Is now a good time to invest in property?

 

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.