Is now a bad time to buy?

[HD_ACE]

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

Agreed. I wasnt saying timing was not important.

More so that when your in a position to buy (buffers, risk profile job security blah blah taken into account ) then take advantage of other markets. Alot of people spend years trying to time the one market when instead if they had of bought when they could in another market (reasonably well timed)they could have made alot of money in that time period instead of watching it go by.

Just my opinion.

Cheers

 

[13andcounting]

The best time to buy is always when no one is buying.

Doesn't mean now is a bad time though.

Is there ever a bad time to buy?

 

[XMW]

I think this is quite a bad time to buy in Sydney, the timing now is quite like 2003 when previous cycle peaked. Current boom is triggered by a combination factors, eg limited supply and low interest rate. The market from now will go sideways at best for the next decade.

Excellent time to sell though for a good price.

 

[Deltaberry]

Is there ever a bad time to buy?

Yea there is. When prices are peaking.

 

[Melbournian]

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.

i got someone trying to sell in frankston for a few years and got nothing.
the problem with frankston is the demographics. if you bought it like 10 years ago that would be different. Ambulances don't even go to frankston without a police escort

there was a guy i know that had like 6-7 properties which he bought in some of the really blue collar factory suburbs like heidelberg west, frankston, dandenong, langwarrin like 18 years ago for like 60K here 70K now he's sitting on a high appreciation.

that being said, there is never a bad time to buy if the bargain is right

 

[atti]

its always a good time if you can afford it and have a buffer to hang On Ya.

 

[13andcounting]

its always a good time if you can afford it and have a buffer to hang On Ya.

So you feel there is never (ever) going to be another market that would be better to have exposure to? Obviously the last thirty years has been brilliant to maintain a consistent and expanding long exposure to Australian property, but surely we have someone here that has an analytical strategy to choose a perfect exit point?

Otherwise I might just have to start reading this a little bit more: http://www.macrobusiness.com.au/2013/08/how-to-recognise-a-property-bubble/

 

[sanj]

its always a good time if you can afford it and have a buffer to hang On Ya.

I could not disagree with this post more.

 

[Singo]

It is always not good time if you buy the wrong property at the wrong price.

Buying the right property at the right price will work any time of the cycle. Properties needing Reno, subdivision potential etc can make money at any time. If the strategy is 'buy and forget', then get the timing right. Just my thoughts.

 

[see_change]

I think this is quite a bad time to buy in Sydney, the timing now is quite like 2003 when previous cycle peaked. Current boom is triggered by a combination factors, eg limited supply and low interest rate. The market from now will go sideways at best for the next decade.

Excellent time to sell though for a good price.

Steve Keen ??

I didn't know you came here ...

Cliff

 

[buster]

The best time to buy is always when no one is buying.

Doesn't mean now is a bad time though.

No not always depends on the market, if you buy when no-one is buying you may find you get no or negative gains, You buy after prices have dropped enough to stimulate demand once people have started buying and you notice the surplus disappearing. In a small market if you than buy 3 or 4 houses a surplus can become an acute shortage and a few years of 30 or 40% GC pa. see it happen in small towns all the time. Ive had people tell me Ive bid too much for houses it, doesn't matter, if I end up buying it because I get a net gain with the increased equity in my existing property, and regain it in multiples. You cant do that if no-one is buying.

 

[Deltaberry]

I should change that to the best time to buy is when, after you buy, they all start buying.

 

[citystar]

When is the right time to buy.... when you can afford it.

 

[Graemsay]

I'm not convinced that Sydney is the once-in-a-decade buying opportunity that the propaganda makes it out to be.

The median (individual) income in Sydney is around $70K, about $55K after tax. For a household it is (or was last year) just under $90K, so I'm guessing $70K after tax.

Meanwhile the figures for median rents are between $440 and $470 per week for an apartment, and $470 and $500 per week for a house. That's 40% to 50% of an individual's income, and 30% to 40% of a household's.

The only way that a typical rental property could be considered affordable would be if it was shared by two people in full time employment. (Which would correspond to 20% to 25% of their combined incomes.)

So I can't see significant rent rises relative to earnings, because tenants can't afford to pay a lot more. In a slowing economy, wage increases are likely to be lower than for the last decade, which would be a further constraint.

It's possible that property could have capital appreciation in the absence of rising rents. But any investor is going to have gamble that he or she will see inflation busting increases from an already low yield.

So I'm still bearish. Then again, given my oracular prowess has been proven to be spectacularly wrong for the last five or more years, I wouldn't be surprised if prices double by Christmas.

 

[buster]

When is the right time to buy.... when you can afford it.

I have found it is usually when you cant afford it, in hindsight the best buys would have been the ones I thought I couldn't afford, The ones I bought because I had money burning a hole in my pocket haven't been so good. When you can afford it there is probably a lot of competition who can also afford it. The right time to buy is when other people cant afford it.

 

[Deltaberry]

My two buys in the past 6 months have both gone up by around $1m each within 2-3 months after settlement (albeit one of them is in partnership with multiple people).

When I first bought them (ie before settlement), lots of people were telling me how the Australian and housing market is going to crash, economy is going pear-shaped and no one buys real estate any more.

Of course the people I hang around with usually have a bit more tact than to say "oh what a bad investment decision". They usually say things like "Oh you bought another $3m place? Congratulations. By the way, the market seems really tough lately. I think I'm going to transfer all my money out of Australia because I'm pessimistic about how asset prices can be sustained at this level. I think Australia's one of the worst countries to invest in right now..... Oh by the way did I say congratulations on your new purchase in Australia?"

PS: no they don't say the last sentence usually

 

[one world]

My two buys in the past 6 months have both gone up by around $1m each

Now you have me interested. Can you please elaborate?

 

[see_change]

I'm not convinced that Sydney is the once-in-a-decade buying opportunity that the propaganda makes it out to be.

The median (individual) income in Sydney is around $70K, about $55K after tax. For a household it is (or was last year) just under $90K, so I'm guessing $70K after tax.

Meanwhile the figures for median rents are between $440 and $470 per week for an apartment, and $470 and $500 per week for a house. That's 40% to 50% of an individual's income, and 30% to 40% of a household's.

The only way that a typical rental property could be considered affordable would be if it was shared by two people in full time employment. (Which would correspond to 20% to 25% of their combined incomes.)

So I can't see significant rent rises relative to earnings, because tenants can't afford to pay a lot more. In a slowing economy, wage increases are likely to be lower than for the last decade, which would be a further constraint.

It's possible that property could have capital appreciation in the absence of rising rents. But any investor is going to have gamble that he or she will see inflation busting increases from an already low yield.

So I'm still bearish. Then again, given my oracular prowess has been proven to be spectacularly wrong for the last five or more years, I wouldn't be surprised if prices double by Christmas.

The bottom line is the person who owns an average place in sydney hasn't moved straight in ther from renting . It might be their second or third property having built up equity ove a period of many years .

Currently rental returns on good properties in sydney are high , so there is some movement available there to get back to a more normal rental return .

Cliff

 

[Deltaberry]

Now you have me interested. Can you please elaborate?

Hard to say.

First purchase was probably a combination of:
- relatively weak market at time of purchase
- relatively long settlement
- the price range being outside the interest of people who look in that area
- subdivision could be done in a day (permits were in place, but people ignored that)
- substantial pick up in that particular area/type of properties in 2013
- prime blue chip location for this type of property

Second purchase was a combination of:
- off-market deal (market/agents were not aware of the deal)
- there was no "market rent" in place (because the vendor was the lessee)
- vendor who was 70 and owned the property for 40 years just wanted to sell and didn't want to do the whole auction process
- prime blue chip location for this type of property

So in both cases, you could argue the purchase price was grossly undervalued, perhaps even for the time of acquiring.

 

[13andcounting]

My two buys in the past 6 months have both gone up by around $1m each within 2-3 months after settlement

So you've sold them both already? Or has your valuation gone up by $1m each?