When it comes to Property – What is waiting costing you?

Have you ever thought about the true cost of waiting to buy over the past few years?

Add it up and it could well amount to half a million dollars.

where's the best place to invest

I have two good friends who chose two different paths and have ended up in vastly different situations.

They both did extremely well at school and university and both obtained high paying jobs as soon as they graduated.

They rented together for about a year in Sydney’s eastern suburbs before Friend A took the plunge to buy a very rundown and old terrace in Bondi for around $550,000 at the time – probably about five years ago.

Back then, it seemed like a huge amount of money to pay for a terrace and it was.

But Friend A rented out another bedroom and also turned a dining room into a room.

feesShe struggled a lot to make it work but it paid off – the property was sold a few years later for about $850,000, post-GFC, during the flat market.

Using the funds, Friend A bought a semi with an amazing outlook in Neutral Bay.

She still tells me that to this day, she never would have been able to afford the semi without buying and selling the Bondi terrace first.

It gave her a huge deposit and allowed her to upgrade.

On the other hand…

Friend B told Friend A that she was crazy to buy a property after just finishing uni and should “just have fun” and enjoy being in her 20s.

property bubble

She ended up renting one of the bedrooms in the Bondi terrace and despite earning a very attractive salary, Friend B is still renting.

She recently complained that she’ll be “homeless forever” now that Sydney is going off.

The strange part is, Friend B was earning far more than the average person from a very young age.

She could have actually been the first person to buy a property in our group of friends but instead she helped pay for Friend A’s mortgage and actually set Friend A up for life.

This scenario is common among so many groups of people.

No matter how good Friend A or Friend B’s wage is, the cost of waiting to buy in Sydney within just a space of five years would probably be around the $500,000 mark in the inner city area at least.images (3)

Today, the Bondi terrace would easily be worth $1.15 million, or half a million more than what my friend paid about five years ago.

Think about how hard it is to earn that much money.

And even harder to save it.

Real estate agents see it all the time. An agent told me just yesterday that some people live and breathe open homes but never actually buy anything.

Can you believe this –

He has seen some people inspect properties in the same area for seven or eight years and they’re still “getting ready to buy”.

He told me about one person who inspected a house in the Brisbane suburb of Corinda about eight years ago and never bought the property. 

A few years later, after the Brisbane boom, the property sold for almost double the price.

The same woman had a look at the second inspection and discussed her interest, but once again didn’t put pen to paper.

Just this month, that same property has just been listed for the third time within eight years and you guessed it, she’s been through the property again.

She told the agent “this time I’m going to buy it”.

I asked the agent what the offer was and the difference in price she’d have to pay but he simply replied “oh, she won’t make an offer”.

Not buying the property almost 10 years ago has probably cost this lady hundreds of thousands of dollars.

Not buying the property the second time would have cost thousands of dollars.

And not buying the property the third time will end up costing her big time in another 10 years.

It’s daunting to buy a property and perhaps scary when you think about potential out of pocket expenses.

downloadBut you have to ask yourself – what’s it costing you to not buy right now and how much more will you have to earn to retire comfortably?

The reality is, the average person simply can’t save $10,000 or $20,000 or $30,000 a year. I know I can’t, that’s for sure.

And even if I could save that amount, I would just spend it anyway.

But a property can easily jump $10,000 or $20,000 or $30,000 a year in value.

It can even jump $100,000 in boom times, depending on where your property is located and what it is, of course.

As for Friend B, I know that she will probably rent for another five years.home loan

She won’t end up homeless, but she might end up renting for a very long time, while still earning a salary of more than $150,000.

Why she waits just simply doesn’t make sense to me and the missed opportunity makes me think that all those years of study and working big hours could have gone into an investment – any investment in fact – in the Sydney market instead.

What about you?

Do you think it’s better to wait in some cases or is the wait simply costing you or someone you know more money?

Want more of this type of information?

Lauren Day


Lauren Day is the former deputy editor of Australian Property Investor Magazine and an avid property investor. Visit www.apimagazine.com.au

'When it comes to Property – What is waiting costing you?' have 4 comments

  1. June 20, 2014 @ 12:20 pm Christine

    Hi Lauren,
    I like & agree with your article. Waiting too long is never good, you miss the boat. I used my savings of $85k & bought 2 places within 1 month; PPOR & IP. It is the most daring thing I have ever done in my life! 1 year on, I can’t believe it I did it.


    • Lauren

      June 20, 2014 @ 3:55 pm Lauren

      Hi Christine,
      Well done! You probably bought at the perfect time and no doubt have already made some strong capital growth. With many capital cities now on the up, it seems the market is turning. You will definitely never be able to save what you earn through equity in a short timeframe!


  2. June 20, 2014 @ 2:50 pm sid

    Im still not sure whats the best way. The prices are so high right now. It has already outpaced our earnings by miles. It seems not possible for prices to increase further and it is possible that renting might workout cheaper in the long run.

    Who really knows! This article is ok if you look 10 years back. But during these years the property has really outpaced earnings. growth in property does not seem possible anymore. At best we can say we will be having a home over our head when we retire but I dont think we will be making money out of our property investment.


    • Lauren

      June 20, 2014 @ 3:57 pm Lauren

      hi Sid,
      It is hard to know and no one has a crystal ball. But from experience, time in the market is better than trying to time the market. Prices are definitely high, and might drop. But then again, they might not. It’s interesting that a couple of years ago so many media outlets and people were saying things like ‘the market is going to crash, don’t buy’. That was actually the best time to buy – unfortunately now investors and homebuyers are having to compete and pay thousands more. Have you thought about buying an investment property and renting it out, while continuing to rent yourself? By doing this, you could claim on negative gearing and perhaps it might help you? I would be interested to know where your investment is and where you’d like to buy…? Lauren.


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