Expert Bust #20 - Buying at the bottom

Experts say you should buy at the bottom. Even amateurs have figured out that would be nice.

Problem is, I wasn't alive 230 years ago. Prices have well and truly moved on since the bottom.

Perhaps that's not the "bottom" they're referring to. Maybe it's more of a dip than the genuine bottom.

So, should I buy the 1st month I see any negative growth - a dip? If not, how many months does a market have to lie dormant before I know it's the bottom?

Even with hindsight it doesn't help. Examine this chart of Hobart's growth.



The bottom was in 2012. But the best time to buy was in 2017. If you bought in 2012, for 4 or 5 years you would've had growth around the rate of inflation. In 2017 growth was about ten times faster.

History has shown it's bad advice to buy at the bottom. Markets stay flat for a long time. They sit on the bottom for years.

A better time to buy would be well after the bottom has passed. Admittedly, you miss out on a bit of the growth. But you miss out on all of that flat period.

Sydney was well and truly in boom stage in 2014. But it was flat for a very long time prior. Buying at the bottom would not have worked back in 2005.



And soon after Sydney started growing, experts started claiming Brisbane would follow. It's only just starting to take off now. That's a long time to wait holding a negatively geared property.

I heard some claim Perth was about to recover from its 2015 dive as early as in 2017! Even now, I'm not advising clients to buy in Perth. Not that it's bad, just that other parts of the country are better.

Property moves very slowly. If you're watching it closely, you're not gonna miss it when it takes off.

 

So you are not in Perth, not seeing the big picture, good luck securing a property in FHB category

multiple offers with prices rising. You may not be seeing this in charts today as could be a lag time here?

But we have gone from 12000 listings to around 7000, very low stock. Rents also very tight and rising

I personally think QLD another good option

I think Syd and Melb will overshoot and watch it correct in 2022.
Caveat..... its my prediction..... take it with a grain of salt

 

You're gonna need a much bigger data set if you gonna make that case.

 

No, I'm not in Perth. But I don't step outside to check on the property market.

If a "read" was only possible by being somewhere, nobody would be able to compare Perth with Newcastle, Brisbane, Adelaide, Canberra, Central Coast and so on.

 

The full research article had a lot more in it. But I'm not allowed to link to it.

I've analysed a lot of historical data, last 40 years, thousands of suburbs. Flat periods on average last a fair bit longer than a couple of years.

 

Hi Jeremy, you note above that you still aren't interested in Perth dated Apr 21.

Considering now we have seen all other cities take off and have seen Perth lag, do you still hold the same view? Do you have any DSR data to back up why your interests are held elsewhere? Thanks in advance!

 

Even back in March there were some good markets in Perth. But other cities simply had more.

Right now, Duncraig, Hammersley, Carine and surrounds are in the top growth markets of the country - along with about a hundred other suburbs across Brisbane, Adelaide, Newcastle, etc.