When most people ask “is now a good time to buy property?”, what they are actually asking is… “is the property market going to rise or fall in the next few months?
To answer the second part…
1- How should I know
2- It really doesn’t matter (if your strategy is “buy and hold”)
Answering the original question is easy, though you’ll have to read on to discover my answer to that question today, tomorrow, next week, next year, next decade (you get the idea), because it never changes.
At the start of 2020, highly paid experts (who dedicate their lives to this art) were lining up with their annual “property predictions”. As you know, I prefer not to pay too much attention to these figures, but there was extra reason to look back and wonder if they’d all just wasted their time.
I’m pretty confident no one factored a global pandemic into their numbers… and when the (you know what) hit the fan, predictions of doom and gloom were abundant.
“Property prices are going to drop by up to 50%” they said. Not only was it in the media (it’s not like them to sensationalise a headline for clicks), I have comments on my social media posts saying exactly that. Passionate people desperate to “educate” everyone that they know economics better than anyone else.
What happened surprised everyone.
Property continued to rise. Even during the pandemic when there was talk of reduced rent, mortgage defaults and the so called “economic cliff”.
Can any of this still happen in the future? Sure. We’ve had downturns in the past. We’ll have them again in the future. Property moves in cycles.
If the experts can get it so wrong though, what chance are you or I of pulling out the crystal ball and predicting property prices in 6 months… or 6 years.
Below is a graph of property prices in major cities BEFORE the pandemic hit. I’ve marked 3 “spikes” in prices (using Sydney as the example).
Consider spike “1” and “2” in early 1989 and late 2003.
1989 was a little before I purchased my first property and before I moved to Australia, though I know people in 1989 were saying that the price of property was too high and that it was a bad investment. Were they right?
I can however clearly remember 2003 when people said the same thing, though I continued to buy.
I was confident the long term trend of property slowly rising would continue (and I do to this day).
Now let’s consider spike “3”.
In 2017 the market was booming. People were paying ludicrous prices for property. Then the market fell in many areas. By 12% (and even more) in some locations.
Yet the market remained strong in blue chip suburbs (like Bondi Beach) and actually showed a very slow and steady growth.
So what do we learn from all this?
Let me answer that with a story from one of our clients who purchased about a decade ago.
During our initial conversation (about a decade ago), they said (obviously I’m paraphrasing)…
“We’ve been saying for 10 years that we should buy, though property was too expensive. Here we are a decade later and we are so much further away from what we thought was “expensive” back then. If this trend is going to continue, we just have to ignore the market and buy now. Because if we come back in another 10 years, it’s just going to be so much more expensive.”
Like I said, I’m not smart enough to time a property market.
The best time to buy was yesterday.
The second best time to buy is today.
To close, consider these statements and reply to this email and let me know if you’ve heard anyone say (or have thought about) any of these…
1. I wish my parents/grandparents had purchased more property
2. I wish I had purchased property when I had the chance years ago
3. I’m so glad I didn’t buy property at the height of the boom in 2004. I would have saved so much money
Book a free, confidential mini strategy session with our property expert Luis Lequerica: https://calendly.com/yourempire/15min
Or simply, get in touch with us today on our contact page to discuss your requirements.