[Podcast] Here’s why now is a good time to buy your next property, with Stuart Wemyss

Our property markets couldn’t look more different from this time last year if they tried.

Gone are the frenzied buyers gripped by FOMO, housing markets where prices rose by $1200 a day, and auctions that routinely finished millions of dollars over their reserve.

Last year’s scenario of never-ending price rises has been replaced by rapid-fire interest rate rises (with more to come), slowing or falling prices (depending on your postcode), and a general sense of trepidation.

If you’re a buyer, do you sit on your hands and wait for prices to fall?

Or do you buy now before interest rates and inflation rise, even more, reducing your borrowing power and spending capacity?

If you’re a seller, do you list now and meet the market before prices possibly fall further?

Or do you hold off, assuming there will be less for sale in a few months, meaning fewer homes to compete with?

In other words, what's the right thing to do now – buy, sell, or hold?

That’s what I ask leading financial advisor Stuart Weymss, in today’s show.

Should you buy now?

With interest rates rising and house prices dropping in some locations, many are suggesting now is a bad time to buy property, but recently leading independent financial advisor Stuart Wemyss, wrote a great blog suggesting that now is actually a great time to get into property.

Now that’s a bold statement, so I’m going to ask him to back it up.

By the way, I agree, but let’s start with some context- what drove the property boom in 2021 and 2021?

• It was much more than just interest rates.
• Mean reversion
• The market was mostly driven by owner-occupiers, who are less affected by interest rates than investors.

Let’s be clear – for some people moving forward with a real estate purchase this year would have the potential to cripple them financially, not just now but well into the future.

Property investment is a process, not just an event.

So rather than just talking about going out and buying a property, the right time for you to consider investing is when you have all your ducks in a row.

This means you have:

• a strategic property plan, so you know where you're heading and what you need to do to achieve your financial goals,
• set up the right ownership structures to protect your assets and legally minimize your tax,
• a robust finance strategy with a rainy-day buffer in place to buy you time.

Buying when conventional wisdom suggests otherwise is often challenging

• The crowd is usually wrong.
• There is a window of opportunity at present.

What do you suggest to your clients who say they want to delay their property purchase?

• Sitting on the sidelines creates some level of pent-up demand.
• It’s easier to buy when there isn’t a lot of competition.

Recently the Reserve Bank has come under increasing criticism for how it handled interest rates and misled (not my words) Australian consumers and businesses by suggesting that interest rates weren’t going to rise until 2024. And the critics point out how the Reserve Bank misread the extent of inflation in Australia.

• In its defence, it’s easier in hindsight, and there wasn’t any playbook for how to deal with a pandemic.
• Its response in 2020 was correct.
• What it did wrong:
  • Providing interest rates guidance – that’s not what reserve banks do.
    • Giving people confidence should have been the treasurer’s or government’s job, not the reserve banks.
  • Leaving the interest rates too low for too long.
    • They could have raised rates earlier and more gradually to slowly adjust expectations and measure the impact of raises.
  • They implemented yield curve control and then abandoned it without warning.
    • This was a shock to the market.
    • The bond market has had the worst year on record as a result.
  • The RBA has ruined any prospect of decent wage inflation.
  • The RBA is under review.

Links and Resources:

Michael Yardney

Stuart Wemyss – Prosolution Private Clients

Stuart’s Book – Rules of the Lending Game & Investopoly

Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us

Some of our favourite quotes from the show:

“One of the things we know from history is that we don’t learn from history.” – Michael Yardney

“Let’s be frank, buying when conventional wisdom suggests otherwise is challenging.” – Michael Yardney

“Be nice to nerds; chances are you may end up working for one.” – Michael Yardney

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