When is the best time to buy?
Real estate travels in a cycle with higher prices at the top of the cycle and lower prices at the bottom. This cycle can last from 5 to 20 years and can be thought of as a clock with 12 o’clock representing the top and 6 o’clock representing the bottom. The interesting part is that on average, every ten years since 1900 property prices have doubled regardless of the ups and downs of the cycle, so in theory every time the clock hits 12, property prices peak. That is why real estate has been one of the most popular investment strategies in Australia, because given time property should increase in value.
Ask yourself this... would any property on Earth sell for the same price it sold for in 1990 in today's market? Would any property sell for less today than what it did in 1990?
Highly highly unlikely.
This is the power of the proprty clock, even when the clock does strike 6 & the market bottoms out you can feel safe in the knowledge that prices probably aren't going to be as low as they were the last time the clock struck 6.
No-one can perfectly judge when the clock will strike 12 or 6 o’clock, it is a matter of watching the market and paying attention to economic trends. One can judge where the market roughly sits on the clock but no-one knows exactly when the clock will hit its peak and when it will hit its trough. If we knew that I wouldn't be writing this blog and you wouldn't be reading it... we'd probably be on the golf course laughing all the way to the bank!
At the moment we are nearing the bottom of the cycle where buyers may not be willing to pay as much for the same property that they may have paid 12 - 24 months ago. You could say that we are around 4 or 5 o’clock on the property clock. I would like to make one thing clear before going any further. This does not mean that property prices are plummeting. It simply means that certain things in our economic environment are affecting the market so in turn property prices and buyers ability to purchase can be affected. It is not the first time this has happened and certainly won’t be the last, hence the cycle of the market.
The most important thing to remember here is that buying at 6 o’clock on the property clock means you stand to wait for less time to realize an increase in the capital value of your home because the top of the market where property prices are highest is closer. If you are one of the many people who bought at 12 o’clock, don’t panic, the clock is always ticking. You will just have to wait a little longer for the clock to reach 12 again to see an increase in the capital value of your home.
So, the trick is to try and buy at 6 o’clock not 12 o’clock. Luckily, for today’s buyers the best time to enter the market is now because of where we’re at on the property clock. As I said, in my opinion I believe we are somewhere around 4 or 5 o’clock. Buying in the next 6 to 12 months will give you a greater opportunity to increase capital growth (the value of your home) faster simply because you will be buying property closer to the bottom of the market rather than at the top of the market.
Once again, for those who may have bought at 12 o’clock, and there’s plenty of us, don’t panic because that home you bought is still building equity. In fact, the equity in that home could even help you buy your first investment property.
So what's the verdict. Realising capital growth is a long-term process regardless of when you buy. If you buy when prices are lowest your "long-term" strategy is just shorter than that of someone who bought when prices were at their peak.
Become a student of the real estate market, the information is out there and easy to get. Enjoy the process and when you're ready and can afford it don't be afraid to buy, whatever the market is doing. The best time to buy is always now because the property clock is always ticking.
For any advice about selling or buying - Halliwell First National Real Estate
(03) 6424 1496
http://www.halliwellfn.com.au/
Alan Halliwell
Director – Halliwell First National
Real estate travels in a cycle with higher prices at the top of the cycle and lower prices at the bottom. This cycle can last from 5 to 20 years and can be thought of as a clock with 12 o’clock representing the top and 6 o’clock representing the bottom. The interesting part is that on average, every ten years since 1900 property prices have doubled regardless of the ups and downs of the cycle, so in theory every time the clock hits 12, property prices peak. That is why real estate has been one of the most popular investment strategies in Australia, because given time property should increase in value.
Ask yourself this... would any property on Earth sell for the same price it sold for in 1990 in today's market? Would any property sell for less today than what it did in 1990?
Highly highly unlikely.
This is the power of the proprty clock, even when the clock does strike 6 & the market bottoms out you can feel safe in the knowledge that prices probably aren't going to be as low as they were the last time the clock struck 6.
No-one can perfectly judge when the clock will strike 12 or 6 o’clock, it is a matter of watching the market and paying attention to economic trends. One can judge where the market roughly sits on the clock but no-one knows exactly when the clock will hit its peak and when it will hit its trough. If we knew that I wouldn't be writing this blog and you wouldn't be reading it... we'd probably be on the golf course laughing all the way to the bank!
At the moment we are nearing the bottom of the cycle where buyers may not be willing to pay as much for the same property that they may have paid 12 - 24 months ago. You could say that we are around 4 or 5 o’clock on the property clock. I would like to make one thing clear before going any further. This does not mean that property prices are plummeting. It simply means that certain things in our economic environment are affecting the market so in turn property prices and buyers ability to purchase can be affected. It is not the first time this has happened and certainly won’t be the last, hence the cycle of the market.
The most important thing to remember here is that buying at 6 o’clock on the property clock means you stand to wait for less time to realize an increase in the capital value of your home because the top of the market where property prices are highest is closer. If you are one of the many people who bought at 12 o’clock, don’t panic, the clock is always ticking. You will just have to wait a little longer for the clock to reach 12 again to see an increase in the capital value of your home.
So, the trick is to try and buy at 6 o’clock not 12 o’clock. Luckily, for today’s buyers the best time to enter the market is now because of where we’re at on the property clock. As I said, in my opinion I believe we are somewhere around 4 or 5 o’clock. Buying in the next 6 to 12 months will give you a greater opportunity to increase capital growth (the value of your home) faster simply because you will be buying property closer to the bottom of the market rather than at the top of the market.
Once again, for those who may have bought at 12 o’clock, and there’s plenty of us, don’t panic because that home you bought is still building equity. In fact, the equity in that home could even help you buy your first investment property.
So what's the verdict. Realising capital growth is a long-term process regardless of when you buy. If you buy when prices are lowest your "long-term" strategy is just shorter than that of someone who bought when prices were at their peak.
Become a student of the real estate market, the information is out there and easy to get. Enjoy the process and when you're ready and can afford it don't be afraid to buy, whatever the market is doing. The best time to buy is always now because the property clock is always ticking.
For any advice about selling or buying - Halliwell First National Real Estate
(03) 6424 1496
http://www.halliwellfn.com.au/
Alan Halliwell
Director – Halliwell First National
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