The Ripple Effect

How Smart Investors Use The Ripple Effects.

When the property market is running hot, as it has been, a common trend that occurs is the ‘ripple effect’, where buyer demand and capital growth ‘ripples’ outwards from one suburb to the next.

Simply, as prices increase beyond the reach of buyers in the suburb of their choice, they tend to look for ‘the next best thing’ that falls within their budget; in adjoining, lower priced suburbs.
As more and more buyers start buying in these adjoining suburbs property prices start to rise.

This ‘ripple effect’ in capital growth most commonly moves from the inner suburbs outwards, and along or away from the coastline.


For smart property investors the trick is to pick these suburbs before the ripple of price growth hits or before it has become too established a trend.
This sounds easy, but requires good timing and plenty of research.
One method is to measure property values based on median prices between adjoining suburbs.
If there is more than 10% variation, chances are the suburb next door could play catch-up.

Another method is to closely monitor median price trends. Generally, at the start of a property cycle, the inner suburbs will be the first to show signs of growth, which will then ripple outwards.

Once the cycle has kicked off, look for properties within your budget as close to the growth areas as possible.
While I like the ripple effect concept, there is no certainty that this will always occur.

Growth does not keep moving outwards indefinitely; there are a few factors that can stop growth from rippling further out:

Firstly, a change in the general property market can stop the growth of property values.

Obviously things like rising interest rates, affordability and market confidence affect the length and breadth of the property cycle. When price growth in the major Australian markets came to a halt at the end of 2003, the following two years saw the highest capital growth rates return to the inner city suburbs and the ripple of price growth didn’t make it to many of our outer, less affluent suburbs.

Investors who were betting on the ‘next best’ outer ring suburb lost out when the growth ripple didn’t quite make it that far. Interestingly the same thing happened when our property markets picked up in 2012 after their two year slump after the GFC.

Secondly, geographic factors can prevent a ‘ripple’ from continuing.
For example, if the primary driver of the ‘ripple’ is proximity to a trendy suburb or fashionable dining or entertainment precinct, the reliability of capital growth is likely to decline in line with the distance travelled.

A safe rule of thumb is: any more than a five to ten minute drive is too far!
Other geographic barriers are main roads or highways – some of which have a sort of psychological effect – people don’t really want to live on the “other side.”

And it’s been the same this cycle
With many of our property markets having performed strongly for well over few years now, once again I’ve noticed the ripple effect as capital growth “ripples out” from those early strong performers to adjoining suburbs.

If you’re in the property market for you first (or next) investment or even your home, this is a trend you should be aware of.

But it needs on the ground knowledge to really take advantage of it and not get caught out.


You see…
Sometimes there is a perceived price differential between one region or another, or one street and another or even one side of the street and the other, but it’s that way for a reason.
It always was that way and will always be that way.

I’ve seen interstate investors or even local investors without intimate knowledge of a particular suburb get caught out buying a “perceived bargain” when that side of the street or that orientation will always be worth less than the other.

I guess what I’m saying is that, especially at this more mature stage of the property cycle, you really need intimate knowledge of the suburb you’re planning to buy in so you don’t get caught out.

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Strength To Bring Forth

…Becoming the man of your dream.

Vision can become fruitless while destiny can become a mere wish and as an unfulfilled dream when a man has no strength to bring forth. It is the strength to bring forth that translates a wish into a dream and the latter to a fulfilled destiny. It is better not to have a wish than to have one without the strength to bring forth. What use is a conception without the strength to bring forth.

A pregnancy will end in a Caesarean Section if there be no strength to bring forth. Many ‘mothers’ and ‘babies’ have ended their journeys in that process. Because their lives were hanging on the experience, proficience and competence of the medical practitioners than on divine providence and natural pattern of conception and delivery.


Conception will become traumatic if one becomes aware before hand that it will end in C. S. and where there are no competent hands to execute it. It becomes a chance of 50-50. A destiny hanging on 50-50 chance has no sure security but is flaky. Strength to bring forth therefore is Grace i.e divinity enabling humanity to perform. Mortals endowed by the Immortal. The finite empowered by the Infinite. The natural helped by the supernatural to achieve the goal.

What a life! It can be frustrating when one lacks the strength but motivating when there is strength to bring forth.

The result of doing nothing is the reason for caesarean section. If you can but push there will be no reason for C. S. You have to push through in prayers. You must participate. As soon as Zion travail she brought forth.
Is there no balm in Gilead? why then is the bruise of the daughter of my people not healed? Jeremiah 8:22; 30-31


Beyond Survival

Taking The Limits Off: The Obstacle To Transformation.

Once upon a time in a faraway land, there lived a Chinese wise man and his disciple. One day in their travels, they saw a hut in the distance. As they approached they realized that it was occupied in spite of its extremely poor appearance.


The Discovery.

In that desolate place where there were no crops and no trees, a man lived with his wife, three young children and a thin, tired cow. Since they were hungry and thirsty, the wise man and his disciple stopped for a few hours and were well received.

At one point, the wise man asked: “This is a very poor place, far away from anything. How do you survive?”

“You see that cow? That’s what keeps us going,” said the head of the family. “She gives us milk, some of it we drink and some were make into cheese. When there is extra, we go into the city and exchange the milk and cheese for other types of food. That’s how we survive”.


The Challenge: The Great Task.

The wise man thanked them for their hospitality and left. When he reached the first bend in the road, he said to his disciple: “Go back, get the cow, take her to the cliff in front of us, and push her off.”

The disciple could not believe what he was hearing. “I cannot do that, master! How can you be so ungrateful? The cow is all they have. If I push it off the cliff, they’ll have no way to survive. Without the cow, they’ll all die!”

The wise man, an elderly Chinese man, took a deep breath and repeated the order: “Go ahead. Push the cow off the cliff.” Though outraged at what he was being asked to do, the student was resigned to obey his master.

He returned to the hut and quietly led the animal to the edge of the cliff and pushed. The cow fell down the cliff and died.

The Guilt.

As the years passed by, remorse for what he had done never left the disciple. One spring day, the guilt became too much to bear and he left the wise man and returned to that little shack. He wanted to find out what had happened to that family, to help them out, apologize, or somehow make amends.

Upon rounding a turn in the road, he could not believe what his eyes were showing him. In place of the poor shack there was a beautiful house with trees all around, a swimming pool, several cars in the garage, a satellite dish, and on and on. Three good-looking teenagers and their parents were celebrating.


The Realisation And Transformation.

The heart of the disciple froze. What could have happened to the family? Without a doubt, they must have been starving to death and forced to sell their land and leave.

At that moment, the student thought they must all be begging on the street corners of some city. He approached the house and asked a man that was passing by about the whereabouts of the family that had lived there several years before. “You’re looking at it,” said the man, pointing to the people gathered around the barbecue.

Unable to believe what he was hearing, the disciple walked through the gate and took a few steps closer to the pool where he recognized the man from several years before, only now he was strong and confident, the woman was happy, and the children were now nice-looking teenagers.

He was dumbfounded, and went over to the man and asked: “What happened? I was here with my teacher a few years ago and this was a miserable place.

There was nothing. What did you do to improve your lives in such a short time?”

The man looked at the disciple, and replied with a smile: “We had a cow that kept us alive. She was all we had. But one day she fell down the cliff and died. To survive, we had to start doing other things, develop skills we didn’t even know we had. And so, because we were forced to come up with new ways of doing things, we are now much better off than before”.

Moral of the story:

Sometimes our dependency on something small and limited is the biggest obstacle to our growth. Perhaps the best thing that could happen to you is to push your “cow” off the cliff. Once you free yourself of the thought “it’s little but it’s certain,” or of that idea “I am not doing great but there are people who are much worse than me” — then your life will really change.

Is there a cow in your life that is keeping you miserable? You can take the limits off! Put away and see beyond the lean cow.