Is it the perfect time to trade up from your current home, to make space for your growing family?
Should investors act now to secure an investment property that builds a foundation under their wealth?
Or should we all just calm down, bide our time, and wait to see if the market continues to fall?
First of all – don’t try to time the market
Many a property “expert” has tried and failed when it comes to pouncing on real estate at just the right time.
Just look at all those experts who were concerned our property market would fall a couple of years ago at the beginning of the Covid pandemic, and how long they work.
Those homebuyers and investors who waited for "the right time" missed out on one of the best buying opportunities of their lifetime.
Then you only have to go back a few more years and see how wrong many of the predictions were when property values slumped in 2017-18 before the federal election that threatened to change property tax laws.
That homebuyers and investors who took advantage of the dip in the market are looking at very handsome profits today.
Sure, it would be great to sneak into the market just before it turns again, but it's just too hard to time.
And as interest rates keep rising, as they surely will, your borrowing capacity in 3 to 6 months' time is likely to be considerably less than it is today meaning that property that you could purchase today will be out of your reach, even if it drops in value a little.
But you’ll only know that you missed the opportunity of a lifetime after it’s passed you buy, just like the decision to jump on what looks like a bandwagon will only reveal itself to be a sheer drop off a cliff once it’s too late.
So, don’t even bother speculating on the future of the market.
Instead buy when you’re ready, and not a minute sooner or later
I’m sure you’ve heard stories about would-be property moguls who “just missed out” on buying up big, pre-boom.
It’s tempting to be drawn in by this hype, but the fact remains that the only really good time to buy a property is when you are ready.
No matter what the market is doing, how great the conditions seem, or what a bargain this particular property is, if you don’t have the solid financial and personal situation to back up your purchase, it’s likely it will all end in tears.
Ask yourself, can you really afford it?
- Have you taken into account not only your current financial circumstances, but also the likely (and unlikely, but possible) scenarios that you could be faced with down the track?
- Have you planned for things like unpaid maternity leave, or school fees?
- What about unexpected costs, like major surgery or a lengthy period off work?
- Don’t forget to factor in at least a rise or two in interest rates.
Make sure you can manage when the RBA raises rates over the next few months.
Ask yourself: Is it really the right time for you to buy?
This question is not just about money, either – your personal life should be a key driver in the decision-making process, too.
If you are buying a home to live in, then your personal needs really should dictate your timeframe.
It shouldn't really matter what the market is doing as you're making a long-term decision.
Don't let short-term influences get in the way.
If you are buying an investment property, then remember it's a long-term game.
It doesn't really matter what the market is doing, because you're not buying "the market."
You are buying an individual property in the market, at the right price.
The type of property that you will hold onto for the long-term, and look back on in five years' time and say "Wasn't that a great purchase - gee I bought it cheaply."
The bottom line:
Don't make this massive decision, which could impact your financial position for years to come, based on market conditions.
Consider your own personal budget, goals, future plans and risk profile, and then contemplate whether buying a property now makes sense.
And if you are still uncertain, an experienced independent property strategist could also be a good sounding bound to help you make the right call.
