Growing up, my friends and family have always said, it’s best to buy a house after the housing bubble has burst. That’s because you can buy for a cheaper price. I disagree with this belief.
Though it’s important to be informed about the economy, 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. It hasn’t.
My friend spent years waiting for the Sydney property market to dip before buying a house. She did purchase the property for below the current market value. However, the price she paid was still 30% more expensive than if she had bought the same or similar property six years earlier, when she first had the deposit.
Become a property investor, not just a landlord
If you have the deposit, a stable income and a lot of savings, then you are ready to buy – regardless of the market conditions. There are investment opportunities to be made in both strong and poor market conditions. Successful property investors understand this.
Property prices increase over the long-term
Remember, many people have become millionaires from buying properties when the market is at its peak. The secret is to keep your property for the long-term. History has shown repeatedly that property values increase significantly over the long-term.
However, many people like to wait for the right moment before buying a property. It’s easier to wait and do nothing. There’s a subconscious fear of parting with a large sum of money (the deposit), so excuses, such as ‘faults’ with the current property market, are made to delay the buying process.
These buyers believe if they wait for the market to crash, the sale prices will be cheaper. This can be true. But, simultaneously, you’ll have more competition, especially in areas with a growing population. Or worst, they’ll be more auctions instead of private house sales.
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 housing bubble
Unfortunately, my husband and I bought all four of our investment properties when the market was booming and overly competitive. This was not on purpose.
We didn’t focus too much on whether the market was dipping or booming. We simply enough cash, equity and confidence, so, for us, it was the right time to buy. This has paid off as we now have a system whereby we release equity from one property to buy the next one, every three to four years.
People focus too much on when the housing bubble will burst. As long as you keep your property for the long-term, the value should increase even if there has been one or two property market crashes and recessions.
So, do you think people are too worried about the housing bubble?
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