The perils of trying to time the property cycle: a guide for mere mortals

I don’t know about you, but I’m seeing a lot of so-called “experts” on social media confidently forecasting the direction of our real estate markets and property prices for the balance of 2023 and beyond.

However, if they really knew how to predict our markets these individuals would likely be enjoying a luxurious lifestyle, reaping the rewards of their market insights.

The reality is that most predictions are, at best, educated guesses and, at worst, misleading information.

Now it’s not just the social media experts.

Just look at those failed predictions from bank economists, financial institutions and research houses over the last few years.

And what about the interest rate cliff or the unemployment cliff or all those other dire press that didn’t eventuate?

For instance, during the onset of the COVID-19 pandemic, some predicted a significant market downturn, which didn't materialize.

Then many predicted price falls of 20 to 30% because of rising interest rates and that didn’t happen.

Sure we’ve just experienced a year of falling property prices, but almost anyone who bought a well-located property two or three years ago is still sitting on some significant equity gains.

So what should an investor do?

For the majority of us mere mortal investors who don’t have a crystal ball, rather than trying to time the market it's essential to adopt a long-term perspective for your property investment.

There is no “best” time or “worst” time to buy property because property investment is a process, not just an event.

So rather than just talking about going out and buying a property in 2023, the right time for you to consider investing is when you have all your ducks in a row.

For some of you who are reading this right now, 2023 will absolutely be the worst possible time you could consider buying a property.

For others there is a window of opportunity because it’s likely when looking back later this year, many will recognise the market reset in the middle of the year and the next property cycle began.

Many people who mistimed the last upswing missed out on profitable opportunities.

They are now cashed up and ready to buy and will hop into the market when the media changes its message.

This means attempting to time the market could lead to missed opportunities.

Investors who wait for the "perfect" moment to invest may find themselves competing with other buyers who return as the market slowly picks up.

Remember the fundamental economic principle of supply and demand?

If you wait for the market to "improve," you'll likely face a more competitive market, making it harder to find a quality property in a desirable location, and potentially at a higher price.

• Also read:Melbourne property market forecast for 2025
• Also read:Sydney property market forecast for 2025
• Also read:Brisbane’s property market forecast for 2025
• Also read:Adelaide housing market update | November 2024
• Also read:Melbourne housing market update | November 2024

Isn’t it too early to get into the market?

Throughout the years, countless investors have regretted not purchasing high-quality properties earlier.

All the major research houses, including Dr Andrew Wilson’s My Housing Market, PropTrack and SQM Research are now suggesting the housing price downturn is over for Sydney and Melbourne, saying the record return of migrants at a time of undersupply of dwellings would bolster prices.

While some housing economists aren’t yet calling a bottom and suggest prices might still have further to fall if interest rates continued to rise, these commentators also agree that the faster-than-expected return of immigration after the pandemic would underpin our housing markets.

You need to plan

So while the property markets will create significant wealth for many Australians, statistics show that 50% of those who buy an investment property sell up in the first five years.

And of those who stay in the investment game, 92% never get past their first or second property.

That's because attaining wealth doesn’t just happen, it’s the result of a well-executed plan.

Planning is bringing the future into the present so you can do something about it now!

Just to make things clear...buying an investment property is NOT a strategy!

It's important to start with the end game in mind and understand what you need and what you want to achieve.

And then you have to build a plan, a strategy to get there.

The property you eventually buy will be the physical manifestation of a whole lot of decisions that you will make, and they must be made in the right order

That's because property investment is a process, not an event.

If you’re a beginner looking for a time-tested property investment strategy or an established investor who’s stuck or maybe you just want an objective second opinion about your situation, I suggest you allow the team at Metropole to build you a personalised, customised Strategic Property Plan.

When you have a Strategic Property Plan you’re more likely to achieve the financial freedom you desire because we’ll help you:

• Define your financial goals;
• See whether your goals are realistic, especially for your timeline;
• Measure your progress towards your goals – whether your property portfolio is working for you, or if you’re working for it;
• Find ways to maximise your wealth creation through property;
• Identify risks you hadn’t thought of.

And the real benefit is you’ll be able to grow your wealth through your property portfolio faster and more safely than the average investor.

Your Strategic Property Plan should contain the following components:

1. An asset accumulation strategy
2. A manufacturing capital growth strategy
3. A rental growth strategy
4. An asset protection and tax minimisation strategy
5. A finance strategy including long-term debt reduction and…
6. A living off your property portfolio strategy

Click here now and learn more about this service and discuss your options with us.