Have You Just Missed the Bottom of the Market?

Yes, that’s how quickly the market can turn, yet so many buyers and sellers think they can pick the bottom of the property market and delay making a decision.

They think they’re being clever; I think they’re making excuses and will live to regret it.

Which are you? Did you see the CoreLogic results for February 2023 yet ?

Sydney recorded an increase in property prices for February, not a fall.

Sure, it was only 0.3%, but it’s a sign and yet another example of how quickly the market can turn. No one was expecting it, no one was predicting it and then it just happened.

CoreLogic Home Value Index - Released 1 March 2023

You can find the full CoreLogic report by clicking here.

A similar thing happened in 2020–2021 where prices were falling at the start of the pandemic. Everyone was saying, “why buy now when it’s going to be cheaper tomorrow? I’m going to wait”.

And then the market took off, rising 20-30% in around 12 months.

Within 6 months of the first rise, many people then said “I’ve missed the boat, I’m too late, property prices are rising too quickly, it’s going to crash. Damn I’ve missed it!”

And here we are on the property price merry-go-round again.

"No one is standing out on the street with a sign saying... It's the bottom of the market today, buy a house." - Zoran Solano

1- Not all the markets rose.

It was just Sydney which rose in February. However, the rate of fall in most capital cities did reduce, which indicates that things are slowing, and the “bottom” is getting closer.

2- Interest rates could continue to rise.

There’s still talk of further interest rate rises and that will continue to affect market sentiment (the biggest indicator of demand) as well as borrowers serviceability limits.

However, Westpac talked about 7 rate cuts in 2024–2025 which is an about turn in the conversation from the banks. If more stories like this appear in the press, that is bound to affect confidence in the market that if you can afford to buy now, chances are that your mortgage will be cheaper in the future.

Read the article here: https://www.9news.com.au/national/westpac-predicts-seven-interest-rate-cuts-but-not-before-more-pain-for-households/daff0572-ea5a-4fc8-baa9-c657565aacf3

3- “Mortgage stress” is real, but what does it mean.

Another big consideration is the talk of the mortgage stress that might happen with a fixed rate cliff coming later this year and that many property owners won’t be able to afford their mortgages doubling or tripling and will be forced to sell.

I’m not so sure that’s going to happen as they were still assessed by their lenders at 3% above current rates when they took the mortgage out. Many people aren’t on fixed rates, and many have already changed from interest only to principal and interest repayments. They might be under more mortgage stress than they were before, but they haven’t been forced to sell.

Not necessarily… and I don’t really care to be honest.

Animated GIF of a person looking surprised with the text 'What did he say?

Let me repeat that… I don’t really care.

Why don’t I care? Simple. I don’t really care because:

  • I’m investing for the long term
  • I’ve never tried to pick the market

I continue to hold 100% of my wealth in property as I believe it’s going to be more expensive to buy in 10 years’ time and I’m prepared to cash flow any negative gearing until that happens.

Yes, my costs of holding that property have risen rapidly recently but it’s not going to be up there forever. We’ve had it good for such a long time now as rates have been dropping for almost 15 years since the Global Financial Crisis in 2008/2009. We all knew it was going to rise and now it has.

The Law of Supply and Demand - Have you just missed the bottom of the market?

The reason prices haven’t dropped massively is because in the main areas that people want to live, there is a large lack of supply. If there’s no property for sale and people still want to buy it, prices rise in the good times and stay pretty stable in the tough times.

So, whether this is the bottom or not, take it as advanced warning that things change very quickly and if you get in before the masses, you’ll probably end up with a better property in a better location for a cheaper price.

Ready to act now? Book a free, confidential chat with our strategy team today.

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