It’s a classic conundrum for property investors – when is the best time to buy?
For those new to investing, trying to answer this question takes up much of their valuable time.
But in the end it really is a huge waste of their energy.
Why is that, you might ask?
Well, the thing is, time in the market is a much better strategy that trying to time the market.
Property markets are cyclical and while it’s valuable to understand where on the property clock the markets that you invest in are, it’s really only for educational purposes.
It’s no secret that Sydney is at the mature stage of its cycle, but it has been that way for a year or two now.
And not surprisingly, a hot market generally makes all properties – investment grade and inferior – increase in value just not at the same rate.
You see…when a market is running and human nature takes over good sense, all properties suddenly “seem” like a solid investment, but of course, that is not true.
If you buy an inferior property near the peak of the market, then it’s quite likely that its value will decrease once the market softens and it won’t experience significant capital growth over the medium-term.
And the reason for that is inferior properties will always be that way – usually because they’re in the wrong location or the wrong property for their location.
A question of quality
Strategic investors always look to buy investment grade properties, no matter what the market conditions because they know that this type of real estate is always in demand.
And more demand means more capital growth…
And as we all know capital growth is the key to property wealth creation.
So, when trying to work out when is the “best time to buy”, the answer is whenever you can afford to – regardless of the market cycle at the time.
The important caveat to that is to only buy properties that are always going to be in demand and have the potential to record above average capital growth.
The properties that I’m talking about are the ones that appeal to owner occupiers; are below intrinsic value; in a location that has a long history of strong capital growth that will continue; and have a twist or the opportunity to manufacture capital growth through renovations.
So, as you can see the lesson from of all this is there really is no secret to when is the best time to buy property.
That’s because the best time is now – but only if you buy the right property in the right location at the right price.
Subscribe & don’t miss a single episode of Michael Yardney’s podcast
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
Need help listening to Michael Yardney’s podcast from your phone or tablet?
We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.
Prefer to subscribe via email?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.