Chapter 1: What is the main focus of this episode on timing the market?
It's The Real Estate Podcast, brought to you by Ray White, the largest real estate and property group in Australasia. And welcome to another episode of The Real Estate Podcast, available on iHeartRadio, also on Spotify and Apple Podcasts, or wherever you get your podcast from. Well, the 1st of April has finally arrived, May next month and then June, and you know what happens then?
we are getting ever so closer to that cash rate rise. And I've started the day with my food poisoning from last night. So it's going to be a very quiet day for me. But the show must go on, as they say. And in just a moment, Rich Harvey is here from Property Buyer. But first, we better have a look at what's happening with the weather across Australia.
It's the main centre forecast with propertybuyer.com.au. And looking at Sydney, expecting a few showers today and also windy with a high of 20 degrees. Melbourne, partly cloudy, also 20 degrees. Brisbane, fine and sunny with 28. And in Perth, expecting a high of 28 degrees and partly cloudy. We feature market updates, interviews and trends. It's your real estate podcast for breakfast.
Well it's another Friday which means another episode from the podcast series Let's Talk Property and this morning we're looking at the phenomenon of FOMO which was a really big factor in the house price boom of 2021 and buyers who didn't enter the market may feel that they missed the boat but those who did pay a premium during the boom more than likely are still going to enjoy capital growth as prices keep going up.
Now the peak growth seems to have passed. Many would-be buyers are re-evaluating the situation, wondering how to get the timing right in the future. Is it possible to time your entry into the market, which is what we're going to look at, or is buying while the market is cooling a good or bad idea? Let's Talk Property, a podcast series with Rich Harvey.
To add his thoughts to the conversation, we are joined by Rich Harvey, CEO and founder of propertybuyer.com.au. Good morning, Rich. Another busy week, no doubt for you. Good morning, Craig. Always busy, mate. As a business owner, the clock never stops. This week has just evaporated on me something awful.
So starting with the first point, should people try and time their entry into the property market? I get asked this question again every day, is now a good time to buy? But if you're trying to weigh up future possibilities and balance a whole lot of external factors, you could actually end up getting the timing all wrong. So for me, buying a property, it's really pretty simple.
It's when is the time right for you? So if you're buying and selling as a home buyer in the same market, whether you're downsizing, being a tree change or a seed change or just relocating, I'd say do it when your circumstances allow, when you've got the money to buy. So what I'm saying is the planets don't need to be perfectly in alignment to be a perfect buyer's market.
If you're trying to forecast the top or the bottom of the market, what we do know, we do know when the top of the market has happened and we do know when the bottom of the market has happened in a past tense. you know, we can look back and go, you know, during the GFC, it was a particular month and during COVID it was this. But for me as a buyer, I'm actually buying now.
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Chapter 2: How has FOMO influenced the property market in recent years?
Yeah. And also, of course, with that, what have you seen happen when people delay their decision to buy for too long? I've seen firsthand what happens. The problem is that the market doesn't depend on your feelings. It depends on supply and demand. And while the market is influenced by sentiment and market forces, ultimately, it's just supply and demand, Craig, that determine prices.
I've seen people personally that have just sold their house before COVID-19. So back in February and January, they sold their house and they thought, oh, I've got plenty of time. The market's going to crash. The banks are saying it's going to drop 30%. I've got plenty of time. And unfortunately, they took way too long. And as I said, they've lost up to $1 to $1.5 million of equity.
And unfortunately, I've seen other people have to move out of Sydney for the very reason that they've delayed their decision too long. So I think you've just got to be careful and buy when your own personal circumstances allow and when you've got the financial capacity to do so. I've actually seen a couple of commentators say that in the next 10 years, they wouldn't expect a property to double.
I was thinking, oh yeah, okay. That's a big call, don't you think, those sorts of predictions? It is. It is a big call. But again, that's making a very generic statement. I mean, that's talking about property prices as a whole market. So again, every market is different. Some property prices will double in the next two years, but other places definitely won't double.
And that's why it pays to get incredibly good and specific advice on where to buy and what type of property buy in the right location. And what are some of the legitimate reasons you would give right now for buying? Well, a couple of reasons. And I'm not just saying this because I'm a buyer's agent, because I'm actually, as I said, buying myself now.
So number one, I'd say I've got really seven reasons to sum up, Craig. Number one is that prices are slowing, but they're not necessarily falling in all locations. So there's still growth left in the tank in some areas. So places like Brisbane, Gold Coast, Newcastle, they're still surging ahead. There's still very strong demand, good numbers at open homes and auctions.
Demand is very location specific. Now, property prices are slowing. We don't know how long, but as I said, don't rely on the bank economists. Often the opposite of that is what happened. Number two, rents are going through the roof. We're seeing rental prices rising very quickly. So if you're buying for an investment, you're going to enjoy a higher yield in a year's time.
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Chapter 3: Is it a good idea to time your entry into the property market?
So people are thinking, oh, well, I'll just wait to get at a cheaper price. But then when you do wait, you're going to have more competition buying when people are trying to pick the bottom of the market. So enjoy the ride right the way through. I'd say number three, ultra low vacancies, very, very tight rental markets, so a good opportunity to get investment. Number four, building costs, Greg.
Building costs are rising so rapidly. So the cost of trades and building materials has really skyrocketed. So that means that the cost of building or replacing your home is significantly higher. That means the physical asset on your land is increasing in value. So that's another reason that we're seeing prices being quite resilient.
Number five is, as I mentioned, skilled workers are coming in and students are coming in in greater numbers. And we expect migration to recover to around 235,000 people by about the year 2024-25. And number six, building approvals are slowing. And if building approvals are slowing, guess what happens? It means that we're going to have a property deficit.
And the state of the nation says that we're creating around 180,000 dwellings, sorry, households a year. And we're going to be short about 160,000 dwellings by the year 2032. I guess my final reason, as I've mentioned, if you've got borrowing capacity, then why wait?
If you're going to wait till next financial year, perhaps your income might drop or the banks might get tighter with their pre-approval. When you've got capacity to buy, I've got to say it's the most valuable thing you can have to use that. There's an opportunity cost will pass you by if you don't buy. And I'm not saying buy anything. Do your research. You know, be careful what you buy.
Make sure you know you're paying the fair price. But I'd rather be in the market and watching the action than be watching from the sidelines. That's what it's all about, being in the market. Some great advice there, Rich. You have yourself a fantastic Friday, a great weekend. Look forward to chatting next week. Thanks, Craig. Looking forward to the weekend. Thank you so much.
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