Residz Team 3 min read
Every property investor wants to time their run perfectly. The buyer wants a market at the bottom, the seller wants to list as the market hits its peak. Timing your run to buy a property seems so important. But is timing the market as important as being the right time for you to buy, and ultimately, the amount of time you stay in the market once you do buy?
The best time to buy a property is, of course, always a decade before you bought your property. Many house hunters mentally kick themselves that they didn’t invest “back then” when they “had the chance.” If you loop back around to this regret over and over again, it’s called ruminating. After some amazing and wild facts about Australia’s property market made headlines in 2021, plenty of people will regret they didn’t buy in earlier.
Ruminating can give you the property blues, at the very least it’s unproductive. Hindsight is 20-20, and you had your reasons for not investing back then. You didn’t have the money, you weren’t in a solid career, you were too young or carefree or travelling, it wasn’t your focus, you were distracted by other activities, you were happy renting, you were living your life. Ok, so you didn’t invest then for a good reason, there’s no point ruminating.
Tennis player Arthur Ashe had a saying “Start where you are at. Use what you have. Do what you can.” It feels hugely unhelpful to people on the edges of the property market, but what choice do you have? The real estate market may feel out of reach, but it’s not going to be out of reach everywhere. If you are determined to get on the property ladder, it is possible to find something in an affordable price bracket.
What may not be as clever is trying to pick the exact right time to buy. Picking the bottom or the peak of the real estate market is hard even for experts. Think of those who waited to buy in the early to mid- pandemic, and saw property prices soar to record levels instead.
Now there is talk of the market correcting, cooling, or even plunging. Well, perhaps that will happen, but property experts are divided and have been wrong before. For example, recent results show house price growth is slowing but still rising in most states; auction clearance rates dropping but still clearing over 70%; talk of interest rates rising but evidence of record household savings as we all stay in and reduce our spending on going out and travel.
World events and a volatile sharemarket also suggest Australian property could still keep lifting, and there are clear signs more buyers are entering the market as listings pick up. Big things are expected from Australia’s international borders opening, including a lift in housing demand. Finally, the cost of building materials is up 20-30%, slowing supply of new homes. So, it’s not clear cut we are headed for a drop.
Where does this leave the prospective buyer? You probably have more choice, even if the market isn’t bottoming out. Think about time in the market, not timing of the market. If you can afford to buy a piece of real estate, it’s pretty likely you’ll hold onto it for 7 to 10 years. This is the “buy and hold” strategy popular with most Australians. The longer you hold the property the more you can average out the property cycles.
As always, research, research, research. Location is still key, and our Investability Index tool on Residz.com shows areas that have evidence pointing to being better or poorer investments. Wherever you end up, keep a diary to look back on in a decade. You’ll read it and kick yourself you didn’t buy the house next door too.
Image: A house at Warburton, Victoria. Photo by Mattinbgn, Wikipedia.