Justin Wang, founder, and CEO of The Property Investors Alliance (PIA) mentioned in a recent seminar: “it’s been a tough 18 months for investors. Not only have they faced increasing challenges with restrictions on lending, LVR’s lowered and stamp duty increases – but they face a constant barrage of media negativity around the NSW growth engine – Property – undermining confidence. To see such a large turnout today signifies 2 things to me: Savvy investors understand market cycles and confidence is being restored.”
Savvy investors understand that property is a mid-long term investment and how to leverage property and market cycles to their advantage. Those new to investment on Saturday night were there to learn how to become a savvy investor. So what did they learn?
NOW is the time to buy.
1. Buying now means entering the market, not just timing the market
Predicting the timing, absolute depth, and duration, of any market cycle is near impossible…unless you have a crystal ball. We all want to buy low and sit back and count our equity. However, regardless of when you buy in the cycle, you’ve achieved the first key goal – at minimum you’ve entered the market.
At PIA, they share their investment philosophy with their clients ‘Buy as early as possible, as many as possible, and hold onto your property for as long as possible’ – because the Sydney residential market only trends up over time.
Property prices are 18% higher than 5 years ago. If you bought 5 years ago, you’re in a stronger equity position today. Buying now will see you in a stronger position over the next 5 years than if you wait to try and ‘time the market’.
2. Prices have adjusted
Whilst we haven’t seen anywhere near the scaremongering 40% drop from media predictions, we have seen housing values adjusted. But let’s put it into perspective – from the peak of the market in October 2017 to February 2019, we’ve seen a decline of just -6.8%
Some areas have adjusted further than others, and there’s possibly some further adjustment to come, but don’t forget, this is Sydney. The market fundamentals here are strong and there is a strong history of growth.
Savvy investors are taking advantage of the price adjustments and are picking up some great value-for-money properties in NSW growth corridors with strong amenity and infrastructure investment as a result.
3. The perfect storm… a coup for buyers
APRA policies and the Banking Royal Commission have seen an overall tightening in lending and LVR’s….fewer buyers in the market and negative media coverage affected sentiment…stronger supply in certain areas….overall housing prices adjust…have all served to impact buyer behaviour over the past 18 months.
However, fewer buyers, but with a strong equity position, and lower purchase prices means less competition, less reliance on bank finance (and LVR’s) and a stronger buying position.
4. Sydney is ALWAYS in demand
Continually topping the most desirable places to live, Sydney has proven itself, year after year, that it has long term sustainable benefits that support property investment and the economy – Infrastructure and Government investment, amenity, employment, world-class attractions, and immigration, and so on.
But most compelling is its history of delivering, with property values doubling every 7-10 years.
5. The proof is in the pudding
If we look at some key suburb areas that PIA has historically sold across, you can see that in just 4 years median sales prices have all increased:
Mascot +68%
Botany +76%
Parramatta +107% (doubled)
Baulkham Hills +69%
Epping +60%
Lane Cove +85%
Granville +51%
The time period above, 2014-2018, was prior to market peak and aftermarket decline, demonstrating that Sydney property continues to trend upwards over time. You can’t argue with that!
*Please note information from this article was sourced from The Property Investors Alliance