Is it smart to sit out this boom and wait for the cool down?

I know the market is being driven by PPOR buyers currently.

So is it smart to sit this one out until it cools down?

 

Two questions:

1. When do you feel this boom will hit its peak and how much more growth is there to come?
2. When do you feel the cool-down will hit its bottom and how much will the market drop?

 

If you already have some property, you still benefit even if you dont buy more now.

if you dont own any property and are just waiting for it to, what, fall? That’s a different set of risks.

if this is the start of a new cycle, even after it peaks and falls, it will probably be more expensive than it is now.

 

Depends on your situation. I'm happy to be sitting on the sidelines because I'm not in a position to buy anyway!!! If I had $$$ ready to go, I would buy if something appropriate came up - but I would be extremely selective, and looking at very long term hold so any imminent negative adjustment would be insignificant anyway.

 

I have a mate that was always waiting for the 'right' time to buy. Myself and some other mates bought in 2001 for around $400-$500k (Sydney), Said mate ending up buying in 2019 for many millions. It's up to you really- whatever best suits your own circumstances and risk profile.

 

How long is a piece of string?

I'm in a position to buy but I'm not looking to because a) prices are unjustifiably high IMO, and b) I can put the money to use elsewhere.

If prices double next year? Well that was a lost opportunity but point B still stands. If prices tank then I might be tempted.

If you need/ strongly want to buy into the market I dont see much point in waiting for a discount that may not actually arrive.

 

There are plenty places where it's not booming.

 

This. Many places are still barely 10-15% up. Eg most of south western corridor Sydney, middle to outer ring Brisbane.

 

I have heard two cycles all my life.

1. People waiting for a bust that hasnt come. Usually buyers who are hopeful
2. People thinking a boom wont happen and it does. Usually owners.

Its like picking high tide. You cant see it when you are on a boat. Only watching from dry land can see a tide and you need to keep standing there watching it. And being at sea in a tsunami isnt deadly.

 

Answer to OP . No , but there are places I wouldn’t buy as an investment

paul , I’ve heard those for all my investing life .

you did forget group 3

those who are well aware it’s a cycle and are prepared to wait for the right time to buy and the right time to sell .

given the difficulty in financing now days , I think it’s even more important .

cliff

 

You can think you pick the right time of the cycle but be unsure. eg Those who held back in the past 2 years are probably seeing prices back to 2018 levels in some markets (eg Sydney) so waiting was fairly futile but...it could have been a bigger fall so they played that cautious. I would also be very opposed to some areas and apartments too as there is still too much supply and construction in the pipeline. Yeah you dont want to be buying at the top either. But I also wouldnt be jumping in with the FOMO crowd and bidding the price up. Its like people read domain and see "may go up 15%" and think its OK to bid higher just because they have other equity to draw on.

yes finance can make it all that much harder. I was just talking to my son. He sells new homes and saw a massive demand for new homes and land in March 2020. He jumped in and bought land seeing it would rise and its now valued at $100K more. And still is in very short supply in NW sydney. after developers pulled land forward and then got stalled with new release approvals Those buying land now are paying a premium and valuations dont always keep up with rising prices.

 

Where in the SW you noticed its not booming?

 

No

 

You mean my comment about there only being about 10-15% growth?

Campsie, Canterbury, Belmore, along the south western corridor.

 

Almost every area in Australia is rising if not booming and it all started at about the same time.

Don't we usually have some markets booming, some stagnant and some past their peak?

What happened to the property clock, markets within markets, the ripple effect that we usually see?

Instead we've got a nation wide boom that started on the same day.

I'm not complaining about the value of my properties going up and I'm even half looking at buying again but the current situation just looks very artificial to me.

It feels like it could stop ( or be stopped) as quickly as it started.

 

People have more cash and access to cheap credit, people have more time, they can't travel so looking to get satisfaction from 'things'...like a nice house (if they're in a position to buy).

Notwithstanding a crazy spiral upwards in price or Govt intervention, it probably won't stop till the borders open up in earnest and even then, it could keep going as migrants start hunting down apartments close to the CBD etc.

You might see the obsession for houses etc wane but the focus will then shift to apartments.

But it will end at some point

 

It’s frustrating me as I was planing to sell once our brisbane properties boomed and then buy else where ... but else where is also booming so we’ve bought earlier than we hoped ...

In terms of the ‘ normal cycle ‘ Sydney and Melbourne had boomed and Hobart was maybe 1/2 - 2/3rds through its .

I can’t see Sydney and Melbourne going up another 50 % ... though northern beaches is very strong . Maybe 10-20 % but never say never .

Brisbane hasn’t been though a generalise boom since 2008-2009 . I’ll be surprised if we don’t see it close to double in the short - medium term . 2-4 years .

Covid seems to have put a turbo boost under the market but given this is a unique situation it’s hard to know what’s going to happen .

cliff

 

Since the beginning my property investing strategy was always to buy or accumulate if I could afford, when our finances permitted, especially when I planned never to sell.
What is your strategy, what do you wish to achieve from that buy, only you can answer that?

 

You can wait but in all probability you would be paying anywhere from 20%- 30% higher if you sit out for the whole prop cycle. Int rates are not going anywhere, migration and o/s likely starting from oct/ nov and households sitting on $200b in savings strongly supporting the economy. This cycle will dump a lot of growth and waiting-out is fine but don't expect paying for prop without a 20% premium to current values from where they are right now.