Without a doubt enough time in the market can produce some pretty amazing results. But now more than ever astute property investors are expecting even more. It’s not just about time IN the market, it’s also about TIMING the market. But how do we know when to buy property in the right part of property cycles around Australia to get the very most out of our money?
Timing is key when investing in Property. Too many B & C grade investors are buying too late in the cycle, or in some cases when the cycle is at it’s peak, and putting themselves at risk.
According to research by CoreLogic, 14.3% of Australians reported an interest in at least one investment property, and only roughly one in five of these people own two properties or more. Many people fall into the trap and pull up the handbrake on their wealth building simply by buying property at the wrong time. Many would have the ability to increase their portfolios simply by picking better timing for entry, which can produce very fast equity growth and thus allow a portfolio to be built faster than most people think.
One of the biggest things that I have learned through my 25 years in watching property cycles around Australia is that for two thirds of most cycles around Australia remain fairly flat. It’s the final “rising” third of the cycle where everything seems to happen.
Gaining an understanding of what drives rising third is key to making these informed decisions of when to buy. At a basic level infrastructure such as major hospitals, growing airports with several flights to major cities each and every day, significant road upgrades and major education hubs are fundamental features to a successful investment property purchase.
I wish I could tell you it was as easy as that, but after all those elements are confirmed we must dig deeper and look into which property types are most desirable to the “right” type of tenants, which properties are in most demand with the least amount of supply, as well as knowing local council’s plans for establishing growth precincts in certain areas. This will give investors a major head start and in some cases an unfair advantage
This is how A-Grade investors use timing to build equity, and in tern, build wealth. To learn more about my thoughts on Australian Properties hottest topics please click here to visit and ‘like’ our Facebook page to receive regular updates.
Now, everyone’s becoming familiar with a “property clock". As you can see below, 6 O'clock represents the bottom of the market, where are 12 O'clock represents the peak of the market.
What we’re looking for are the drivers mentioned above that will push the property market and create the next growth curve, or the “rising” third of a cycle.
As far as timing goes, 7 o’clock is the perfect time to buy a property to pick up all of the growth in right third of the cycle. Unfortunately, at 7 o’clock, very few people know this is the right time as the media is yet to pick up on it, no one is talking about it locally and all the while property prices are quietly starting to rise under the radar. Most people are too distracted, and too busy with life, and just don’t have their finger on the pulse.
But by around 9 o’clock most B-grade investors are noticing things are moving, and really want to start taking action. This is where the auction numbers and clearance rates start picking up as a new level of interest has arrived. By 10 o’clock you’ll even see the property magazines saying, “ ow, watch this particular market, it’s a growth market, we’re tipping it as a hot spot!” The reality is by then it’s too late.
As an A-grade investor you wouldn’t consider buying at this stage in this market, and, preferably, we wouldn’t even be selling here either. Ideally we’d be getting to this part of the market looking at the equity we’ve created and tapping into that equity to go and reinvest into another 7 o’clock market and squeeze the most out of our dollar.
That’s an insight into how to buy late during a cycle to get the most for your investing experience. Timing is a big one, and knowing what actually makes a rising market will remove so much of the guess work in buying investment properties. To understand how my team and I can help you invest safely without putting any strain on your pocket click here and register for our next free event.