Property investors say that succeeding in real estate is all about timing. Buying at the bottom and selling at the top is easier said than done as there is no easy way to predict exactly when the market is at its peak or trough.
Many real estate experts agree that “time” is everything and it’s more about “time in the market” rather than “timing the market”.
What is a property clock?
Some real estate analysts use a clock analogy to explain market cycles. The hands moving around the clockface represent where local markets are, at any one point in time.
So many markets, so little time
While the idea of a property clock is logical, the notion of a top and a bottom should be taken at face value.
Experts break down the major capital city performance into “house” and “unit” markets and refer to “regional” figures separately, consolidating hundreds of regional cities and towns into one collective data group.
Cities and towns might be heading one way as a whole but dig deeper and some suburbs can be running their own individual race.
Buyers and sellers should narrow their research to fit their own personal circumstances. The big picture is great, but knowing exactly what is happening where you plan to buy, or sell is more relevant.
It’s hard to time the trough
During the pandemic, people were looking to get out of the city and choosing to move to regional areas with more space and tranquility as they worked from home.
Interest rates were at record lows allowing some people to secure their dream property. As a result, inner city apartments were out, as people were opting for larger homes meaning houses and regional properties boomed.
In early 2022, many locations moved from the “12 o’clock” spot transitioning away from their market peak. Houses started to become even more unaffordable for many and with interest rates rising swiftly, the desire (and the ability) to pay top dollar dropped.
Apartments gradually started coming back into favour and less demand for high-priced houses saw values slip. It’s not yet determined whether the property market has reached the “6 o’clock bottom”. Unfortunately, pinpointing when values hit a trough is usually declared once the moment has passed.
It’s not timing the market, but time in the market
Australia has a diverse property market with varying cycles. Although, as a population we might experience the same external economic factors – such as inflation pressures and interest rate rises – how each of them impact each corner of the country, can vary greatly.
Experts cannot predict exactly how long each cycle will be or the extent of the rises and falls. For example, when Covid hit many economists were signalling a property market crash – the market proved them wrong.
Sophisticated property investors look for real estate in desirable locations that may appear more likely to hold their value and increase over time.
“Time” can also refer to the right time for you as a buyer as you need to have your financial ducks in a row to purchase a property.
Whether you’re an investor or a homebuyer, holding out to buy at the bottom means you may risk missing out on time in the market because as history has shown us – the longer you hold a home, the more valuable it may become.
To talk about the right time for you to make your next step onto the property ladder, speak to us today.
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Author: Pat Casey – Managing Director & Financial Planner Sydney – Assure Wealth
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Assure Wealth Pty Ltd ABN 31 965 466 780 Corporate Authorised Representative no. 1244817, Patrick Casey Sub-Authorised Representative no. 1244748 of Walker Lane Pty Ltd ABN 70 626 199 826, an AFSL
