How to pick the start of a move.

By the time the stats show a move it’s already started .

Reasons

from the time a place goes under offer to the time it’s goes onto the system ie settled can take a couple of months so that is a delay to start with

BUT more importantly ALL of the stats on median prices I’ve seen are 12 month averages so simplistically if there was a sudden increase in prices in a couple of months , the price reported aren’t those from that two month period , but they’re averaged over the past year .

Another thing compounding this is that the sharper price rises occurs when there is decreased supply so if you have a sharp price on decreased volume that will dilute the average price rise further because the number of sale determine the average price over that 12 month period .

so how do you pick the start of a move ?

The only way I know is by talking to agents and or going and seeing properties at open houses .

either works , but it’s a lot more efficient to do it by the phone .

if you have a good relationship with an agent you can trust it simplifies the process , but i find it relatively simple to get an idea of what’s happening by talking to several agents in one area .

Some agents will always tell you the market and some will be harder to get info out of or guarded in what they say but I find if I talk to around 5 , I’ll get a consensus opinion from around 3-4 and I find that usually reflect on what is happening on the ground . Some agents just don’t seem to pick the start of a move and will put it down to having a good month and when they’ve had a bad 5 years seem to dismiss it as luck so that’s why you need to talk to a few .


So what do I say .

I’m a property investor and I ringing up to find out what’s happening in “. “ at the moment . Initially I give them time to talk without interrupting their flow .

if they pause I might say something line ‘ that’s interesting ‘ to encourage or no directing questions like ‘ have you noticed anything else / any changes ‘

Once they loose steam there are specific thing I want to know

who’s buying

• First home buyers
• Downsizers
• New to area
• Investors

The more the merrier , sometime investors buying can be an early sign .

By the time a full blown boom is happening , the vast majority of first owners are priced out , but to get a good boom going you need investors and owner occupies buying . If IMHO if investors aren’t buying in number then it getting late in the market .

Stock on market

What I love to hear is ‘ there’s not much on the market , we’ve only got 6 at the moment , last year we had over 200 ‘

It’s the change that’s important .

Agent will also have a good idea of what’s coming . Most people will talk to agents for a while before they sell so agents have a pretty good idea of what’s likely to come in market in the next month or so .

Not much in the pipe line is what you want to hear .

Price changes - has this happened

these come after stock numbers drop . If there’s plenty of stock on the market , there’s no competition to drive prices up .

Drilling down into prices you want to know if people are buying below asking prices .

Are buyers offering the asking price to get the deal done or are people having to offer over the asking price to get somewhere .

Time on market

this goes hand in hand with stock . When things are moving or about to start moving good properties will go under offer when they hit the market , within a week or to after , or BEFORE they hit the market . Many agents will have lists of active buyers and may have an open house / inspection by appointment prior to the first open . When the market, The best buys maybe under offer before the first open

My dream situation

• Capital city or major regional with diversified economy
• Ten year median LOW
• Preferably everyone buying or investors or OO’s buying strongly
• Stock on market low and not much in the pipe line
• Prices haven’t moved
• Places are selling when they come on market .
• The agent knows I’m serious so they’ll talk to me first

• other occasional situations we’vw some across are
  • an out of area who doesn’t actually know what is happen
    
  • The three D’s ( reasons for motivated sellers ( death , debt and divorce ) apply to agents as well . Our Best Buy in Rockhampton in the last cycle came via an agent who was recently divorce and was totally uninterested in his business . When we saw him a couple of months later , he was over his personally slump and his first words were ‘ wow , you got a good deal on .....’ what we didn’t tell him was we had major problems getting in contact with him and with arranging an inspection and as a result we were the first people to actually seee a property that had been on the market for months . Didn’t ignore the bad agents who are hard to contact . If you have problems getting on to them , so does every one else .
    
  • Our last PPOR we bought in Turramurra ( east side , walk station ) was with an out of area agent who took about two weeks to get back to us . We were going to open houses every week , saw a major change in numbers , time on market and people offering asking price in the first couple of weeks on market . We offered the asking price at the end of the first open and we know the agent didn’t contact any of the other people who saw it that day

Agents good and bad can be your best friend

Cliff

 

If you’re going to buy in Sydney it might as well be when no one else is buying. Sydney will always pick up again. We bought our 2 PPORs, July 2008 when the market was dead and there was no competition then again Dec 2015 which was after the market had a huge run and then prices died. My sister bought in Castle Hill mid 2012 when the market was dead and they got their pick of the homes at reasonable prices. I feel for the vendor of their home because if he waited a year or 2 longer, he would have sold for a few hundred thousand dollars more which would have been significant.

Early last year prices in my old suburb significantly dropped back and you could have saved $250-300k over previous prices. It’s now back at peak and those low prices have gone.

Just went to an auction in my street this morning, house on a battle axe sold $2.435m. Very solid result. 20 registered bidders. There are buyers on the ground.

 

Interesting that the buying window for sydney last cycle was 2007-2011 or so. Then the recent window was maybe 12-18 months.

 

When the agents keep pestering you to sell a property is also good indicator. Note the desperation in their voice or if they come begging on their knees.

 

but that would be whether the market is hot or cold?

 

The best buying in Sydney was late 2008 , after Lehman brothers collapsed to late 2013 .

about a month after GFC hit , the only buyers were those who had cash available . At most open houses , we were the only ones there , and there were some highly motivated vendors .

statistics don’t show the scale of some of the deals as there weren’t many sales , and the moving average sales data ( averaged over the preceding 12 months ) will dilute something that sells 30 % below its long term average so it hardly shows up at all in the average price

cliff

 

Well yes that would be when the market is hot and stock is low. I suppose at that stage it would be common knowledge that property market is heated.

But then again there could be a clued up agent who knows things are about to take off and wants as many properties on the books as possible.

 

Agents pester you in three situations

1 . When the market is hot and they need more listings , they say it’s a good time to sell and it may well be , but they will be doing that when they have low stock . If it’s early in The cycle , prices may not have moved much so you might want to wait .

2. when the market is cold and they have no buyers , they will tell you about new listings and how it’s a great time to buy . It may be , but they make money by sales and not putting you into the market at the best time so there may well be better times to buy

3 all the time ..... with social media , emails etc some agents will send regular updates of what is happening in their area in terms of the market , but also in terms of infrastructure changes / business changes and Also ...new listings . Like all things in life some are good and some are just constant hype . One agent in Launceston sends regular updates which I find are quite accurate with regards what’s happening in the market so I tend to use that as my go to source for that market . It’s been hype recently , but that’s what’s happening there . He sometimes gives updates on locals events , big business closing , wineries ( eg Brown Bother a few years ago ) buying into the area , and new developments around the uni . One thing they’re trying to do is make Launceston a University town ( think small scale oxford Cambridge ) and part of this was moving the uni from an outer suburbs to a suburb next to the CBD . It’s now next to their AFL stadium .

cliff

 

2008 and 2018 were very different psychological markets.

there was no real reason to think it would boom if you bought in 2008. You can say it was cyclically cheap, but sydney had been dead since the recession a few years back. There was no belief that sydney was bound to boom.

2018 was a different beast. Property had risen fast. It looked like the market was going to fall further.

not sure the ‘turn’ is obvious though. If 2008 was the best time to buy, the boom was not in the media until 2011/12? On the other hand, 3-4 years is a huge window to buy.

 

For most people, learning the cycles, focus on a couple of below median suburbs in syd / mel, and just buying when its cyclically cheap is a fairly conservative strategy.

 

All the factors you pointed out and also for me, I prefer not to buy just as a move is occuring but wait till say about 7-8 o'clock roughly speaking.

Also want to buy the best stock available for the demographic with add value ability and at a decent price.

I follow the 3 Ps.


Position: location, aspects, views, ripple areas, value streets
Property: land size, add value ability, right dwelling type for demographic, rentability
Price: relative to value more so than the median for the area.

 

when we bought in 2008 ( Mosman two units - deal of the decade ) I knew there was going to be a boom in Sydney . I just didn’t know when , but give the nature of Sydney I knew there was going to be a boom at sometime . If you want to call it cyclic cheap , fine , that’s just semantics . I knew it was going to boom . I wouldn’t have bought good deals at that stage .

We bought two units in manly around 2011-2012 and bought good deals . Stock was dropping and prices had picked up from the post gfc trough but hadn’t gone above longer term peaks . At that stage there was no hype in the media .

Looked at buying another unit in manly in mid 2013. there was less stock in the market and over a period of a couple weeks prices jumped significantly . We missed out on a couple we tried to buy .

We were looking for a PPOR and saw the market moving quickly , but even at that stage ( outside this forum which is an early indicator ) there was no general talk about a boom . Around that time a well respected main stream media commentator was talking about falls in Sydney and no expectations of a boom . Moved quickly and bought at asking price .

when we bought in Goodna , I knew it was going to boom , just didn’t know when .

cliff

 

I agree have rode on the wave of 6 boom cycles, easiest way to make money

You can never perfectly time the market, but key is to get in as soon as you see volume shrinking.

Booms last for at least 2 years so you have a good chance of making money if you get in early

You will also see multiple offers, positive reports in media, auction clearances rising etc

just a matter of having your ducks lined up when an opportunity presents itself

 

The key to being willing to buy when the market is bad, is the belief that the market will boom eventually. This seems to be the case for Syd/ Melb. Is it / will it be the case for the smaller cities? Brisbane / Perth had good gains in the 2000s but not much since then, especially for units.

How to convince yourself that there will eventually be a boom? Or are you kidding yourself? This is the problem for new buyers.

 

Or use a strategy where you can make money in all cycles. The key here is fhb market, low interest rate environment is opening opportunities to develop property, I am referring to Perth here

holding property in downturn is not a great idea in current lending environment just my opinion

 

Fair enough. But most people dont have the skills to add value to develop.

Does buy and hold still work? Lending environment might mean its slower, but for most people, having say two median-ish properties in Syd / Melb, on top of PPOR, at retirement would be a great and achievable result.

 

for sure, agree... cant go too wrong

You need to hold stock to create income streams

 

Research . I spent a year reading everything I could and looking at historical data going back for as far as I could before I bought my first property .

your comment about Brisbane and Perth shows the lack of research you’ve done .

You’re only looking at the last ten years and saying Brisbane hasn’t done anything.

ive looked at data going back over much longer periods and know that Brisbane follows Sydney and Melbourne .

that’s not even accounting for much greater ease of interstate migration and the ease of buying interstate . Back in the early 2000 many regional sales weren’t in the internet so I subscribed to regional newspapers and some agents only advertised in the shop front ....

much easier to move and buy interstate and much easier for anyone to find out about property investment .

somersoft had been not just started when I joined . Now everyone’s an expert .

cliff

 

Hey Cliff, I bought in Brisbane when we were in a downturn and Melbourne was in a boom. I'm still waiting for Brisbane to boom a year or two after Sydney and Melbourne. My Husband would not let me buy in Tasmania at the time, we would have doubled or trebled our money.

 

That's why I started buying property in my own name using money I earned myself. Would be down a couple of mil otherwise.