When is the Right Time to Invest in Property?
For both first time and more experienced investors, this can seemingly be a difficult question to answer, especially when there are so many conflicting opinions around. For instance, if you read the investor columns in newspapers, or survey the large range of forecasts that are available, you’ll find that there is far from a consensus as to when it’s the ‘right’ time to buy an investment property in Australia.
For instance, some analysts suggest that the market will continue to rise in the first part of the year, and then become more stagnant, which would imply that waiting until the second half of 2020 is a better time to buy. Others are more bullish, predicting continued growth throughout the whole of 2020, while some are predicting a limited price recovery. Some in the industry are simply hedging their bets.
If you take all of these sometimes contradictory views into account, you are not left with an especially clear picture as to where the Australian property market is actually going in 2020.
When is the right time to make a smart property investment?
With so much conflicting advice out there, what should you do when it comes to buying an investment property? When is the right time?
In our view, the short answer is now.
You can wait for downturns and upticks, for moves in interest rates, or for the economy as a whole to shift, but in the end, this means that valuable time is passing you by. The best time to begin building your property portfolio is as soon as you possibly can.
How important is timing in real estate investing?
In the long term, it is the length of time that you hold an investment property rather than the time at which you purchase it that is the key to successful property investment in Australia.
Over a period of 20 years or more, the property market will fluctuate significantly with peaks and troughs being experienced throughout the cycle. Research has shown, however, that in the long term the point in the cycle at which you make a purchase will only marginally affect the overall value of your investment. Even if you buy at a time deemed to be the peak (i.e., a point from which prices can only fall), the ultimate value of the property and your investment over an extended period of time will generally still make it worth more in the long run than if you stayed out of the market, waiting for the seemingly optimum time to buy.
Therefore, when you are thinking about how to invest in property, it is important to remember that it is the length of time you hold a property that is generally the key to growing your investment. The time at which you make a purchase may have a small impact, but over the long term the difference will in most cases turn out to be negligible.
Why is buying the right property more important than timing?
Buying an investment property in high growth areas with the potential for further development is one of the keys to success when it comes to how to invest in real estate. The quality of the property, taking into account the suburb or area in which it is located, the existing and potential infrastructure and services, and the overall desirability and likelihood of growth, are ultimately more important than trying to pick the right time to buy.
As property strategists, we invest significant time and resources in researching new and existing developments across Australia, gathering information that helps us to make well-informed decisions based on knowledge and facts. In this way, we are always well-placed to advise you on where you can make a high quality property investment, which in the end we consider to be more important than when that investment is made.
Is it possible to accurately predict rises and falls in the Australian property market?
As the brief survey above of current opinion regarding the Australian property market demonstrates, there is no consensus as to how it will perform in 2020, let alone beyond that. While the fundamentals can generally be understood (e.g., interest rates, the effects of inflation, changing demographics, etc.), it can be more difficult to factor in what is known as investor sentiment. This is a loose term that attempts to describe the general feeling among investors towards a particular market or asset. It can be measured, but it is far from an exact science.
Investor sentiment does nevertheless play a role in how all markets, including the property market, move, and likewise has a bearing on analysis and the formation of forecasts. It is also one of the contributing factors to the general and widespread perception that there is a right time to invest in property, as well as a wrong time.
Our view is that it is the quality of your investment and the length of time that you hold this investment that is the key to successful property investment in Australia and growing your property portfolio. Investor sentiment can certainly impact on prices, but it should ideally not be a barometer as to whether now (or any other time) is the appropriate time to buy.
This is almost always our central advice when it comes to real estate investing for beginners, as well as those more experienced in the market — don’t try and predict when the optimum time to buy is, but instead make the decision to invest in property as soon as you possibly can, and focus on a high quality investment with the potential for long-term growth.
Talk to Power of Property about buying an investment property in Australia
We are highly experienced property strategists who offer well researched guidance on the best places in Australia to invest in property. Our aim is to work with you to create a strategy and property portfolio designed to meet your investment needs well beyond the short term, growing your wealth over time and giving you financial peace of mind.
Call us on 0407 785 560 or get in touch via email and we will be happy to arrange a consultation.