Property experts believe holding off from buying property because “prices are too high” could see you lose long-term capital growth.
Australia’s booming property market, along with many ‘boom or bust’ headlines from mainstream media, has led some investors to pause plans.
But Dashdot CEO and buyers agent Goose McGrath along with KnowHow founder Bushy Martin revealed on the Get Invested podcast that waiting too long could see you lose out in the years to come.
“I did a breakdown and looked at someone who delayed investing for ten years because there was always a reason why now wasn’t the right time. And on a $400k property held over 20 years, delaying that by 10 years actually breaks down at an average growth rate to about $4.5K a week they’re missing out on equity growth,” Bushy said.
“So that delayed decision time is either going to be your biggest friend or your worst enemy in relation to getting the sorts of results that you’re trying to achieve out of property.”
The duo explained that when you observe property market trends, there is rarely a time where prices drastically decrease. Instead, property prices have an upward trending bias. Therefore, the key is finding a time when the prices are plateauing.
“The way I explain it is a lot of people talk about the property clock … but it’s actually more like a staircase. It goes up and then it goes across and then it goes up and then it goes across. And look, the across often does have a little bit of a down dip as well, but the point is you want to work out how to get in it at the foot of the stair. How do you get in right before it starts to go up?” Goose said.
However there is a way to overcome this and mitigate the risks, and it’s one of Bushy’s biggest messages; play the long-term game.
“Property investing, to be successful, is a long-term game. It’s at a minimum of 15 years, because those property cycles that we speak about, the property cycle where we see a spurt of growth and then a long period of plateauing or even a slight drawback and then another spot of growth, to be safe you need to be into property for 15 years,” Bushy said.
“And the good news is if you’re taking a 15 year or more view of the exercise, then trying to buy at the bottom and sell at the top doesn’t matter so much because you go through a full cycle over that duration.”
Goose added: “We’ve been in these kind of crises before. We’ve been in times where property prices have been booming and people thought they can’t possibly go any higher, but they do. And we’ve been in situations where there’s been major international global economic events and property prices to go up. Now, that’s not to say they don’t also go down. But what we want to look at is playing a longer term game.
“The way I think about it is for the people that are sitting on their hands going ‘I’m going to wait for it to be cheaper’, it’s like well, all you need to do is go rewind back to 1990. If you could go back in time and buy properties in 1990, how many properties would you buy knowing what you know now? How many houses would you buy? You could just buy all of them. And we’re sort of in a similar position here.
“It’s the same thing everyone’s been saying for decades … and I’m on the receiving end of meeting with people who are now in their 50s and 60s saying ‘I just wish I’d started sooner’.”
But Goose and Bushy stressed this information also doesn’t mean investors should immediately jump at the next opportunity or rush to buy a property.
Property buyers are strongly encouraged to seek advice from a professional property team to find the right fit for you, your goals and your strategy.
Listen to the full interview here.
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