By Guest Blogger, Leanne Pilkington, CEO,
Laing & Simmons and President REINSW
FOMO was a big factor in the recent house price boom and buyers who didn’t succumb to temptation may feel they missed the boat. After all, those who paid a premium during the boom may have still enjoyed capital growth as prices kept going up.
Now that peak growth seems to have passed, many would-be buyers are re-evaluating the situation, wondering how to get the timing right in the future. For these buyers, Laing+Simmons CEO Leanne Pilkington has a simple message: you can only control your own circumstances.
Trying to weigh up future possibilities and balance external factors to get the timing of a property purchase just right, may end up being all wrong.
In the current climate, it’s understandable for buyers to be asking themselves questions. “Should I wait and see if there’s a price correction?” and “what if interest rates go up?” are both poignant questions to consider.
On the question of interest rates, there are probably some assumptions that can be made, but they don’t relate to timing and, as ever, there will be other factors at play.
Interest rates are likely to go up. Exactly when, we don’t know. Some economists reckon mid-year; the Reserve Bank has tried to pour cold water on that scenario. An upward shift in rates has traditionally had a negative impact on prices, however certain locations are always in high demand.
Plus, there’s a pronounced supply shortage in many areas, and the supply-demand balance always plays a part in pricing.
No-one knows what impact an interest rate rise might have. At the start of the pandemic, some smart and qualified people predicted a price crash. Look how wrong those predictions turned out to be.
In buying property, like any major investment, the question of timing must come with a disclaimer: the timing must be right for you.
The best time to buy property, including if you’re selling in the same market to upgrade, downsize, sea change, treechange or just re-locate, is when your circumstances allow.
The planets don’t need to align, as in, it doesn’t need to be a “buyer’s market”. This categorisation is especially irrelevant if you’re buying and selling in the same market, where the price you get and the price you pay will be subject to the same factors.
Trying to forecast the top or the bottom of the market is impossible. The most seasoned economists and investment experts whose job it is to study the market don’t get this right. The top or bottom of the market is only ever apparent in past tense. We know it’s happened, once it’s happened.
This makes waiting problematic. Agonise over the “right time” to buy and you risk missing out on the property that might be ideal for your needs. You may reduce your choices. The personal and financial circumstances that were right for you in the past, may no longer be right for you in the future. Sometimes not buying when you can means missing out altogether. Unfortunately, there are many first home buyers feeling this way right now.
Then, of course, is the very real possibility that property prices continue to trend up. The pace of growth may have slowed, but that doesn’t mean prices have stopped growing.
After all, property is a long-term investment and over time, history shows, that investment usually goes up in value.
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