Property investment tip 26: Should you wait for the property bubble to burst before buying a house?

Growing up, I was told by most of my friends and family that it’s best to wait for the property market or property bubble to burst before buying a property. This way, you get the best property prices.

Admittedly, I disagree with this belief.

Though it’s important to be informed about the economy and the current housing market, unless you’re a fortune teller, I think speculating about when the property market will crash is wishful thinking. And you could be waiting for a very long time.

My parents have been waiting for the Australian property market to crash since the mid-1990’s. It hasn’t.

My best friends waited four years for the Sydney property market to dip. Yes, they did manage to buy a house for a below market price. But it was still 30% more expensive than if they had bought six years earlier – this was when we first told them to buy.

Become a property investor, not just a landlord

If you have your deposit ready, a stable income and a lot of savings, then there is little reason why you shouldn’t take that leap of faith and buy your desired property – regardless of the market conditions.

As a property investor, you should learn to adapt your investment strategy to various market conditions. Poor market conditions should not stop you from achieving your goals.

Property prices increase over the long-term

Remember, many people have become millionaires from buying properties when the market is booming. The secret is to keep your property for the long-term, ideally close to when you retire.

As history has shown over and over again, property values increase significantly over the long-term. And you have a greater advantage if you invest while you are younger because your capital has more time to grow. And you have more time to learn from your mistakes.

But many people like to wait; it’s just too easy. There’s a subconscious fear of parting with a large sum of money (your deposit), so excuses, such as ‘faults’ with the property market, are made to delay the buying process.

Many buyers also think if they wait for the market to crash, they will get a cheaper house price. This can be true, but at the same time, you’ll have more competition especially in larger cities where the population is growing. Or worst, they’ll be more auctions.

Personally, I prefer to invest when there is less competition because you, as the buyer, are in a stronger bargaining position.

Stop thinking too much about the property bubble

Unfortunately, my husband and I bought all four of our investment properties when the market was booming. This was not on purpose.

Honestly, we didn’t really pay attention to whether the market was dipping or booming. We simply had enough cash, equity and confidence at the time, so knew it was the right moment to buy.

Taking the leap of faith has enabled us to create a system whereby we can now use the equity growth from one property to continuously buy the next property every three to four years. I’ve discussed our strategy in a previous post.

People focus too much on when the property bubble will burst, when they should really focus on how to generate more rental income and capital growth, so they can retire earlier.

As long as you keep your property for the long-term, the value of it should increase even if it has gone through one, two or three property market crashes and recessions.

So, what are your thoughts on the property bubble?

Please note, though I own a few properties, I am not a legal, financial or professional property expert. I’ve written this post to share my personal experiences and would love to hear your opinions and views.

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