However, within the overall market cycle, each city and even down to the city block can be in its own cycle, which investors need to understand so they buy at the right time.
"Knowing where you are on a property cycle means following a strict process of understanding the macro and micro elements affecting your decision," writes Koch in an advice column for news.com.au.
For example, while the overall housing market is considered to be undergoing a moderate recovery, Kochie believes the Gold Coast is oversupplied with apartments - many of which have been on the market for a long time - meaning there are bargains to be snapped up by investors.
He suggests astute investors make themselves aware of such things as "local influences" such as new infrastructure in the works or the release of plans for new housing, "property condition" (the extent and cost of any future improvements), "city variances" (local economic and demographic factors) and the overall economic indicators like consumer confidence, interest rates and unemployment, which can all impact on demand for property.
Most importantly, Kochie says investors must understand the four property phases, which he labels as:
1. Opportunity Phase:
This he says is the best time to buy, at the beginning of cycle when the market has bottomed out (not always easy to pick)
2. Growth Phase:
This is the point when investors are most confident and prices start to rise.
3. Peak Phase:
When the best gains have been achieved, this is the point, says Kochie, when "inexperienced and timid investors pile in".
4. Correction Phase:
This he says is when buyers over extend themselves and banks start to tighten credit, making it harder to get a mortgage or refinance.
By Larry Schlesinger
Read More: http://www.propertyobserver.com.au
No comments:
Post a Comment