B Invested

When is the right time to buy property?

 

If you are waiting for a certain month or season to buy your next property, you may just be wasting your time.

 

While there are a couple of times in the year where properties could sell for cheaper, it is better to be active year-round while following market trends, says Nathan Birch.

So, when is the right time to buy property?

Christmas is over.

 

The Christmas and New Year period can be a great time to pick up a property bargain. During this time, there are generally less buyers in the market. Coupled with the fact that vendors want to sell so they can enjoy the break and plan for the year ahead, the festive season can often provide the perfect ground for negotiating a good price.

 

Then there are the properties that have been on the market since spring. A certain sense of desperation can kick in for these sellers, who just want to be done with it already.

 

But, now that Christmas is over it doesn’t mean we should stop trying to negotiate. 

 

Look at the motivation behind the sale.

Getting a property for cheaper doesn’t depend on the time of year, says Nathan, it actually depends on a range of different factors.

 

One of these is the motivation behind the sale.

 

“At different times there are different motivations.”

 

He says if you understand what someone’s motivation is you can negotiate more appropriately.

 

At Christmas, sellers may be desperate to sell, and buyers may not want to buy. But this is not the only time of year where this perfect storm of bargaining power can come into play.

 

It can happen at any time of year depending on how the market has been performing.

 

The end of financial year can be another interesting time for property, says Nathan. It can be quiet in the lead up to EOFY while people prepare to do their tax returns.

 

Part of the increased activity in spring could be due to the fact that most people have taken care of their tax, received refunds and figured out how much capital they have.

 

But Nathan says buyers should always be ready to pounce rather than waiting for the next hot time to buy. This means having finance and a deposit ready to go, as well as having a solid strategy and clarity on what the next step should be.

 

Follow market trends.

Nathan says he is able to pick up properties at the bottom of the market because he studies a lot of data.

 

“There are different things that happen at different times,” he says.

 

“You need to look at things from every vantage point.”

 

He says he looks at trends, such as what properties are selling for now compared with ten years ago, three years ago and six months ago. Nathan looks at surrounding suburbs, the number of listings and the number of properties coming under contract. He also looks at the number of days that properties sit on the market, and tenancy related data such as vacancy rates, rental movements and demographics.

 

By doing this, he is able to gauge when the best time is to buy in any given market. 

 

He has avoided buying in some markets, such as those in the WA, for as long as ten years because he has never felt it’s been the right time to buy.

 

Whereas, in other markets, he has bought when prices are just starting to climb after already undergoing a major reduction.

 

Look beyond property data.

But it’s not just property related data that can help you decide when to buy.

 

Nathan says that wider economic factors should be considered too.

 

He says, the Sydney property market recently started to pick up again after interest rates hit a new low because money was cheaper to obtain.

 

Stimulus measures, such as government grants and exemptions, as well as quantitative easing, also work to bring up prices in the more affordable markets.

 

 

When is the best time to buy?

When it comes to getting a good deal on a property, it is better to go against the grain and buy when prices have hit their bottom.

 

“It’s always important to add assets to your bottom line, but the question is, where can I get them cheapest at the time?”

 

Nathan says most people get excited when they see prices skyrocket – which is exactly what happened in 2017 when the Sydney market peaked.

 

More and more people flocked to buy because they thought property was a worthy investment. 

 

However, buying at the peak means buying with maximum risk, says Nathan, because once prices have hit a certain level, it is unlikely they will go up much more.

 

The downside risk is also much greater – the higher prices have soared, the greater they could fall again. 

 

In contrast, if prices in a market have fallen and then stayed low for a long period of time, most buyers will be too fearful to invest.

 

Nathan says he buys with minimum downside risk. For example, he may buy a property for $110,000 that sold a few years ago for $350,000, when current values are around $150,000. Though the market is still low, it shows signs of recovery and the downside risk has been removed from the equation.

 

What’s coming next?

Nathan says he expects prices to start climbing again very soon.

 

“At the moment, we’re going to see double digit growth for the next couple of years, I believe – because of the stimulus that has been put into the market via the repo rate.”

 

“There’s liquidity coming into the markets which is going to be able to push pricing up.”

 

So, rather than wait for a certain time of year to buy, keep a close eye on the property market and get ready to take action before it is too late.

 

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