Is there ever a right time to buy?

dvane

I agree totally. I think one of the most prominent thing preventing people from investing today is there attitudes. At the end of the day if you are a long term invester than the market fluctuations will be irrelevant as we all know that in the long term all markets rise.

Sometimes you just have to jump in and go for it…

ret

Do they? I know of properties in regional centres (pop 20-30000) that have sold for less now than 10-15 years ago.

A lot of the long-term extrapolations over the last 30-40 years were done over periods of high inflation (late 60s to early 90s).

After correcting property prices for inflation, yes there’s been some increases in real terms in the big cities and coastal areas, but not necessarily significant increases (in real terms) everywhere.

Regards, Peter

Hey Dave

IMHO I believe that this question is actually a moot point should you have done your ‘due diligence’ as part of analysing the property (as far as it fitting into your stratgeies are concerned) will include a worst case scenario. If you can live with the worst case scenario and your sleeping patterns aren’t going to be disrupted, then anything that follows is actually more cream.

At the risk of stating the obvious, another point that I think is paramount is to actually become very familiar with what drives the market forces eg economics, urban trends, pop. growth rates, migration patterns, town planning etc. I sincerely believe this is a key factor in making up your OWN mind. And I don’t mean, becoming familiar with the concepts. I mean go and actually acquire some knowledge in these areas. It’s very easy to be persuaded by market commentators as we naturally assume they must know something right, cause how could they have got their job in the media where they can presumably be discredited quite quickly and easy??? Wrong! The reality is, when it comes to the economy they have as much of an idea as you and I and that is a fact. One thing you learn when studying economics is that if you can explain why you think something is the way it is (or going to be) with supporting theories etc, its right – it’s only your opinion but it gets a tick. There maybe someone who comes in behind you and says no, no, no. This is how it works and they explain how and it makes sense as well and guess what. They get a tick too!! So you could have two completely different interpretations but they are both right! Wouldn’t you feel better if you were in more control of what YOU think than what you are ‘massaged’ to think? Given that, it could be argued that it all depends on what channel you watch and who your favourite market commentator is that may determine who your acquire your position on how you think the economy is going. (Not trying to be condescending here just trying to put it into some sort context).

I personally know of one very popular market observer who is on the tellie quite a bit and was exposed not too long ago for flogging a product in one of his shows that he had actually been paid to mention. I have no doubt that he sincerely liked the product he was paid to endorse because afterwards I checked it out it was quite good. Not applicable to me, but still quite a good product none the less. The product is offered by only a select group of financial institutions so his endorsement was more for who to go with rather than the flogging of the product itself.

Another example:
Last year on the ‘Sunday’ program, there was a story on Stock Brokers. They conducted a concise survey on the advice the shareholders had been given in the last 12 months. Out of 88 stokebrokeers (I think) quizzed, only 2% of them advised shareholders to sell their shares. It was all buy, buy, buy!!! (above figures are as correct as my memory can recall at the moment. Regardless, it was staggering to say the least). The Sunday’s spin on it was they felt it was more than a coimcidence that only 2% advised the clients to sell. It stunk of collusion.[V]

My point is, I believe as do many others, it is possible that certain media figures in the market observation business are approached by other key players to paint a certain angle or skew a finding on something within the RE market with a view to ensuring a certain outcome has been manipulated. Not all the time, but it mst certainly does happen.[!]

When you have a bit of basic knowledge in the areas that drive RE, you start to analyse a bit more, ask more questions and conduct your ‘due diligence’ in a totally new light therefore eliminating your concerns about timing. If you’ve done your homework, you’ll have a pretty good feel for timing. It won’t always be right but most times you’ll get it close.

Yack made a very good point. He believed house prices would go down 3 years ago, but have they? It didn’t mean Yack was wrong because when dealing with sectors that are encompassed by the economy, it’s easy to forget that it is actually people and their emotions that have the final say. All indicators may have pointed to house prices slumping which Yack may have been right in observing, but who new what impact GST was going to have on people’s emotions not to mention other market forces as well??

Yack
Just curious, why did you think house prices were going to go down in 2000? [] ( I didn’t have an opinion back then so I’m interested to know what your thoughs were)

Sorry for rambling on Dave. Hope I have helped in some little way.[]

Cheers
Devo

Dvane,
As i’m the recipient of Mels advice you quote,”bite the bullet”,i’d like to say that the positive geared property that i’m picking up fits into a scheme.
Mel knew where i was at last Friday i don’t think Mel meant “bite the bullet ” in general.
The figure’s worked,the town research is sound,it produces cash on a weekly basis and the house next door sold 50% higher.
There’s lots of opinions around from what i read at the moment regarding rural towns and begginer investors,if i’d listen to PeterP i’d not have invested as he seems to feel that rural investment could be a mistake at the moment for begginers,,this could also be good advise.
thanks to Mel and others for realising the counciling i needed at that time,one more time i don’t think Mel meant “bite the bullet” in general.

Scruffy,
all happy here[]

Actually your investment sounds fine, provided you’ve done due diligence and are satisfied that the place has a future : )

If you put down $20k on a $100k cf+ property, by the time you pay it off you’ve quintupled your wealth (assuming the property at least grows in line with inflation, which is not assured). Sure that result might be modest over 30 years, but I can think of far worse investments and you’ve got a good income from it. And if you can find several lots of $20k and put it into multiple properties then you could do very well indeed, especially if some show growth as well.

Westan, my point was based on sales stats I obtained for Geraldton in WA (an attractive coastal city with a stable/slightly growing population of 20-30 000).

Here’s a few examples:

* 210 Evans St $68k 9/6/93 – $66k 20/12/02
* 242 Second St $76k 19/9/94 – $60k 24/3/03
* 14 Bennett St $65k 4/7/97 – $60k 25/2/03
* 33 Clematis St $88k 27/6/90 – $77k 9/5/03

This is selective as more properties showed increases (though not dramatic) but it underlies the point that property can go down.

It could be that the above sales were urgent so the prices were lower than what could have been fetched had the vendor held firm. Or they were overpriced at an earlier sale.

But review of ads in a 1991 newspaper found in late 2003 show even many asking prices and rents were little different than in 2003.

Given inflation that means a decline in real terms has taken place, and that this has been fairly widespread.

I agree with Austin Donnelly – not all property can grow (or even keep up against inflation). But it’s fair to say that most would hold its real value, especially if you buy at a good price.

I should add that these stats did not stop me buying there in 2003 as my area research showed potential for growth. Some of this appears to be happening, with the market tightening over the last 6-12mths.

Regards, Peter

PS: if you think the above prices are likely to be cf+ think again – Geraldton is a low rent town

Westan – you are right. I dont really have much idea about rural properties. I rather invest closer to home so I can keep abreast of my investments. I also work full time and dont need travel pains. I also want properties close by so I can add value to them by doing periodic renovations amd make cosmetic improvements.

Maybe one day I will look at places like Ballarat, Warrnambool (we used to go their for our hoildays as kids), Bendigo.

There are no opportunities at the moment, so I am not going to waste my time.

Which means there are more opportunities for the Millionairre apprentices and newbies.