We have never thought that there is a bubble - that is not to say however, that they're aren't upward pricing pressures and in some cases they are getting "toppy" in some markets/suburbs. Moreover, we are pretty silent generally and have been for some time with our commentary because there are more than enough points of view about property as well as vested interests being pushed on the property reader - we aren't experts, we are professionals, and there is a difference...worth thinking about!
We thought it was worthwhile re-publishing and discussing the table below, given the buying depth across the core Sydney markets and the price growth that has been recorded month on month since May 2013.
We are often asked, "is this a good time to buy property?" our answer...it is always a good time to buy when you are ready - factoring in your hold strategy and your cost of ownership (including future interest rates rises for example); speculation about where property prices will be and if they will come down is not a discussion worth having because it is crystal balling and yes, there will always be a correction 'cause markets have peaks and troughs - its always about asset selection and value versus price (where does it not make sense to you and at what level are you overpaying against the purchasing strategy and your own affordability?) this is why we are here, to sort the wheat from the chaff!
The following table shows capital city house prices from their last peak. Sydney for example had its last (total market) peak in prices 10 years ago. They initially dropped 21.2% and currently sit at only 4.3% higher after adjusting for inflation over the same period, that's less than half of 1% of average annual growth over the past 10 years. There are other variables like capacity, LVR's and so on but, they don't change the numbers regarding property prices as tabled. Apart from Sydney, the rest of the capitals have experienced real value deductions since their more recent peaks...arguments about asset values will persist however, this is interesting in the context of the market we find ourselves in now...
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To see the full article from RP Data's Research Blog click here
We thought it was worthwhile re-publishing and discussing the table below, given the buying depth across the core Sydney markets and the price growth that has been recorded month on month since May 2013.
We are often asked, "is this a good time to buy property?" our answer...it is always a good time to buy when you are ready - factoring in your hold strategy and your cost of ownership (including future interest rates rises for example); speculation about where property prices will be and if they will come down is not a discussion worth having because it is crystal balling and yes, there will always be a correction 'cause markets have peaks and troughs - its always about asset selection and value versus price (where does it not make sense to you and at what level are you overpaying against the purchasing strategy and your own affordability?) this is why we are here, to sort the wheat from the chaff!
The following table shows capital city house prices from their last peak. Sydney for example had its last (total market) peak in prices 10 years ago. They initially dropped 21.2% and currently sit at only 4.3% higher after adjusting for inflation over the same period, that's less than half of 1% of average annual growth over the past 10 years. There are other variables like capacity, LVR's and so on but, they don't change the numbers regarding property prices as tabled. Apart from Sydney, the rest of the capitals have experienced real value deductions since their more recent peaks...arguments about asset values will persist however, this is interesting in the context of the market we find ourselves in now...
To see the full article from RP Data's Research Blog click here
You
don't need to be an expert in order to achieve satisfactory investment
returns. But if you aren’t, you must recognize your limitations and
follow a course certain to work reasonably well. Keep things simple and
don’t swing for the fences. When promised quick profits, respond with a
quick “no.”
Focus
on the future productivity of the asset you are considering. If you
don’t feel comfortable making a rough estimate of the asset’s future
earnings, just forget it and move on. No one has the ability to evaluate
every investment possibility. But omniscience isn’t necessary; you only
need to understand the actions you undertake.
If
you instead focus on the prospective price change of a contemplated
purchase, you are speculating. There is nothing improper about that. I
know, however, that I am unable to speculate successfully, and I am
sceptical of those who claim sustained success at doing so. Half of all
coin-flippers will win their first toss; none of those winners
has an expectation of profit if he continues to play the game. And the
fact that a given asset has appreciated in the recent past is never a reason to buy it.
With my two small investments, I thought only of
what the properties would produce and cared not at all about their
daily valuations. Games are won by players who focus on the playing
field – not by those whose eyes are glued to the scoreboard. If you can
enjoy Saturdays and Sundays without looking at stock prices, give it a
try on weekdays.
Forming
macro opinions or listening to the macro or market predictions of
others is a waste of time. Indeed, it is dangerous because it may blur
your vision of the facts that are truly important. (When I hear TV
commentators glibly opine on what the market will do next, I am reminded
of Mickey Mantle’s scathing comment: “You don’t know how easy this game
is until you get into that broadcasting booth.”