A recent survey of 2000 Victorians by the National Bank found that more than fifty percent of us believed that right now is a good time to buy a property to live in. A survey like this raises an interesting question, (and it’s one of the most common questions that people in the real estate industry get asked), how do you pick “the right time to buy a property”?
The right time to buy is not about market trends
Some people believe that they can study a variety of market statistics in order to pick the “perfect moment” to purchase their next home. However, they overlook the fact that most of the most definitive market statistics on the Melbourne property market only become available well after the event. Thus the ‘watch and wait’ approach is inherently flawed.
As we all know, every market has its cycles, whether it’s property, shares, currency, gold or pork belly futures. Investors try to buy at the point that prices start to rise again and sell just before prices start dropping again, but with the lengthy transaction times involved in buying and selling property, any change in market trends will only be visible several months after it happens. That’s why 99% of us only realise that we’ve hit the peak or the trough after it’s happened.
It’s more about time than timing
Perhaps the best tip on choosing the right time to buy comes from an old saying that originally came from the share market… “Time in the market is more important than timing.”
No matter whose statistics you follow when trying to analyse the property market, three facts will always be clear.
- If you look at short term returns, the property market usually moves up, but has been known to move down on rare occasions.
- In the longer term, the property market has always moved up.
- The longer you hold a property, the more it tends to go up.
If you are aiming to buy a property, then sell it again in the short term, you need to be prepared to get actively involved in changing it (through renovation, subdivision, construction or rezoning) in order to make a profit. But keep in mind, making a profit is far more challenging than ‘Reality TV’ would have you believe!
However, if you are looking to buy a property as part of a long-term plan, history tells us that property has very few competitors. Of course, if you are looking for advice or assistance through this process, the team at Ian Reid Vendor Advocates are always happy to help. Feel free to give us a call on 1300 400 400, and be sure to get your free copy of our booklet “Fatal Real Estate Traps Exposed”, while you’re here.