Is now a bad time to buy?

D

DennisLeung

Hey guys,

I was just wondering whether these record low interest rates are making now a bad time to buy an IP. Seems like there are reports everywhere of prices and auction clearances skyrocketing with the media preaching the wonders of the property market. Would you guys consider now to the be the 'peak' of the property market for this 2010-2020 decade, just like 2003/04 was the peak of the 2000-2009 decade?

I'm just worried that purchasing now will mean a 5+ year wait for any capital gains, or is the notion of "markets within markets" true? Alternatively, should we wait 3+ years until the downturn to buy?
 
DennisLeung said:
I'm just worried that purchasing now will mean a 5+ year wait for any capital gains, or is the notion of "markets within markets" true? Alternatively, should we wait 3+ years until the downturn to buy?
Click to expand...

If you buy into the cheapest decile of property on the market, preferably something on a development sized block, its pretty hard to go wrong. Depending on where you look, it's amazing how much good value could be gotten for as little as $300,000

Forget about kitchens, bathrooms or yields.....buying houses on the cheap is the best assurance of long term capital gain.
 
I'll counter with the mantra "It's the time in the market, not the timing".
I'm going to settle an IP next week and I'll be buying another one in the next few months.
 
one world said:
If you buy into the cheapest decile of property on the market, preferably something on a development sized block, its pretty hard to go wrong.

Forget about kitchens or yields........buying houses on the cheap is the best assurance of long term capital gain.
Click to expand...

Well 3-4 years ago everyone was talking about Frankston and the area tanked. Same with Melton. Cheap is indeed very nasty in my view.
 
Aaron_C said:
Well 3-4 years ago everyone was talking about Frankston and the area tanked. Same with Melton. Cheap is indeed very nasty in my view.
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Those who paid too much got hurt. Those who bought smallish blocks or units got hurt, as did those who listened to Buyers Agents.

However, those who bought into the lowest quintile of Frankston property 3-5 years ago have done extremely well!

I'm not telling the OP to buy anything that is fully priced, regardless of the location.

You mentioned Melton - I'm not a huge fan. Like Frankston its got its fair share of bogans, without the benefit however of the beach or the infrastructure.
 
spludgey said:
I'll counter with the mantra "It's the time in the market, not the timing".
I'm going to settle an IP next week and I'll be buying another one in the next few months.
Click to expand...

Time in the market can certainly help heal any wounds for anyone who has overpaid (not saying you have), however timing is also a valid strategy. Residential property generally runs hard for approx. 30 % of it's cycle up, then languishes by either trending sideways or softening slightly and tracking inflation.

As Aaron has mentioned the markets within markets mantra applies. I reckon now is a great time to buy. I have bought two in two months.
 
spludgey said:
I'll counter with the mantra "It's the time in the market, not the timing".
I'm going to settle an IP next week and I'll be buying another one in the next few months.
Click to expand...

Ive always had issues with that statement

It breeds laziness imo. Timing is absolutely important because there are indeed lots of times when your capital could be better used elsewhere and not in buy and hold properties. Perfect example is 2007-2012 in perth, apart from tiny pockets in between.
 
one world said:
its pretty hard to go wrong. Depending on where you look, it's amazing how much good value could be gotten for as little as $300,000
Click to expand...

I don't think there is anywhere in Sydney you are able to get a house for $300K unfortunately :(

Edit: You can in 2770 - my bad.
 
Last edited:
sanj said:
Ive always had issues with that statement

It breeds laziness imo. Timing is absolutely important because there are indeed lots of times when your capital could be better used elsewhere and not in buy and hold properties. Perfect example is 2007-2012 in perth, apart from tiny pockets in between.
Click to expand...

The reason why I agree with it is that most of the time, you're better off buying sooner rather than later.
I can't pick when the market is at its peak or at its low point and I don't think many people would be able to. So while you might potentially be better off waiting till prices drop, you're probably better off buying right now.
It doesn't mean that you shouldn't research the area in which to buy in though.

Or another one: "The best time to plant a tree is 20 years ago, the second best time is now."
 
It's about what you buy in this market. I've just signed a contract today on a property that I believe is under market value in Sydney's western suburbs. It is to be our new principle place of residence so while it wouldn't have been a big deal if we paid current market value (which can be inflated in parts), we have an exit strategy to offload at a profit (or make our money back after expenses at worst) if need be.

I think it's really important to know your market in a hot market. The ability to walk into a property and pretty much know straight away if it's worth the asking price or if it may be underpriced for whatever reason is an asset. I went to open houses for 3 months, looking at pretty much every open in the suburb before I started making offers. I've missed out on a few properties in the past few weeks which I could've secured if I increased my offers but my research gave me the confidence to walk away at a particular price point without feeling too much remorse at missing out.
 
HD_ACE said:
If its a long term strategy then buy when you can. You wont make much coin on the sideline.
Click to expand...

I'm not saying I agree with the maxim. But some people swear by it.

And I guess it comes down to what is "good property".

In the past I've posted references to a couple of properties at Wategos Beach (Byron Bay). One was bought for $5200 in 1972 and sold for more than $6m in 2006. Some would say that you don't have to make much on the sideline if you can make that from one property.
 
HD_ACE said:
:D



If its a long term strategy then buy when you can. You wont make much coin on the sideline.

cheers
Click to expand...

Personally I disagree with this . Timing can help significantly

If you are always fully committed , then you are not in the position to take advantage of the REALLY GOOD situations that come along , especially when the market is bad . Also at times , you will need elbow room for change in situations , interest rates going up etc .

Cliff
 
DennisLeung said:
Hey guys,

I was just wondering whether these record low interest rates are making now a bad time to buy an IP. Seems like there are reports everywhere of prices and auction clearances skyrocketing with the media preaching the wonders of the property market. Would you guys consider now to the be the 'peak' of the property market for this 2010-2020 decade, just like 2003/04 was the peak of the 2000-2009 decade?

I'm just worried that purchasing now will mean a 5+ year wait for any capital gains, or is the notion of "markets within markets" true? Alternatively, should we wait 3+ years until the downturn to buy?
Click to expand...

DennisL
Now is a good time to buy in Sydney market.;)

MTR
 
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