Articles

The Sydney median property price has risen by 14.87% in the 12 months to March 2014 (source RP Data)

This equates to $2159 per week! (Based on a median priced property of $755, 000)

This sounds quite unbelievable when you break it down, but if you talk to people who have been looking to buy, or you ask a Real Estate Buyer’s Agent, they will be able to give you specific examples of properties selling for even more than the above percentage, than what they were selling for 12 months ago.

• Is this price growth sustainable?
• Is this price growth normal?
• Is there a ‘property bubble’ forming?
• Should I wait to see if prices drop first, before I decide to purchase?

These are questions most property buyers are asking me daily, so I thought it best to respond in an article.

Firstly, no, the chances of this type of growth occurring ongoing, year on year forever, is highly unlikely. Price growth will eventually slow down to a more moderate level, (or level off for a period of time) before the next growth stage. When that will happen is anyone’s guess. At the time of writing, there seems to be no sign of slowing down. Auction clearance rates are consistently still around the 80% mark or higher, there are more new buyers entering the market each week, and the supply issue, (especially in the most sought after areas of the City and Eastern Suburbs) is definitely not getting addressed.

Yes, this price growth is perfectly normal, that’s what property does. It’s a growth asset, it goes through regular cycles. On a regular basis, it goes through the ‘growth’ phase of that cycle.

Regarding a ‘property bubble’, some of the smartest people in the country, including the Governor of the Reserve Bank of Australia (who is generally very conservative) have stated on several occasions recently, that there is no current property bubble.

Waiting to buy, with property, most often proves to be a very expensive mistake.

There is an old saying in Real Estate.

Question: “When is the best time to buy Property?”
Answer: “Ten Years Ago”

Question: “Ok, ok, that’s impossible, so when is the second best time to buy Property?”
Answer: “Now”!

Of course the reason for your purchase is very important.

If you are purely investing, then studying which part each cycle is at, of each Capital City property market, is essential. You need to have your portfolio of properties growing, if you want to leverage off increased equity to purchase more investments. There may be other markets or Cities in Australia at the earlier part of the growth cycle, and offering far better yields. Your Property Investment Advisor will be able to give you more information here.

If you are buying as an Owner Occupier, then it is rarely a good idea to wait, especially if you are buying for the medium to long term, which you generally need to do with any property purchase.

Use a Property Professional such as a Licenced Real Estate Buyer’s Agent to make sure you buy the right property and you buy well. In the most popular suburbs of Sydney, over 40% of sales are now going through Buyers Agents. Not having a Buyer’s Agent puts you at a distinct disadvantage.
Trying to D.I.Y with such an expensive asset, especially if you have limited time, specific property knowledge, or recent buying experience, will increase your risk considerably.

Sit down with a Licenced Buyer’s Agent, one that has a proven record in this current market, tell them exactly what you want, and let them do what they do for a living.

You will get a better property, you will get into this rising market much quicker, and you will generally pay less.