This brilliant Chinese proverb is undoubtable true not only for tree’s but also for the Australian property market. When clients inevitably ask me ‘is now a good time to buy?’ I often recite this proverb. When it comes to buying property, trying to time the market is futile. At Nyko we believe you should buy when you can comfortably do so and ensure that you purchase a quality property with the right characteristics for continuing demand for both rental and capital growth.
If you are an investor, the key is to then have a strict hold strategy. While we say 5 years is the absolute minimum an investor should hold, 10 years is preferable. In markets like Melbourne, you normally get through a full property cycle in 5 years but in Sydney for instance, that same cycle may take 10-12 years. Prior to the most recent housing boom in Sydney, property prices grew below inflation for almost 10 years – so if you sold at the 10-year mark you would not have realised any real growth.
However, if you held just 5 more years you would have been very heavily rewarded with 74% growth in that time – that’s an increase of over $500,000 in the median.
Obviously buying at the top of the market will mean you have to wait longer for the growth which is not ideal. At Nyko we are recommending very specific locations within Brisbane and Melbourne which have the right characteristics for continuing demand. Brisbane is just starting to rise from the bottom of their cycle while the more mature Melbourne market probably has the best underlying economic and demographic drivers and some way to go in this current cycle
Selecting the right location and property is vital. Nyko Property has recently had some amazing success by making sure our research methodology is sound and that we are buying quality property. The success is mostly due to market movements, however buying the right property in the right area opens up the opportunity for above average growth and that must be the goal.
An example of this was a town house in the beachside suburb of Bonbeach, 32km’s south of Melbourne’s CBD. Our client sold thi8s property within 5 months of settlement in March this year for a massive 22% gain. Another example is a boutique apartment block in the middle ring south eastern suburb of Carnegie, with a 2-bedroom apartment growing at ~12% in the first year.
While trying to time markets is futile, researching your options thoroughly and buying the right property opens you up to the opportunity for growth earlier in the cycle. Did we know Bonbeach and Carnegie would grow so much in the first year? Of course not, that would be near impossible. But by buying a high-quality property in a suburb that had the characteristics for growth we opened ourselves up for the highest possibility for growth.