March 1, 2018 | When is the right time to buy a property?
For those looking to purchase a home or investment property, the main question they ask themselves is ‘when is the best time to buy?’ The answer is now. Many people spend so much energy trying to pick the best time of the market and they could be costing themselves time, energy and money. Time ‘in’ the market is a much better strategy than time ‘of’ the market.
Unfortunately, sitting on the sidelines and waiting to finally buy a property at a cheap price may be costing you a lot more in the long run. Patiently waiting for the market to drop, the ‘housing bubble’ to pop, or property prices to fall back to a more ‘sustainable level’ may mean you are locking yourself out of Melbourne’s best available real estate or the perfect property for you.
Property markets are cyclical and no one has the crystal ball to predict the future. It is very important to understand what factors are driving a market to surge or slump but again, the majority of these factors are out of our control and very hard to predict.
Strategic investors see advantages in both bull and bear markets and they capitalise on all conditions. Strong markets provide capital growth on their existing or new investments which then provides them leverage for future investing. Slower markets provide opportunities to capitalise on less buyer competition and more attractive buying options as they know a strong market will be on the horizon at some stage in the future. Investors always secure investment grade or A-Grade properties because they know this type of real estate commands strong capital growth, is always in demand (should they need to sell) and they will attract good tenants and rental yields.
Home buyers are also comfortable to transact in all market conditions as their circumstances are generally forced by lifestyle and social changes, growing or shrinking families and school zones. The majority of home buyers usually trade-in their existing home so they can up-size or down-size and based on this double transaction, they are hedging their bets. A strong market will benefit their existing property sale but will force them to stretch their budget for their next purchase. A slower market benefits their new home purchase price but will hinder their existing home sale price. Either way, they are safe.
So, when trying to work out ‘when is the best time to buy?’ – the answer is ‘whenever you can afford to’ regardless of the market cycle at the time.
Given most people spend several months searching for their dream property, if you see it and you can afford it, then you should go for it. If you’re a homebuyer with the intention of staying put for the next 10 – 20 years, there is no point of putting your life on hold in the hope of saving a few dollars based on a possibility that the market may fall. If you are an investor, you should be holding property for a minimum 7-10 years so you can ride market fluctuations and enjoy long term capital growth and rental yields.
The best way to minimise risk on a property purchase in any market is to do your homework or engage a professional to assist you.
At Beckett, we look forward to empowering you to move beyond timing the market and into a perfect property that will secure your financial future and your lifestyle.