So exactly when is the right time to buy property in one of Australia’s most popular investment locations?
This is one of the most-often asked questions by property investors who feel bamboozled by the mix of negative media commentary and the hype of property investment spruikers.
I have seen property investors hang on and on, waiting for the best time to buy in case the market may drop lower or waiting in a rising market as they think the horse has bolted and it is way too late. The fact of the matter is – property is a safe, long term investment and the best time to enter the market is whenever it is practical for you to do so. Waiting longer than this will see you lose potential investment value.
Historical data shows property is a safe investment long term
World and local events impact perceptions about when to buy. If you stop and reflect on some recent events would you have invested in the following periods?
- 1985 – capital gains tax introduced
- 1984 – banking industry deregulation
- 1990-1992 – “a recession we had to have”
- 1997 – the Asian crisis
- 2000 – GST introduced
- 2001 – September 11, New York
- 2003 –2nd Iraq war
- 2006 – Socceroos losing round 16 world cup for their chance to move to quarter final (this was a crisis in my book!)
- 2007 – US subprime crisis, collapse of Lehman Brothers
- 2008 – Global Financial Crisis
More recently we have had the Brexit.
There is no doubt some of these events were terrible and many people would have chosen not to invest in these times due to fear and uncertainty. Yet those who invested sensibly did make money, despite the difficult times. Check out the growth in median house prices across 6 Brisbane suburbs (growth has occurred across all suburbs despite their distances from the CBD), despite these world events:
In terms of taking a long-term view of investment Warren Buffet is famously quoted as saying: “someone is sitting in the shade today because someone planted a tree a long time ago.”
If we look at the graph above we see Mr Buffet’s view is extremely applicable to property. It always holds its value long term – despite what is going on in the short term. The graph above shows us that regardless of turbulent economic times prices will recover. In recent times, the Global Financial Crisis (GFC) was a set-back. However if you had stayed in the market you would have recovered your unrealised losses within two years.
Banks also regard property as a secure investment. They know that property holds its value. For example, an investment of $250,000 in Wavell Heights in 2001 (September 11 disaster) was worth $490,000 by 2010 and today is worth approximately $630,000.
The same results exists across many suburbs. In Bardon the median house price was approximately $265,000 in 2001, by 2010 it was $730,000 and now it is approximately $850,000.
My biggest concern is people waiting too long to come into the market
My biggest concern is seeing clients waiting for the perfect time to come into the market. At the end of the day it’s the time you spend in the market that will make all the difference to the success of your property portfolio.
There is no “perfect time”
The historical data above shows the best time to come into the market is soon as it is practical for you to enter the market. As long as you understand your financial situation and your borrowing capability, and you adopt a long-term sensible approach to buying, and you know what makes a “smart” buy, you will always be in front.
Smart buyers’ tips: What indicators do we consider?
At Brisbane Buyers’ Agency we believe there is always a good time to buy – provided you clearly understand your own financial situation and you know what makes a “smart” buy. We have more than 20 years property industry experience so there are some fundamentals that we consider when assessing a property as a “smart” buy. The key indicators we analyse on behalf of our clients include:
- Consumer confidence index
- Interest rates
- Inflation
- Time on the market
- Number of properties sold locally
- Vendor discounting behaviour
- Local population growth (inter-state migration into Brisbane/Queensland)
- Commodity prices
- Housing affordability i.e. income to debt ratios
- Major elections.
As you can see there are quite a few factors to consider here as property economics is a complex living organism. Also at this time we would strongly advise against buying any unit in Brisbane. There is a complete oversupply and investors may not be able to rent good quality apartments in inner-city seemingly blue-chip locations.
Some of these indicators confusing? Let us help you
At Brisbane Buyers’ Agency our philosophy is to help our clients make the smartest buying decision possible. We know that it can be confusing and even overwhelming. We save our clients time, money and frustration in three ways:
1. Our Smart Buyers Index gives our clients the inside running on the true property hotspots in Brisbane.
Our proprietary property analytics tool, the Brisbane Buyer’s Agency Smart Buyers Index, focuses on finding the “micro-economies” in local suburbs so our clients can find the best deal possible.
When you work with us you will find the real property investment hotspots or as we like to call them ‘smart buying opportunities’ in the Brisbane market.
Using our local knowledge and our Smart Buyer’s Index we have insights that may not be so obvious:
- why houses in the northern end of one northern Brisbane suburb sell for more than homes on the southern end despite them being separated by 1 km
- why a pocket of this same northern Brisbane suburb has not increased at all over 5 years
- why some suburbs will never command a higher rental yield despite how much is spent on renovations
- how to access good deals in close proximity to dress circle locations
- why houses on the north side of a major arterial road in southern Brisbane are more expensive than their southern counterparts
- how to find great deals – we recently purchased an investment property for a client for only $585,000 in one affluent inner city suburb only 1 km to the border of another suburb where the median house price was $800,000+
- how to interpret variances in the sales data to make realistic offers that vendors accept.
2. We do not work on commission
We work on a flat fee arrangement, we do not work on commission, so you know exactly what your costs will be up front.
3. We roll our sleeves up and investigate what is really going on
As registered valuers and quantity surveyors, we have inspected thousands of properties so we know what we are looking for in a property.
We take this one step further by building an intimate understanding of the local community around a potential investment property. The information we find out is not available through published sources. Our approach means we know about:
- the reasons for sale – critical information for sale negotiations
- the neighbours – will they be friendly?
- how the area fares in heavy rain (compared to the Brisbane City Council flood maps)?
- is the road use as a rat run in peak hour
- the potential for neighbourhood issues such loitering kids
- the parking situation
- noise levels at night
- the state of the body corporate (relationships, propensity to spend or not on maintenance)
- other potential local issues that could turn what looks like a good investment on paper into a very difficult situation in real life.
FREE session: “Brisbane Property Buyers Strategy Session”
Imagine being crystal clear on what’s most important to you, so you buy the property that sets you up best financially and lifestyle-wise. Book a free strategy session with us where you will clarify your Buying Brief and get some insight into property opportunities available in Brisbane right now.
You will leave this session knowing exactly the type of property you need to help you grow a strong financial future and property portfolio.
To book your “Brisbane Property Buyers Strategy Session” register at the form to the right of this blog, call 0409 499 034 or email paul@brisbanebuyersagency.com.au.