum!

Skating to where the puck is going sounds obvious, but most people don’t do it. Most people are stuck in the moment, labouring over the most recent data and simply reacting to it. Most people can’t see turning points.

And so they suffer from recency bias. This is a cognitive bias towards recent information rather than timeless wisdom.

So when the market was falling, these people thought it would keep falling.

And when the market was rising, they thought it would keep rising.

Contrarian investors see turning points. Buying bottoms takes courage.


So how can one predict where the puck will go? History Helps.

It is easier to see it now, but the Sydney market was always going to bounce back.

By the end of 2018, when the Sydney market had pulled back 13% on average, history told us that Sydney property rarely pulls back by more than 10%, and the bottom was soon.

10%+ pull backs in Sydney have happened only three times since 1980.

History suggests that the risk has shifted: from downside risk, to upside risk.


What am I seeing on the ground?

I purchased two properties for clients in the last ten days: one in Paddington and another in Chatswood.

I attended several auctions around the Chatswood area, and the bidding was a “feeding frenzy” on each occasion.

This could be a post-election relief rally, or it could be something more substantial. Only time will tell.

However of these two sub-regions of Sydney, my observation is that the Eastern suburbs is stable and not falling. The Lower North Shore is moving higher.


So where is the puck going next?

I don’t have a crystal ball, and in the short term, Sydney property prices could move anywhere from here.

It is always worth returning to fundamentals when considering where the puck will go.

  1. The RBA dropped interest rates, in part to put a floor under property prices.
  2. APRA is likely to relax the assessment rate to assist more credit to property borrowers.
  3. The approval of new construction for dwellings has fallen off a cliff. In the year to April 2019, approvals for new dwellings fell 24.2%, and are down about 45% since 2017.
  4. The Australian population is still growing by 1.5% per year, which is a staggering number. We build one new Canberra per year!

So if the “puck” is property prices, I would think that the puck is moving higher from here, at least in middle or inner ring suburbs.



There is an old Wall Street saying: – “ Don’t fight the Fed”. Which means, if the central bank wants an economic outcome, they usually get it.

In an Australian context, the RBA does not want property prices to fall further from here.

Too many factors are converging to put a floor under real estate.

I don’t know exactly what will happen next – and there are certainly economic headwinds (there always are). However if you can safely afford to do so, now is a great time to accumulate real estate in Sydney.

This commentary is general in nature and does not take into account your personal financial circumstance.