Jun 02, 2022

Our insights

Australia is emerging from what has been a truly phenomenal property bubble.

A combination of high demand fuelled by low interest rates saw Australian property soar by 22 percent in 2021.

But the boom inevitably had to run out of steam sooner or later and a creep up in those interest rates has seen the brakes applied.

Industry research firm IBISWorld is now predicting a correction of up to 5.2 percent nationally in 2022-23 and a further 7.2 percent in 2023-24.

So is now a good time to sell? Should buyers wait for that market correction? 

Playing the long game

Australian property, especially in Adelaide, is one of the safest investments you can make. But the key, as with so many other assets, is playing the long game.

Ideally, investors need to be planning for a minimum 15 years in the property market.

That way, booms, busts and bubbles are basically just buzzwords as you ride out the corrections and come out on top.

The stress of trying to buy at the bottom of a cycle and sell at the top is avoided over a period of at least 15 years because extensive research shows all the fluctuations and characteristics the property market is known for will have presented over that time frame.

Don’t miss the boat

How often have you muttered, “If only I knew then what I know now”?

The point is, you do know now!

Prices will keep rising over the next 15-year cycle and here’s the evidence.

In January, 2022, Adelaide’s average house price reached $565,000, a rise of a whopping 15.3 percent in 2021.

If we go back in time to 2007, the average Adelaide house price was just $337,000.

That’s a 67.6 percent premium on your investment over 15 years or an average of 4.5 percent annually.

Much of that has been at a time when you’d struggle to get more than 0.25 percent from a bank.

Let’s go back another 15 years to 1992.

The average house price in Adelaide was just $108,000.

Imagine you wanted to buy in 1992 but found the price tag just a little out of reach.

Maybe you didn’t want to scrimp, save and compromise your lifestyle that little bit to make it happen.

Would you have found a way if you’d known you’d make a 312 percent return on your money over 15 years? Where else were you going to make 20.8 percent per annum on your investment?

The point is, people waiting for the right time to buy nearly always miss out on significant capital growth every week they delay.

It’s also important to remember that despite media predictions of doom and gloom, property prices rarely fall and never plummet.

They may incur minor reversals which are soon eroded by more growth in the market.

If you are looking to buy and witness a plateau in prices like we are seeing now, that is about the best you can hope for in terms of opportunity.

The time is now!

Tips when buying

One of the best ways to avoid a really hot market is to seek out a good buyer’s agent. You don’t want to get caught at an auction where a street load of people turns up, all bidding on YOUR dream home.

Instead, a good buyer’s agent will find you properties BEFORE they hit the market.

The trick is then to incentivise the vendor to sell to you.

Find out what they need. It might be a fast settlement. It might be a delayed settlement.

They might be tempted by an early release of deposit to help them facilitate their next purchase.

If you have to sell

There’s no doubt the glut on prices has run out of steam with a mere 0.7 percent rise in the March, 2022 quarter.

But there are some ways you can extract every last penny out of your sale.

-       Employ an experienced real estate agent, especially if you are going to auction. There’s lots of money being spent at the moment and you need the best people working with you to maximise your return.

-       Besides a standard auction, consider a “best and final offer” strategy will invite interested parties to submit their best one-time price with no room for negotiation. It’s like a silent auction. This can help flush out extra dollars from people who are determined not to miss out.

-       Presenting your property in its best light is still vital to maximise your return, even when demand is high. There is still lots of competition around so it’s worth spending those extra dollars to make sure your property looks its absolute best.

Get advice today

Whether you are considering buying or selling property, or making any other significant financial investment, it’s always important to be armed with quality advice.

Calder Wealth Management are financial experts who can help you make the best financial decisions for your long term interests.

And getting the best finance strategy and deal is more crucial than ever. Talk to our team at Calder Finance Broking about your property goals.

Contact us today to discuss all of your financial needs and concerns.

Written by Hayley Walsh from Calder Finance Broking, for more information please visit the Calder Finance website. Please note that Calder Finance Broking Pty Ltd is a Corporate Credit Representative of BLSSA Pty Ltd ABN 69 117 651 760 ACL 391237.