The combination of so many sad events in such a short space of time has no doubt left many of us reeling and worried about what the heck is coming next. And it gives so so many investors the perfect excuse to not invest (again), to procrastinate, to wait and see, to just wait for things to calm down – sound familiar?
Alas, life is never constant, which means that there are always significant ups and downs for ourselves personally, our communities, our nation, and the world.
The property sky is falling?
Over the decades that I’ve been helping people purchase strategic property investments, I’ve regularly heard all the reasons why now wasn’t the right time for them to buy. Back in 2007, it was because interest rates had risen sharply, followed the next year by the Global Financial Crisis, when property prices were seemingly set to drop by 30 or 40 per cent! Not long after that, the Federal Government axed its popular first owners grant for established properties – clearly to save money given most first-timers bought existing properties but also to stimulate the construction sector. A few years later, the headlines were filled with tales of woe about China’s economy slowing down and then there was Brexit, which we all should worry about it seemed.
In 2017, the rising market cycle in Sydney was coming to an end and property prices were set to fall dramatically “they said”. By 2019, we had a Federal Election when negative gearing was a hot political potato and, again, was the harbinger of property price woe. Of course, two years ago, the pandemic then came a-calling and the decimation of property prices was supposedly a sure-bet, too!
Yet, here we are, with property prices around the nation generally 20 per cent or more higher than when we were instructed to go home and stay home for months on end in early 2020. Now we have another looming federal election, yet more incarnations of the COVID virus circulating, interest rate rises on the horizon, and I will take all the surprise out of this one. They WILL come and rates WILL go up. And then at some stage they will go down again … and then guess what? They’ll rise once more. You get what I am saying here.
The best time to buy property
As you can see from my little history lesson above, over the past 15 years, there have been many times when local or global events were seemingly going to set fire to our real estate assets and we’d all end up financially in the poo forever and a day. Of course, that never happened, and it was never going too, either, because real estate in this country has a history of resilience and stable price performance. To further prove my hypothesis, here are some fact about how properties have performed during these events, from 2007, using the Melbourne median house price as an example.
Year Event Median house price
2007 Rising interest rates $420,000
2008 GFC $451,000
2010 FHOG abolished $559,000
2013 China economy slowdown $569,000
2016 Brexit announced $773,000
2017 Sydney property “bubble” $873,000
2019 Federal Election $902,000
2020 COVID-19 pandemic $936,000
2021 Property market boom $1,004,000
So, as you can see from this property price trajectory, the median house price in Melbourne has soared 139 per cent over the past 15 years. This performance was also during myriad periods when markets were “all but certain” to bust. Which brings me back to the question I posed at the start of this blog: Has there been “too much bad news to invest right now?” Or are you going to ignore the doomsday merchants and err on the side of history and facts so you can secure your next property investment?