When buying and investing in real estate, the best results often come from taking a long-view perspective. We recently spoke with Peter Icklow, CEO of Monarch Investments Group on the topic. With a career in property development spanning over 50 years, Peter shared what he has learnt and his advice to people entering the property market.
Market cycles don’t change
Looking at real estate trends over the past decades can give a great indication on the strength and return that the property market can give. Short-term property dips are often caused by specific factors, and the overall growth of the market remains strong decade-on-decade. Property generally follows a 7-10 year cycle, and the graph continues to point upwards overall. You will only lose money if you sell at the bottom of the cycle.
The property market is very active
Whilst the global pandemic has seen factors such as a temporary reduction in immigration with border closures and travel bans (both locally and abroad), this has been balanced out by a higher than average influx of Australian ex-pats returning home earlier than planned.
Investing money locally
With no scope for international travel this year, people have found a renewed focus on home — both in terms of upgrading or renovating their primary residence, and in terms of investment properties and securing places to visit within driving distance of the major cities.
Low interest rates
This year has seen historically low official interest rates in Australia, giving access to some great deals for property. This factor combined with continuing incentives in the first home market mean that high growth in the sector will continue.
Pent up demand
The market was very cautious as the initial impact of the pandemic was felt, and a number of property owners held back as they waited to see how the market would respond. This has meant that there is pent up demand as people have begun putting their homes on the market (often as off-market properties) and buyer demand increases from a temporary pause to volume of properties.
The right time to buy a house
A frequent question asked by people is when is the right time to purchase. Peter notes ”When should we buy a house? They all wait for the prices to drop. I never see someone successful in waiting for prices to drop. The best time is now.”
The approach is that if you wait another few years to see a favourable fluctuation in the market, you may save $20,000 on the transaction, but pay an additional $50,000 in rent that could be going towards your mortgage repayments. The savings in waiting often don’t work out as we expect they might.
The key factor here is whether or not the property is your ‘forever’ home, or an investment. Investment properties certainly have a strict set of criteria in order to match your desired yield and outcome. Beyond that however, minor fluctuations in the market make no material difference if you are buying for the long-term.
Finding the exact right property for you takes a lot of work and diligent research. Waiting for a minor shift in the market is often fruitless on face value anyway, but an opportunity missed cannot be changed.
“It is not easy to find a house that ticks all the boxes. If a house comes along that does tick all those boxes, move quickly because it won’t come up again quickly.”
Peter’s ultimate advice is that life is to be lived, and opportunities need to be seized when they are in front of you. Good property does not fall. Don’t be afraid of good debt. Good debt is investing in good property.
- Right aspect
- Rear-facing north back garden sun
- High side of the road
When you walk into the right property, you just know. A house always has a feeling right away.
Peter says of his love of property: “There is always something going on — it’s never boring in property.”