Waiting for the Sydney Property Bubble to Burst?

Why not taking action could cost you Thousands!
The media often talks about Sydney property as though it’s a bubble – and one that could burst any day soon. It’s a powerful image, the bubble, and one that instills great fear in many would be real estate buyers who have watched property prices rise to record levels over the past few years. But it’s not necessarily an accurate one.
So, if you’re cooling your heels and holding back from buying your next home or investing in Sydney property, you could be costing yourself thousands of dollars. Here’s why.
1. No one knows what will happen next to Sydney property prices
Plenty of educated people have been predicting a fall in Sydney house prices for some time. If you had heeded their advice at the start of 2016 and held off buying in the hope of correction, you would have missed out on an average 13.1% growth across the 12 months according to CoreLogic’s figures. In other words, the property that would have cost you two million at the start of 2016 would have cost $2.262m by the end of the year. That’s the equivalent of more than $5,000 a week.
The reality is that no one can predict exactly when real estate prices will rise and fall or by how much. However, the long-term trend is very much in favour of property prices continuing to rise.
So, if you’re waiting for property prices to fall before taking the plunge, you may be waiting some time… potentially even forever.
2. A property bubble tomorrow? It’s the long-term that matters
Whether you’re buying a home or buying property as an investment, it isn’t what happens in the next weeks, months or even years that matters. It’s what happens in the mid-to-long term.
After all, if you’re buying a place to live in, chances are you won’t want to up and leave anytime soon. If you’re buying property as an investment, looking at spending some time in the market, will give you the chance to capitalise on at least one property cycle. These cycles usually last five-to-seven years.
It’s important to think in cycles because property prices don’t rise and fall uniformly. While the long-term trend for Sydney property is that it tends to go up, it usually does this in short bursts. For instance, if you look at the past decade, Sydney property prices were dipped in 2008-2009, rose sharply in 2010, were stagnant again and the rose sharply (but not uniformly) between 2014 and 2017.
As we said, no one can accurately predict what will happen to the property market. But if you’re in it for the long-haul you should ride out any short-term price dips. Even if you had bought just as the market dipped in 2008, you would still be well and truly ahead now.
In other words, the long-term risk in buying quality Sydney property is low. The great risk is not being in the market at all.

3. Sydney property remains a solid investment

Like all investments, property prices are set by the simple principles of supply and demand: so long as there is high demand and limited supply, property values stay high.
In Sydney, recent demand has been fuelled by a growing population, relatively strong economy and record low interest rates. Meanwhile, while there has been a lot of development recently – especially when it comes to high density apartments – the number of desirable properties on the market in good locations stays constrained. Add to that new transport links being added and the fundamentals look good.
On top of this, the government provides a number of tax incentives – such as a capital gains tax discount and the ability to offset interest repayments on negatively geared properties against income tax. These continue to make property an attractive asset for investors when compared to other options.
And, while there is talk of some of these incentives being scrapped in the future – especially if there is a change of government at the federal level – it’s likely any changes will apply to investors who buy after the change to the law, not before it.
If it’s an investment property you’re after, staying out of the market could mean you miss out on the tax relief other investors enjoy.
What goes up doesn’t always have to come down….
Finally, it’s always worth remembering that what goes up doesn’t necessarily have to come down – especially not over the long term. There are concrete financial reasons to get in as soon as possible.
So, while saving a deposit and doing your research is important. But it can also pay to act before you feel completely ready, even if that just means starting a conversation with a buyer’s agent at TBAS®.
Call us on 02 9363 3239 for an obligation-free consultation or EMAIL US
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PO Box 49 Double Bay NSW 1360
P: +61 2 9363 3239 M: 0418 474 304

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