A note for the first home buyer

Time spent in the market is always better than timing the market

This phrase simply relates to the time it takes property value to mature from the day you purchase it to that day you choose to liquidate (sell) it. There are 2 questions to ask.

1. How many people do you know who have sold a property for twice its price 12 months after buying it? I’m guessing not many. Ok, Ok, I’m sure there’s someone out there who has done it (Donald Trump maybe) but it’s not very common.

This is because property takes time to grow in value.

2. How many people do you know who know exactly when the stock & property markets are going to hit the very bottom and when they’re going to hit the very top? This time I know it’s no-one because no-one can. Plenty of people are very good at “forecasting” and “predicting” and this can really help narrow things down and I recommend that everyone does this in some way but no-one really knows exactly when things are going to happen.

Back to the opening statement “time spent in the market is always better than timing the market”.
This statement relies on the fact that the property market takes time to mature and that prices through all their ups and downs over 10, 15, 20 yr periods still generally increase.

There is no “get rich quick” scheme. When it comes to property the majority of us need to have a long-term approach. Some lucky people buy very low and sell very high and most of them are just that… lucky. And then there’s the Donald Trumps of the world who devote their lives to forecasting markets and took huge risks to get started too. For most of us that just isn’t practical.


So as you can see, if you choose property as a place to invest there is no real “bad” time to buy as long as you are prepared to wait and treat it as a long-term investment. Sure, if you buy when prices are at their peak you will have to wait longer to realize capital growth but your property will probably still increase in value if you hold onto it long enough. Most of us live in our homes for around 7 – 10 yrs.

For first home buyers this is a great time to be buying. The Govt. grant has been doubled to $14,000, the market is soft (prices aren't increasing) and interest rates are dropping. This is a first home buyers "perfect storm".

This is exactly the reason why buying as early as you can (as long as you can afford It and have considered your finances) is always a good thing to do. The longer you can hold property the better chance you have of selling it for a profit in the future.

A good idea would be to visit a financial planner who can help you make informed decisions about your individual financial situation in relation to buying property.

Time spent in the market is better than timing the market… when you’re ready go for it.


For any advice about selling or buying – Halliwell First National Real Estate

(03) 6424 1496
www.halliwellfn.com.au

Alan Halliwell
Director – Halliwell First National