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A common question we’re being asked is ‘Shouldn’t I just hold off for 12 months before buying?’
With the market sentiment quite weak now particularly in Melbourne and Sydney, and with all the negative media, you can understand why people are asking this question. The fear of missing out (FOMO) is a distant memory… now everyone wants to pick the bottom of the market.
There’s no right or wrong answer here. ‘Waiting’ may absolutely be the best strategy, but for others, now may be the perfect time to buy. There are a lot of first home buyers, upgraders and property investors who have never had buying conditions as good as they are now.
In today’s episode we discuss why waiting may not be the best strategy, and we also round out our discussion of the ‘GLOW’ model for asset selection. We discussed strategies for identifying ‘Growth’ properties in episode #25, today we discuss Lower risk investments, Opportunities to add value, and buying Well, e.g. the L, O and W in the GLOW model).
We make the point that the media over-generalises. Certain headlines of late imply that all property markets across the country are declining, whereas in fact house prices in Adelaide and Brisbane have been steadily on the rise.
Our other points are as follows:
- The breakeven on property is quite low (see episode #23), even in a low growth environment, property can outperform other assets classes due to the combined powers of leverage, compound growth and time.
- It’s extremely difficult to pick the bottom of a market, however the fundamentals of property in Australia remain strong (ref episode #24)… so if you’re looking at your purchase or investment as a 10yr+ proposition, then question the significance of any price movements over the next 6-12mths anyway.
- We’re currently in a buyers market with less than normal competition for high quality assets, if negative gearing on established property gets abolished, there may be a ‘rush’ to get in, which all of a sudden changes this.
- Anything could change in the next 12 months, what if based on your personal circumstances it was more difficult at a later point in time to get finance?
If you’re in a position to buy and you have a sensible long-term strategy then perhaps now is an opportune time for you.
Warren Buffett’s famous quote is ‘Be fearful when others are greedy, and be greedy when others are fearful’.
Is it now that people are most fearful..?
Enjoy the show!
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The Long Property Show provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. Nothing in the Long Property Show constitutes legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.
