There is this preconceived idea that there is always a ‘best time’ to buy property. People pay thousands of dollars to be told by so-called professionals when to buy a property. There are many different magazines and print media that have made a living based on releasing this information to the public. There are various ‘experts’ in the industry claiming to know when to buy a property. News outlets constantly make conflicting claims, one week they will tell you how the property market will drop by 30% and the next week they will tell you how property prices in Sydney will continue to increase. We are now hearing property prices are going down and people are waiting for property prices to drop before they a property.

Based on actual data from CoreLogic, prices have fallen over the recent months. There are many factors for this, but the main factor is the government’s crackdown on investment lending by the banks. This is has resulted in stricter lending criteria, higher interest rates for investment loans and restrictions for interest-only lending. Even though the government recently announced the removal of the 10% limit on investment lending, I think the banks will leave the restrictions in place for some time.

Now that we have seen slight falls in property values. Does this mean its now the ‘best time’ to buy a property? My answer to this question is this ‘the best time to buy a property is when you are ready to buy a property’. Let me explain my answer, the property market works in cycles, we see a period of time where property prices stay stagnant or experience little growth, think between the years 2008 -2012 where Sydney house prices dropped by an average of 7.7% over this period. Then from 2012 to 2017 Sydney house prices increased by an average of 70%, nobody predicted this growth, however, it was only a matter of time that we saw the cycle change. Currently, we are in a property cycle and it’s only a matter of time that we enter a stagnant period of the property market cycle, where we may even see property values slightly fall even more. The question I would be asking is can you maintain a property for the long term and ride the property cycle’s ups and downs.

As much as many people see it as luck that they purchased a property 10 years ago and it has now doubled in value, I don’t think it has anything to do with luck. The decision to purchase a property and hold onto it for the long term has been proven time and time again as the best strategy to make gains in the property market. You need to be prepared to be in the property game for the long haul to see decent gains. To be in the property gain for the long haul you need to ensure that you can hold onto that property for a long time, for 10 years or more. During this time, you may experience little or no growth in value or better yet, the value of your property may even go down slightly, as long as you’re prepared for that, you shouldn’t panic and sell. You may also experience higher interest rates, which results in higher mortgage repayments, you need to ensure you can afford the higher interest repayments.

When we advise clients of their proposed actual interest repayments, we also advise our clients of their potential interest repayments if interest rates were to increase by 1% in the future. This allows our clients to ensure they would be still comfortable to pay the increased mortgage repayments in the event that interest rates went up and let me give you tip. They will go up. Based on the economic data and current inflation rate, we are a long way away from the Reserve Bank increasing interest rates.

I have opened my calendar if you would like to discuss your current repayments or potential repayments if there were any increases in interest rates in the future.

“The best time to plant a tree was 20 years ago. The second best time is now.”

*Chinese Proverb*

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