Bear markets- looking for robust growth or bargains?

Taking capital growth statistics-

Do you
A) Look for properties in areas that are robust during bear markets and have shown consistent growth over say a 10 yr period
or
B) Suburbs that drop in bear markets so that you can get a bargain?

Why?

 

A is your metro solid inner and middle ring property. (Note, the definition of a middle ring property will differ between cities but this is a general rule of thumb). B is your suburban outer ring, holiday home type location or mining town. With the outer ring or holiday home type property, you may wish to buy when no one else is buying and sell in the boom. With the inner and middle ring property, buy when you can afford and keep it as long as possible.

But I'd still stay away from type B that is mining town. Too much risk.

 

Both, a) generally is an area in high demand with good fundamentals I.e well serviced with transport, proximity to cbd, good infrastructure etc. generally a higher demand area has good stable rent with good stable increases in rent which in my opinion is super important.
B) these type of properties are fantastic also, one word, volatility!! It is here where if you time the market you can significantly increase your wealth. I generally find these type of areas seem to drop in bear markets are they usually are bought by people that can't really afford to live in that postcode but do so more on a social 'look at me' decision.
There is a spot for both in my opinion, one will accelerate wealth creation and one will provide good growth and income to be able to afford to hold on during tougher times.
As always just me thinking out loud.

To sum it up ( @MTR ) will love this:
A) Time in the market
B) Timing the market

 

On that note of B and timing the market- would you look at say DSR score or another gauge or supply and demand in order to buy when demand is flat?

Conversely with A, would you look to buy when demand is starting to pick up?

 

With A) I would buy when I can afford
With B) I generally wait until we've gone through a period of at least two or three years of negative sentiment towards realestate, then I look for private sale listings and go from there.
Unfortunately I've no technical gauge or tool I use to make these decisions, I more focus on my capabilities and circumstances at the time and go from there. I've always struggled with timing so now it truely is a case of what I like when I can afford and hold on!

Sorry I couldn't be more help/relative to your thread topic. Also to be honest I've not experienced a large market down turn so I can't comment exactly, I was buying in mid 2013 as that's when i could afford to and saw value, not cause I was a great analyst haha.

 

Re A vs B. Late 2014. I was in a position to buy something. I wanted to buy a 2 bedroom apartment in a particular pocket of Parramatta. But apartments there were they were all very tightly held. I remember Parramatta units used to be 300k and when I was looking, they'd all gone up to at least 450k. So... with both that the prices had risen a lot and the stock I wanted to buy wasn't coming on line for purchase, I decided to look near the city. I liked Darlington/Redfern because that location is near Sydney Uni. So I looked around there. Went to a few opens. And one came up that seemed to have no buyer but it ticked all my boxes. (Lots of balconies, it was bright, good sized, car space on title, very reasonable strata fees, no lifts, pools, gyms, internal laundry, small quiet complex, quiet street, easy walk to station yet no train noise, well maintained...) anyway, I was planning to go to the auction but I had a volleyball tournament that day so I missed the auction. Then that afternoon I call up to find out the auction result and I was told it wasn't sold... so I then negotitated with the agent and it seemed the vendor was happy to sell at a very reasonable price.... and.... I ended up buying it.

And since buying I ended up airbnbing it the whole time. It's a nice bolthole thats an easy walk into the middle of the city, or an easy walk to trains and multiple universities.

At the time of buying it, there was the tent embassy on the block (not far away) but after a while (next October) that left. There are nice cafes and a quiet pub across the street. I believe more nice cafes are popping up nearby - also thanks to the Central Park development.
Personally I feel like I'd want to hold it forever because of its location (I can imagine my nieces living there if they ever end up attending Sydney uni). Also its an easy walk to ATP park which CBA plans to move 10k of staff to. Big wins for the area. I have no land tax issues with it either. It's pretty hip.... a 26 year old colleague lives (rents) up the street and I'd describe her as a life loving type. Sporty, social, educated....

While owning a terrace in the area would be really awesome, I can't spend 1.3mill on an IP.
I tend to think this area and property will always hold its value.

So... I think this is the A area, B is Parramatta apartments. Parramatta really boomed, this area (Darlington/Redfern) was slower to boom - actually... its better described as quietly sizzling the whole time, I just didn't realise it but I think will consistently rise in the future. I think Parramatta is still a very good area, with a lot going for it. A lot of apartments are coming on line there possibly dampening future prices and rental demand - or not. Hard to know what will happen. I consider it the capital of the west though.

More apartments are being built around Redfern too - but people want to live there. It's an easy walk into the city, it's become hip. I also think the city will expand further south (Central to Eveleigh) over time. So Darlington is a keeper.

Added images... All the areas seem similar but Redfern has a more continual upwards line than the other two. All good. (I also had a West Ryde unit too at the time). Anyway... I feel I was lucky and did well with my purchase

 

C?

If you look at Perth markets most of the suburbs in the sub 5km ring haven't shown consistant growth over 10yrs but they certainly weathered the slump and might have only lost 5% when some of Perth lost 10-20%
My vote would be for these suburbs rather than the more boomy-busty outer ring where there is plentiful stock of cookie cutter sameness.
I would look for the type of stock that is not plentiful (ie probably not apartments) or is unique but still popular with a wide demographic.

 

Good points re perth inner ring and your conclusions match my analysis... I'll be looking around inglewood in 2019/20 FY

 

So comparing your redfern to parra- would you say your happier with redfern for the long term hold?
Do you wish you had two of those rather than the parra.. or are you content with your diversification within the Sydney market?

 

Would have have been great to have that plus house on land in Western Sydney. but I ran out of serviceability and my partner didn't want to invest.... anyway, at least I don't have a land tax problem. Parramatta has also done amazingly well too.

 

Each town is a case by case example, but Id say risk is much lower in many of the mining towns as one could potentially buy a bargain at bottom of the market.