Is now a good time to invest in property?

For many people this is an important question. The market has grown generous equity in your current home or other investments but the market is starting to slow, is now a good time to jump in?

The answer ultimately depends on strategy:

  • Is this a long or short term strategy?
  • Can I ride out a market correction?
  • Do I plan to upsize or downsize my home within the investment strategy?
  • Do I have the cashflow to cover a loss of rent?
  • Am I prepared to purchase in another state or territory to optimise gain and yield?
  • Can I cover repayments if interest rates rise by 1 or 2%?

Long or Short term strategy:

We’ve seen a significant increase in property values over the past 20 months and the market is starting to show signs of plateau. This is normally followed by a correction in values before another plateauing of price, in my opinion the correction will start when the Reserve Bank of Australia starts to lift interest rates. No-one disagrees rates will rise, what many disagree with is when. If it’s next year then we may start to see a property correction in and around 2024, possibly earlier.

Is it a good idea to purchase off the plan with a 2 year completion date?

I’d argue this is a risky strategy, purchasing at what has to be near the top of the market with a delayed settlement naturally has significant risk of devalue. You would then need to fund any shortfall in valuation once you’re ready to finance the purchase. It would be important to factor in this downside risk to your investment decision.


Purchase with a long term strategy!

With a 10 year strategy, considering the property market is cyclical and if you have the liquidity to ride out any dips in price & increases in rate/repayments, then this could be a good time to enter the market. This is also shown in the below graph from the RBA.

Our economy is deeply complex, with many moving parts which makes prediction very difficult.

Economists get their predictions wrong all too often. Who saw Covid-19 decimating the world economies in 2018, which has had a domino effect with increasing inflation, labour shortages and supply chain issues.

These challenges weren’t on the market radar two years ago.

A good example is there are still questions on how our immigration strategy over the next 3 years might shape our property market? A Sharpe increase in migrants could counter any slow down in the property market.

I should note however that historic performance gives no guarantee of future performance.

If viewing the Sydney and Melbourne graph’s you can see the continual upward trend in property prices but also the market correction after each increase.

Investing in anything has its risks, if it wasn’t risky everyone would do it.

At Webb Financial we spend the time to understand your goals and prepare a strategy to deliver on those goals. We have over 50 years of combined accounting, planning and lending experience to assist you in the process of building your investment strategy.

This could include:

  • Borrow capacity
  • Structuring finance
  • Asset protection
  • Understanding capital gains tax
  • Development opportunities
  • Understanding good versus bad debt
  • Gearing & Taxation
  • Estate planning
  • Protection (Income, Life, TPD)

If you’re considering an investment please contact us on 02 4244 4054.

Please note: This email constitutes general advice only and does not consider your specific circumstances.

Copyright © *|CURRENT_YEAR|* *|LIST:COMPANY|*, All rights reserved.

Our mailing address is:

Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list.