By Andrea Milner

Looking at the current state of the property market, for which Hawes says the drivers are immigration, affordability and yields, he describes immigration as “down but not dead – neutral at present”. Affordability, he says is “terrible” – the least affordable since this has been measured by factors of property values, interest rates and wages.

Yields are the rental amount compared to the property value. Hawes’ yield benchmark is a net 6-7%, but he says yields presently average 2%. On the fundamentals, most properties are overvalued, according to Hawes. He thinks they may get more overvalued and stay that way for some time, but will not stay overvalued forever.

The market is currently driven by pent-up demand, says Hawes, from both first homebuyers and investors motivated by “rah-rah” seminars. Other drivers are the plenitude of stories about making money from property going around, and the fact that there are “no compelling investment alternatives”, combined with pressure to look after ourselves in our retirement.

When things get gloomy in property says Hawes, they really get gloomy, and there are many seminar presenters who have never seen a downturn. It is not so much that values fall, he says, but that properties become really hard to sell. “It gets boring when you’re not making money, you’re propping up your properties, and you still have to manage them.”

“Inexperienced and negatively geared investors listen to a wall of noise from economists and financial planners. The Reserve Bank will not stop until things get really gloomy – they’ve been too doveish until now.” But Hawes still sees opportunities for savvy investors, advocating a counter-cyclical approach.

“Remember,” says Hawes, “buy in gloom and sell in boom”.