Timing the Market- When to pull the trigger

For those only interested in purchasing in Melbourne and Sydney curious as to when you plan to pull the trigger on your next purchase.

For me I’m waiting until the next federal election. If Libs stay in then that’s my approval to go shopping.
If Labor get in then I really need to assess how the housing policy looks. If I don’t like what I see then I’ll be looking at a different asset class for a while.

I strongly believe once correction is complete in those states that growth will be minimal (likely in-line with inflation). But great development opportunities, especially for subdivisions and retain to sell more affordable FHB properties.

 

When I see a quality deal that stacks up.

 

Just before everyone else does

 

Presumably you are referring to investors only.

Waiting for the federal (and NSW state) election is a reasonable time frame. And with CGT, negative gearing etc on the chopping block, that's fair enough.

As a broader comment, there is always a reason to wait. The best strategy for investors is usually to take action and dollar cost average in, particularly as real estate is a very illiquid long term asset, and time in is more important than timing (as the cliche goes).

So you could make a case that for a 30 year proposition like property, in a year after a fall of 10%, the "what are you waiting for" ethos should kick in and one election cycle shouldn't make a difference. Sydney property rarely if ever goes down two years in a row (though it can zig zag lower over a few years).

Happy investing in 2019 everyone!

 

No hurry in Sydney...it ain't goin' anywhere for 6-7 years...

 

Ditto

If you want a PPOR , then after the election won't be a bad time , but given the time from the previous peak ( 2003 ) to the start of the next major boom was ten years , i see no reason to be looking in Sydney for an investment in the foreseeable future .

For me , our next Sydney purchase will be after Brisbane has boomed and I don't know when that'll happen , but it will be before sydney booms , IMHO .

Cliff

 

I think 2020-2025 will surprise you with a fairly aggressive bull market. There is a lot of artificial manipulation of the market, that will build up and release like a coiled spring in the next few years.

Factors include: lower interest rates, a significant slowdown in dwelling construction (supply) and population growth highest in the developed world.

Thinking Sydney will correct for 6-7 years after a 5 year bull market (2012-2017) is just "recency bias".

Lastly, the "wait" argument assumes that investors only want to purchase one property, and therefore they need to time it perfectly. But true investors accumulate several quality properties. So if you get cracking now, you might be able to purchase say 3 properties at bargain prices in the next few years.

Waiting just delays the accumulation process - all for that elusive "deal of a lifetime" that I promise will never come. I would rather buy three properties at a good price, than one property at a great price.

 

Disagree..... have been through a few cycles...and given large the up tick in Sydney is...it will take years to go up again namely because:

1. No wages growth
2. Borrowing/Serviceability is not like to change significantly for years.
3. Baby Boomers are retiring...Gen X will be behind them..and Millenials don't have the cash to pay more
4. Sydney is overpriced compared even to London these days....

 

Thanks Sash,

I would argue with some of those points but most are reasonable. I think you are missing the impact that lower interest rates have on the relationship between housing prices, incomes and affordability. But yes, Sydney property is expensive.

Just so I am really clear what my point is: I built a large property portfolio. I was able to do it because I prioritised reaching my goals and buying good properties rather than trying to time the market.

If I had obsessed with getting the timing right, my portfolio would be half the size.

This is the trade-off the "wait and see" crowd don't mention. And that trade-off is the scarcity of time and the limitations of age.

The times in your life when you have peak earnings (let's say 35-45 years) are specific to each individual, and you can't time a dip in the market to correspond to your peak earning. Wait too long and you simply shorten the time horizon of your earnings and give your portfolio less time to compound.

 

No doubt but I am fixed squarely on Melbourne so timing does become a critical factor given we are in a correction. It’s a dead set certainty prices still have a good 5% to go so buying now makes zero sense....
I don’t however believe it’s going to bounce and we will be on for a very long period of flat growth.
So it’s probabky fair to say once we bottom out you will have time.

But that’s when I agree with your sentiments that it’s best to get in, ecspecially if you employ an active strategy as opposed to relying on the market to do your lifting.

 

Past strategies of piggy backing next purchase on earlier purchases accumulated equity may not work given less likelihood of cg in next 3/5 yrs(syd/mel) along with current restrictive credit assessment likely to continue.

Your ability to borrow along with the cash you hold is the most treasured asset in current times.

 

Doing zip no rush, bust cycles last longer than boom cycles
Not interested holding negatively geared properties and servicing debt while waiting for the tide to change

 

I predict 4. I think demand is there and immigration will keep occurring

 

Lol. That's pretty much exactly what I was just thinking this afternoon I don't know when Brisbane will boom butI'm pretty sure it will be before Sydney. Won't be for a few years yet.

 

Agree on that point about taking action now.....but no point getting into Sydney now...when markets like Adelaide...Brisbane...and Perth will offer more...you can always come back to Sydney....

 

Why Melbourne when some other states are offering great development opportunities with decent yields while you wait on council to do their stuff or other delays in general?

And higher chances of capital gain when compared to Melb or Sydney...

 

Millenials will be cashed up when their baby boomer parents fall off the perch.

 

....assuming their parents are not part of the SKI (Spend the Kids Inheritance)....club......

What I am seeing is a lot of baby boomers are not well prepared for retirement...it is possible they may need all their cash to continue to live...and a lot will need for Aged Care...so when thye do pass it on as a inheritance I can see it being modest...most had 2-3 kids maybe each one would end up with 300-750k each....not millions....

A lot of millenials may have not gotten on the property ladder..if that is the case even with a $500k inheritance it will help..but nutin' life changin'

 

Purely because I am hands on with access to good trades and PM’s in Melbourne.
I am confident foregoing some potential growth in other states will be outweighed by being close to the development.

 

I'm waiting for the baby boomers to die and inter generational wealth to increase, meaning that a lot of people will be able to spend more. We may see this happening soon.

On the downside, I think the gap between well off and just getting by will become larger.