Everyone would like to “buy at the bottom and sell at the top” but it’s very seldom that property buyers and sellers can time the market this way.
“First-time buyers always want to know whether they should wait for prices or interest rates to come down more before they commit to a home purchase,” says Realty 1 International Property Group chief executive, Hano Jacobs.
“On the other hand, those who are already home owners and planning to sell are always tempted to wait until they can get a higher price for their property. The truth is, however, that you simply can’t time a property decision like a share buying or selling decision on the stock market.”
For new entrants, he says, the best advice is to get into the market as soon as possible, and leave room in your financial planning for interest rate fluctuations.
Despite the occasional short-term dip, the trend of home prices is ever upwards, so the longer you take to buy, the higher the chance that you will have to pay more for the same house. And that means in all likelihood that you will need a bigger home loan, for which it will be more difficult to qualify, no matter what the prevailing interest rate is at the time. Rather than gambling on which way the market is going to move, you should make it your primary concern to avoid taking out a bond that you can’t sustain.
As for existing home owners, says Jacobs: “If you want to sell for more you will most likely also then have to buy for more, since prices tend to fluctuate similarly across the board. In other words, even if you are moving to a smaller home or a cheaper area, you will probably be paying more per square metre.”
Of course, plenty of people have made money from property (in bad and good times), by making judicious investments that are well-geared with relatively small up-front deposits and then having the patience to wait for values to increase.
“But property should always be viewed as a medium to long-term investment, which means that the sooner you start, the sooner you can expect returns – whatever short-term cycles the market goes through.”
