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It\u2019s a bold statement, but it\u2019s true.<\/strong><\/p>\n For some of you who are reading this right now, 2022 will absolutely be the worst possible time you could consider buying a property.<\/p>\n In fact for these people, moving forward with a real estate purchase this year would have the potential to cripple them financially, not just now but well into the future.<\/p>\n Sounds dramatic, right?<\/strong><\/p>\n And I\u2019ll give you 9 reasons why this could be the worst time to buy property in a moment\u2026 but here\u2019s the truth.<\/p>\n This statement rings true in 2022.<\/p>\n It was also true last year.<\/p>\n And the year before that.<\/p>\n And in 2015, 2010, 1985, 1972\u2026<\/p>\n The reality of real estate is that\u2026<\/p>\n Here\u2019s why\u2026<\/p>\n Property investment is a process, not just an event.<\/p>\n So rather than just talking about going out and buying a property in 2022, the right time for you to consider investing is when you have all your ducks in a row.<\/p>\n This means you have:<\/p>\n Of course, for some 2022 will be a great year to invest<\/strong>, but in a moment I\u2019ll explain why that will not be the case for others.<\/p>\n However, it\u2019s likely that you\u2019ve heard me talk about the drivers of property price growth over the years.\n<\/p>\n There are so many things that determine a property\u2019s price performance and growth trajectory, many of which are well outside of your control, and some which also have nothing to do with the property itself.<\/p>\n These include, but are not limited to:<\/p>\n Now, as a result of these factors \u2013 which are by no means an exhaustive list, but they give you a general indication of some of the major influences on property prices \u2013 our property markets move through cycles, from booms to <\/em>busts <\/em>and back again.<\/p>\n Moving forward, property\u00a0values should increase throughout 2022, but at a slower rate of growth than 2021.<\/p>\n One of the leading indicators I watch carefully is housing finance approvals, and these are still at very high levels suggesting that many Aussies are still looking at getting into property, meaning we will have continuing strong ongoing demand from owner-occupiers and investors as the year moves on.<\/p>\n Over the last year, the apartment market hasn\u2019t grown as strongly as the housing market, but now with the differential in price between units and houses at the highest level on record, and houses becoming more unaffordable for many, I can see strong capital growth in family-friendly apartments in great neighbourhoods.<\/p>\n Even apartments in the CBD towers and accommodation around universities should pick up as immigrants and students return, however, these never really made good investments and I would steer clear of them.<\/p>\n And rents should also keep increasing as there is a desperate shortage of good rental accommodation.<\/p>\n And currently, it looks like we\u2019ll have a combination of multiple growth drivers<\/strong> to give investors an opportunity to take advantage of the current strong phase of the property cycle.<\/a><\/p>\n Here are some of the indicators suggesting that 2022 will be another great year for property investors: \u2013<\/p>\n Please let me explain with an example\u2026<\/p>\n Between 2016 and 2018, Sydney and Melbourne property values soared allowing those who owned properties in our two big capital cities to amass small fortunes along the way.<\/p>\n But it\u2019s important to know that just because \u201cSydney boomed\u201d, that doesn\u2019t mean that ALL of Sydney\u2019s housing boomed.<\/p>\n It means that overall, the majority of properties across the city experienced an increase in value.<\/p>\n However, there are always some areas, pockets, streets, and individual houses that perform better<\/em> or worse<\/em> than the average.<\/p>\n For example, the value of the apartments in many of the high-rise, Legoland towers around Sydney languished as concerns about structural integrity, following the Opal Towers debacle tarred all new apartments with the same brush.<\/p>\n Of course, the concerns raised by Covid19 only added to this.<\/p>\n Let me give you a different example.<\/strong><\/p>\n Let\u2019s say a couple owned a property in a sought-after Sydney suburb in 2017.<\/p>\n They had purchased in 12 months earlier for $1.55m.<\/p>\n It\u2019s a messy and contentious divorce, and both parties want to sell the home as quickly as possible so they can move on.<\/p>\n They also don\u2019t want any looky-loo neighbours snooping through their home every weekend, and they don\u2019t have the energy or appetite for a big, public marketing campaign.<\/p>\n So, they engage real estate to sell the home privately\/off-market.<\/p>\n It reaches fewer potential buyers and drives less competition, but they secure a buyer within a week.<\/p>\n They sell the property for $1.6m in a hasty settlement and move on.<\/p>\n Had they taken the property to the open market \u2013 say, an auction \u2013 and a number of would-be buyers fell in love with the property, they could have sold for more money.<\/p>\n But their circumstances dictated a swift sale, so they accepted the price they got and moved on.<\/p>\n It could be the case that one street over, a couple owns very similar property.<\/p>\n They list their home for auction, pay for an expensive but very high-profile marketing campaign, and achieve a final sale price of $1.825m.<\/p>\n Two similar homes, two very different outcomes.<\/p>\n Neither is \u201cright\u201d or \u201cwrong\u201d, and this is the infuriating truth of real estate: there are no \u201cdefinites.\u201d<\/p>\n Just a series of educated guesses and informed choices, which \u2013 with the right expert guidance \u2013 can lead you towards making profitable decisions for your future.<\/p>\n When it comes to deciding the right time to buy or sell, at the end of the day, it\u2019s our own personal situation as much as external factors<\/em> that influence the best course of action we should take.<\/p>\n The fact is, any time could be the worst time for you personally to buy a property\u2026 or it could be the best time to buy.<\/strong><\/p>\n It truly depends on your own goals, budget, timeline, risk profile, and circumstances as to whether 2021 is a good time to buy.<\/p>\n If you\u2019ve just lost your job or your income is insecure in the current economic climate, then yes, this could be a risky time to commit to a mortgage; in fact, you\u2019d struggle to get a loan.<\/p>\n However, if you\u2019re financially stable and have a deposit ready to go, then some might argue that with 2% mortgage rates and prospects of strong house price growth, 2021 could be the property buying opportunity of a lifetime.<\/p>\n That\u2019s a common question people are asking now that our real estate markets are up and running again.<\/p>\n In my mind, we\u2019re in for a 2-tier property market moving forward.<\/p>\n While most property markets around Australia have performed strongly so far this cycle (other than the inner city of high-rise apartment market), moving forward the rate of property price growth will slow and there are several reasons for this including:<\/p>\n This will lead to a two-tier property market \u2013 in other words, not all locations will continue growing strongly moving forward.<\/p>\n I can see properties located in the inner and middle-ring suburbs, particularly in gentrifying locations, significantly outperforming cheaper properties in the outer suburbs.<\/p>\n While the outer suburban and more affordable end of the markets have performed strongly so far, affordability is now becoming an issue as the locals have had minimum little wages growth of the time when property prices have boomed.<\/p>\n In these locations, the residents don\u2019t have more money in their pay packet to pay the higher prices the properties are now achieving.<\/p>\n More than that, Covid19 has adversely affected low-income earners to a greater extent than middle and high-income earners who are likely to recover their income back to pre-pandemic levels more quickly, while many have not been hit at all.<\/p>\n And as we start to emerge from our Covid Cocoons there will be a flight to quality properties and an increased emphasis on liveability.<\/p>\n As their priorities change, some buyers will be willing to pay a little more for properties with \u201cpandemic appeal\u201d and a little more space and security, but it won\u2019t be just the property itself that will need to meet these newly evolved needs \u2013 a \u201cliveable\u201d location will play a big part too.<\/p>\n Those who can afford it will pay a premium for the ability to work, live and play within a 20-minute drive, bike ride or walk from home.<\/p>\n They will look for things such as shopping, business services, education, community facilities, recreational and sporting resources, and some jobs all within 20 minutes reach.<\/p>\n So back to my initial thoughts that for some people this will be the worst time to buy property.<\/p>\n ALSO READ: <\/strong><\/span>2022 predictions and planning: Part 1<\/a><\/p>\n![\"Business](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2019\/09\/business-risk-problem-300x231.jpg\")
<\/p>\nThere is no \u201cbest\u201d time or \u201cworst\u201d time to buy property<\/span><\/h2>\n
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![\"propertycycle\"](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2014\/07\/propertycycle-300x300.jpg\")
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So why could this be the worst time to invest for some people?<\/span><\/h2>\n
![\"Home](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2020\/06\/home-property-300x167.jpg\")
It\u2019s right in the middle of a booming property market and sadly, the couple split up.<\/p>\n![\"Auction\"](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2020\/01\/Auction-300x200.jpg\")
They are planning to move in with their parents for six months while they build their next property, so they have no deadline or timeline pressures and they\u2019re happy to wait for the right buyer to come along.<\/p>\nWhat\u2019s ahead for our property markets for 2022?<\/span><\/h2>\n
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NOW READ:<\/strong><\/span> The worst properties to buy in an uncertain market<\/a>\u00a0<\/p>\n
\nWhy 2022 could be the worst time for you to buy an investment property<\/span><\/h2>\n
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Don\u2019t be lured into buying secondary properties that offer high depreciation allowances for excessive negative gearing.
These new properties tend to come at a premium price, and rarely deliver capital growth for many years.
In my mind negative gearing is not an investment strategy \u2013 it\u2019s for short-term funding strategy which only makes sense when used to purchase high-growth investment great properties.
These tend to be established houses, townhouses, or apartments in desirable streets in top locations in the middle ring suburbs of our three big capital cities.<\/li>\n![\"House](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2019\/07\/increase-the-rent-300x200.jpg\")
<\/strong>
Sure our property markets are moving surged last year, and of course, it\u2019s human to become emotional when considering buying a home or an investment property.
But investing emotionally leads to bad investment decisions \u2013 it\u2019s exactly this type of emotion that makes investors fall prey to property marketers and spruikers who will offer you a way to get rich quickly.
2022 will be a year of a flight to quality as there are more properties on the market \u2013 so don\u2019t take shortcuts.<\/li>\n
<\/strong>Property investing is a long-term endeavor, it is a process, not an event.
The property you eventually purchase will be the result of many decisions that you need to make prior to even starting to search for a property.
I\u2019ve found it takes the average property investor 30 years to become financially free.<\/span><\/span><\/span><\/span><\/li>\n
<\/strong>Many people mistakenly believe they understand property investment because they own a house or have lived in one.
<\/span>So they end up buying a property close to where they want to live, where they want to retire or where they holiday.
<\/span>Again, these are emotional reasons to purchase a property rather than selecting based on sound investment fundamentals.
<\/span>On the other hand, successful investors have formulated a sound investment strategy that suits their risk profile and helps them achieve their long-term goals and one which has stood the test of time.<\/span><\/span><\/span><\/span><\/li>\n
<\/strong>I found many investors are looking to invest in property to help increase their cash flow, but if they do not have the financial discipline and cash flow management skills required, taking on the extra debt of an investment property only compounds their problems.<\/li>\n
If you are buying a property with the aim of creating wealth, but it also has to be your future home or a part-time holiday home, or somewhere to retire in the future; then you\u2019re probably wanting too much for that one little property to achieve.<\/li>\n![\"money](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2016\/11\/37177045_l-300x203.jpg\"\/)
Property investment is a game of finance with some real estate thrown in the middle.
To get into the property you should have a stable job, profession, or business with a steady income and need to be attractive to the banks so they lend you money, plus you should have sufficient stashed away in a financial buffer to see you through the inevitable rainy days ahead.<\/li>\n
If you can\u2019t afford an investment-grade property, either because you haven\u2019t saved a sufficient deposit or you can\u2019t service the loan repayments, then rather than buying a secondary property, in my mind it\u2019s better that you wait and buy an investment-grade property.<\/li>\n
Sure property markets move in cycles and it would be great to buy near the bottom or find a location that will be the next hotspot, but the landscape is littered with investors who tried to time the market and failed.
Instead, the right time to buy real estate is when your finances are in order and you\u2019ve got the ability to purchase an investment-grade property.
Remember there is no one property market in Australia so there will always be opportunities somewhere.<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n