To buy or not to buy

There is no such thing as natural booms! Nature doesn't get involved in boom or busts. It is the fundamentals and the sentiment.

When you have consumer confidence & business confidence at 11 year high (WBC Consumer index), RBA stating that IR staying this low until well after 2024, IR at sub 2% and economy back at pre-covid levels, it gets as good as it is now for a boom! It has never been this good where all stars aligned and every single bank and forecaster is pointing to a 25%-30% national price rise! I have seen 3 previous boom cycles and have never witnessed this much alignment in views and fundamentals being so stacked in favour of prop prices.

You can wait it out if you prefer but you are very very likely going to pay (if you ever purchased a house) a lot more in 2 or 3 years (or even next year) than you will today. This board and thousands of reddit & other forums have been full of bears since 2000 wanting to buy at lower prices during each boom cycle and had to end up buying at significantly higher prices years later.

 

If I've read it wrong which should show in the next 18 months i believe im ok with that and will just build in a new estate. Being forced that way today anyway.

 

Broker told us maximum 600k, bank before her gave maximum 570k

 

This is something to really consider

 

great to hear you have seen a broker. When it comes to capacity issues there is no other option.

What I would say though is self employed can be fickle and one broker may miss something another doesn’t. Just to be 100% certain I would get a second opinion. Being Melbourne based hit up @Peter_Tersteeg who is a gun.

 

Just be sure that you're not seeing a prolonged boom because you want to.

I don't know what's going to happen next, no-one does. We might hit a boom in which prices are driven up 30% or 40% by low interest rates, government stimulus, and the eventual resumption of immigration. Or there might be an economic shock, and they fall by a similar magnitude.

 

A genera comment would be I have never seen newbies guess correctly in terms of timing the market. The people that do well out of timing the market generally have a lot already invested and cash reserves to pull the trigger on a good deal when it arises.

 

Tbh it's irrelevant. That's precisely why soooooo many folks miss out on growing wealth. Time and time again . They try to predict booms. Predict how long it'll last. Predict the mythological crash. And everything else in between.

The key ( which some investors have been trying to get the point across now for many years but mostly falls on deaf ears) is to buy when you can afford to, buy value, buy add value, buy with a strategy in mind, buy according to your risk tolerances and hold.


If you think you are able to buy with better timing (and not be paralysed by indecision) then even better.

But you gotta give up the crystal ball approach of knowing, waiting, hoping and praying.

 

Absolutely love this @Sackie

 

If you are worried about when to buy, maybe the best question to ask is "when are investor's going to sell" .......
If investors are selling I wouldn't be buying
I hold 2 IP's, and both will be for sale 3 weeks into next Spring, advertised for $90k over agent estimates (will sell 1 and keep the other for 1 more year, but I am intending to take some profit to invest again)

 

The key was to buy when interest rates were high, and let falling interest rates raise asset prices
With RBA cash rate at 0.1% theres not much more to be had from falling rates unless we go NIRP

 

That wouldn't factor into my strategic planning at all and doesn't make sense to me on a few levels.

 

and you knew rates would fall? Couldve made more trading bond futures.

 

People talk about prices dropping back .

since watching my parents buy their first Aussie House in 69 , I’ve only seen price pull back on two occasions . The recession we had to have and the GFC . Guess what . Part of the reason prices pulled back was the banks weren’t lending .... we were able to buy in the GFC because we had cash in the bank .

So if you have a pile of cash ( which you don’t ....). Even then the pull backs are short and sharp. People who talk about 30-40 % are living in fantasy land . It doesn’t happen .

After booms prices go side ways .

We bought our first house at the end of a boom during which prices doubled ..... We could have paid 100 . People next door paid 140 which every one said was crazy , why would you do that ? We paid 200 . ( 80’s , concord west ,Sydney ) . ? Worth 2 mill now .

every boom , we’re told it’s crazy , but it keeps going up .

would I buy an investment property in Sydney / Melbourne at the moment ? No .

PPOR ? Hard to know because I’m not in that position , but probably yes .

Sackie , Harris know what they’re talking about . Harris is based in Melbourne . Some of the other people on this thread have NFIWTTA ....

In Sydney , people are paying 550 for ****box ex housing three bed fibro’s at the bottom on the market in suburbs the majority of people wouldn’t want to buy in . Not sure what people are paying in Melbourne for those . @Harris would know . How much more value is there in what you’re looking at buying compared with that ?

Cliff

 

Once you hit the second cycle, the numbers look unbelievable anyway.

And if you start at 20, it means prices, and gains, are unbelievable for most of your life.

 

People nearly always buy at all time historical highs unless the market has dropped. We bought a Sydney PPOR 2008 for just under 700k and using an assumption of 7% annual growth I worked out that it would hit 1 mill in just a couple of years. And it actually came true! But when I did the calcs, 1 mill seemed like a huge number.

Brisbane - ok, say prices mostly stagnated for a loooonnngggg time but I feel they are on the way up now. Sydney - with the worst timing/worst case scenario it seems it takes 4-5 years before home prices are higher than what you paid (2004-->2009, 2017-->2021). A cousin bought an Oatley home while prices were rising (late 2012) for 1.26 mill. I thought that they overpaid. I don't think that way anymore....

Disclaimer: The future may not exactly mirror past growth, keep that in mind. But it's something to use with few other factors to rely upon.

 

ITs also physiologically to buy when everything seems to be going to hell. . When there is some thing really bad happening Such as Covid and you think the world is ending is hard to buy.

Than the Australia is slowly coming out of covid and every one realizes we are ok. The market goes crazy and you missed an opportunity.


The market was already heating up in early 2020 and only stopped due to covid


It was primed to go crazzy in late 2019-early 2020


So like some say the deman was suppressed for a few years.

 

Mate exactly. I even posted back then about great buying opportunities in multiple threads ( as well as going in the stock market during covid). My return in stocks since then has been in the millions as I invested close to 3mil. And I'm no expert in stocks whatsoever. Just got good advice and also believed the companies I invested in didn't really lose the crazy value the market at the time was showing. All panic. And fear driven. I was afraid too but tried hard to not let it stop me from seizing a fantastic opportunity.

Same thing with real estate.

It's not rocket science to know value in markets. Many folks (even cashed up ones) are usually overpowered by their fears, even when great value is staring them in the face. That's why I've been saying since the beginning that the whole wealth creation game is 70% a psychological battle. Many folks like to minimise the importance of it. So be it.

Most just afraid to pull the trigger.


Mindset.
Mindset.
Mindset.

My 0.05c.

 

The is exactly what my mind has retained most from reading Jan Somers' books all those years ago.