May 25, 2015
Is it time to buy Real Estate?
Hindsight is a wonderful thing, but it isn’t much help when trying to anticipate the best time to buy Real Estate. That said, by analyzing past data it is possible to expose telling trends and cycles. And right now, the trend is your friend.
Lets take a closer look into three particularly interesting and current trends:
- Trend 1: When interest rate goes down, house price goes up
- Trend 2: Sydney Median House Price rises at 7% per annum
- Trend 3: Brisbane Median House follows closely behind Sydney Median House Price
Trend 1 : When interest rate goes down house price goes up.
We have a Reserve Bank Governor in the midst of a juggling act. Stating that his aim is to lower the Australian Dollar to support the economy without overheating the housing market, he has also stated that the economy will need the support of low interest rates until at least 2017.
Interest Rate has trended down and by The Reserve Bank Governor’s own statement rates will stay low for quite some time to come. Taking Sydney as the example, as interest rates fall, Median House Price trends up, like synchronized swimming in reverse.
SEE FIGURE 1
So is this a mistake? No. The Reserve Bank WANTS housing activity to trend up – creating activity in construction, renovations and even retail – carpets, TV’s , dishwashers and accordingly, the employment that this creates.
The trend is deliberate and the trend is working.
Trend 2 : Sydney Median House Price rises at 7% per annum
Has Sydney house price gone too far? Opinions don’t matter – only numbers matter. And numbers show that by even the most conservative trend – Sydney Median House Price has been rising at 7% over the last 30 years.
SEE FIGURE 2
Look back to 2002 when Sydney Median House Price “overshot” the trend. FOR EVERY YEAR THAT HOUSE PRICE OVERSHOOTS TREND, there is a year down the track that it must pause for.
Fact - in Sep 2014 Sydney Median House Price overshot the trend. In my opinion this means that Sydney Median House Price will now take a pause sometime in the near future.
Buy in Sydney if you are going to hold long term until the next cycle – but don’t buy in Sydney to make a quick gain – as the saying goes – “that boat has already sailed”.
Right now - 30% of our Sydney clients are buying OUTSIDE of Sydney and half of those are buying in Brisbane. (because it is more affordable)
Trend 3: Brisbane Median House Price follows but lags Sydney Median House Price
Certainly one of the most topical trends of the moment is the confident up-rise of Brisbane Median House Price.
Sydney clients buying in Brisbane at the moment are doing so confidently, and either at or above asking price. They’ve seen this trend before…
Brisbane clients however, are experiencing frustration at not having their lower than asking price offers accepted and consequently are taking several attempts before being successful.
The market where you can offer low and wait to hear back from the agent to negotiate has GONE.
SEE FIGURE 3
Look back at 2002 when this has happened before. Sydney house price rose and eventually stalled, Brisbane then caught up because it was more affordable
It is happening again right now - the numbers speak for themselves.
And the message to take away?
Buy now in Brisbane and capitalize on an upswing… The trend is your friend.
Alan Heath. Call or email me anytime... 0411 601 459