20 Jun 2011

When Is The Best Time To Buy Or Sell Property?

If you have ever dabbled in the share market you’ll know that it soon becomes clear that trying to take advantage of the fluctuating moves of stocks and currencies is about as easy as knowing exactly when your phone will next ring. Now the real estate market does have its ups and downs too and some level of short term unpredictability, but unlike stocks, predicting the best time to buy and sell property may  not be as complex as is often thought, provided you don’t have a get rich quick mentality.

Day trading is the term used for the activity of those who take risks on the short term movements of stocks or currencies. Some would say it’s tantamount to gambling, others feel they have cracked a strategy that produces profits on a regular basis. However, like most investment platforms, those seeking to make quick gains are those who take the greatest risks. Those who are patient especially with real estate tend to end up being winners.

Solid growth over the long term

Median House prices have risen albeit with varying degrees of speed for decades.  This means that no matter at what stage you buy a property, if you intend to hold onto to it for a reasonable period-, say no less than 4 or 5 years, you more than likely stand to make money. Likewise if you intend selling your property and bought the property say 4 to 5 years or more ago, then you more than likely will also make money. As can be seen by the Median House Prices chart that has taken averages of capital cities of Australia, properties continue to grow in price over the long term. If you bought ten year ago you would have probably at least doubled your money.

 

 

Don’t let greed get the better of you

Greed is a two edge sword; For the seller who bought their home some time ago and may have seen their property on paper worth more at some stage than what it seems to be worth today there is the risk of holding back from the market in the hope they will see further short term gains but actually see some fluctuations further south. For the buyer who is looking to buy but is waiting for the market to drop some more, they also risk unforeseen fluctuations north. You see just like the stock market, prices do fluctuate unpredictably, but in all reality no one really knows when a market has hit rock bottom, leveled out, or is continuing to decline or is in fact on the rise.  If you hope to second guess the market with the hope of making that little bit more by waiting it out and hoping to see the right signals, be warned; the market never does what we hope it will! If you have some equity in your property and want to sell, then sell. If you want to buy a property and have the ability to buy now, then buy now. Greed has a sting and many people trying to play the market like a day trader get stung.

Buying and selling on the same market

If you are selling and looking to buy back in to another property, then your paper loss or paper gain as the case may be, is irrelevant. What you possibly could have made if you sold earlier in a higher market makes no difference because you probably would have bought then at an inflated price. Again trying to predict the short term future prices of property is pointless. Deal with the known quantities.

If you have already sold or you are in a cash ready position to buy a property but are hoping to cash in on a rebounding market, well you are just playing roulette. Bite the bullet and buy now, you will ultimately be the winner as your property will eventually outperform virtually every other strategy of wealth creation available over the medium to long term.

Richardson & Wrench have been helping buyers and sellers of property create wealth for the last 30 years. Let our experience and expertise enable you to make the most of the current market.

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