Is now the worst time to buy?

Discussion in 'Property Market Economics' started by Fortune Favors the Bold, 25th Apr, 2016.

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Is now a good or bad time to buy?

  1. It's a good time

    16 vote(s)
    16.3%
  2. It's a bad time

    42 vote(s)
    42.9%
  3. It's not about timing the market, but about time in the market

    40 vote(s)
    40.8%
  1. Perthguy

    Perthguy Well-Known Member

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    We have a loan sitting there doing nothing right now with available funds for investment purposes. I call this 'lazy' credit. It's not working for us right now, so it is time to put it to work. :)
     
  2. Dan Donoghue

    Dan Donoghue Well-Known Member

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    Is there such a thing as a "bad" time to buy if your plan is long(ish) term? my term is 10 - 15 years so I don't think it really matters? <-- note this question mark means I am asking if I am right :).

    Short of the population stopping growth completely and everybody being able to work from home, I don't see urban sprawl will stop so prices can only continue on their "australian" property cycle??
     
  3. Perthguy

    Perthguy Well-Known Member

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    In my opinion, yes, there is a bad time to buy. For example, I would not buy at the peak of the Sydney property market. The reason is that you will wait too long to see any real capital gain. If you are patient and wait for the market to drop, you will find a better deal. However, it depends on what you are doing with your money in the meantime.
     
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  4. MTR

    MTR Well-Known Member

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    There is always a bad time to buy because markets work in cycles, as mentioned by PG, if you buy at peak you will most certainly end up losing money. Also no point in buying when markets are falling because what you are buying today could be worth less tomorrow. When markets bottom out and are starting to turn makes more sense. I notice Tasmania is starting to look good, I have not researched this, just what I have read. Perhaps opportunities here? same as Adelaide? not sure, perhaps time to look.

    If you are taking a long term buy and hold approach then I would also consider how much its costing you today and if/when interest rates rise how this will impact during the period you plan to hold.

    Other considerations is lost opportunities in making money in other markets that will potentially provide upside.

    If you have parked your money in assets that are falling or peaked you may potentially miss other opportunities. One thing in this game is you can not buy that time back, you miss a cycle then you have missed an opportunity to make money and in real terms that could be 7+ years.

    MTR:)
     
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  5. Dan Donoghue

    Dan Donoghue Well-Known Member

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    I guess that's my biggest worry, waiting for the decline to stop and for things to plateau, being that I have no experience in this, I don't want to miss the starting gun. Is it just a case of keeping an eye on movements in the area and that sort of thing? What sort of timeline do we see something move from a spike to a trend? ie 3 or 6 months of elevated prices could be a spike with a fade afterwards, how do we tell this from the start of the next upwards cycle?

    I am seeing hints at 2020, does this mean you should absolutely not buy before the start of the next cycle?
     
  6. Azazel

    Azazel Well-Known Member

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    If you're talking about Sydney, there are plenty of other places to buy.
    Could get some growth somewhere else and then look at Sydney later.
     
  7. teg499

    teg499 Well-Known Member

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    If you hold for long term, importance of timing the market reduces and you will still come out on top. However, if you are in a position where you can time your purchases, than being strategic in when you purchase isn't a bad idea... Buying in Syd after one of the biggest booms doesn't really make sense. Best time to buy is when property is out of favour, intetest rates are high, properties take a long time to sell, vendors are desperate and willing to drop the prices and negotiate...then u will find the best buys ... Are we there yet in Syd market?.. Don't think so. Once we do get there, I will be buying up... Buy low, sell high.
     
  8. Ouga

    Ouga Well-Known Member

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    "Trying is the first step towards failure" Homer
    Timing the market is a difficult proposition. Plenty of people were waiting for the "bubble" to burst for the past 10 years and things have just gotten worse. Not to say the next 10 are gonna be the same, but timing the market is a form of speculation in that no one knows for sure what is coming next.
    Waiting for a Market to correct isn't much of a strategy IMO. Buying in a different market with a deal that makes sense is a sensible proposition however.
     
  9. TMNT

    TMNT Well-Known Member

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    for those that say time heals all wounds in realestate , which is true just makes it less riskier than others. however if you buy something for $500k, stays at $500k for 5 years and then goes from $500 to $750 in 3 years, why would you buy from now to 5 years time if you knew it was going to happen

    my advice, its not time in the market, as in my above example, your return for 8 years vs 3 would be the same, even though the result is the same,

    best time for me is at the very bottom, or just before it hits the bottom or just on the rebound,

    obviously its hard to pinpoint these exactly however assuming its $500k now and $1million in 10 years time, its not going to matter if you buy at $480k vs $520k
     
  10. dabbler

    dabbler Well-Known Member

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    Where do you want to buy ? Even in Sydney there are things that are probably a good buy, and those that wont be.

    Trying to line up and time it right can be hard. You do not need to be perfect.

    No one really knows what is going to happen, change of govt may change all rules, frankly, I think Sydney in some areas has had it's pull back. APRAs changes are already in place, some areas had a 10% drop, interest rates are still coming down, not up, so it will probably be flat or even creep up.

    You are not now going to get in on the start of a boom :)

    So, if your going to be buying in Sydney, I would say you need to look very hard or bargain real hard on something others do not want to try and get a higher return, if you buy something that is at 3% return and it takes 6-7 years to start a decent period of growth, your losing money.
     
  11. Dan Donoghue

    Dan Donoghue Well-Known Member

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    Thanks all for your replies.

    My current line of thinking is buy in QLD then around 2020ish, pull all equity out and buy in Syd. This way my dollars increase over the next 4 years in QLD and may enable me to buy more in Sydney.

    Ultimately I need to have around $1,000 a week in rent (pre fees and tax) coming in to enable me to retire and I need a PPOR outright (I already mostly have the PPOR paid out), I don't need much, just enough to be comfortable.

    I guess I am looking for the fastest way to get there but aren't we all? :).
     
  12. joel

    joel Well-Known Member

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    To avoid this, you should buy in a recovering/rising market

    This will result in what you suggested above
     
  13. Azazel

    Azazel Well-Known Member

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    Agree in general, but I would still buy in other markets that have good fundamentals and were on the upswing as well.
     
  14. TMNT

    TMNT Well-Known Member

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    not necessarily, plateaus usually occur at the peak,
    it can also occur at the bottom as well

    however, like you, id prefer to see the start of a recoveyr before buying too.....in a perfect world
     
  15. bobbyj

    bobbyj Well-Known Member

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    I like to take the approach of: buy when I can afford to and when I am actually motivated.
    I find that I spend at least 6 months of the year NOT thinking about property or actively watching the market.

    So for me, if I see something I want and can afford, i'll buy regardless of what the market is doing in this short fart in time.
     
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  16. Sackie

    Sackie Well-Known Member

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    The best times to buy are when most think its the worst time. That's when you get some of the best opportunities.

    Just make sure you buy according to your risk profile and strategy. Do your thorough DD on wherever you are looking and then make a decision.

    The best deals I have ever gotten was when uncertainty/fear pervaded the media/market.
     
  17. Perthguy

    Perthguy Well-Known Member

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    I have timed the market well for my last 3 purchases and last 2 sales over a 12 year period. I have found it fairly easy to pick a market peak. It is much harder to predict the bottom of a cycle, but once prices are that depressed I have not found it difficult to find good deals. Basically, sell in at a peak but don't buy at a peak and you should be ok.

    I agree about waiting for the mythical "bubble" to burst though. I recall the "bubble bursting" prediction has been going on for more than 10 years. I have ignored all the hype and done my own market analysis.
     
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  18. Azazel

    Azazel Well-Known Member

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    Yeah, you don't need the absolute bottom of the market going by the official figures, when the local market has been in the crapper for a while, you can find that deal where you can negotiate a big % off the price.
     
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  19. joel

    joel Well-Known Member

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    So... now?
     
  20. Sackie

    Sackie Well-Known Member

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    If your asking my opinion, I personally think its always a good time to buy. The question is more:

    A) where
    B) what
    C) Using what strategy
    D) Is it in line with your risk profile and financial situation

    But I am very motivated to find opportunities because the reality of working for the next 45 years and then relying on the pension and super, petrifies me.
     
    joel likes this.

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