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  • Writer's pictureGM Homes

The perils of trying to time the property cycle: a guide for mere mortals.

Key takeaways


Numerous forecasts concerning real estate markets and property prices are merely guesses or possibly false information. Investors should avoid trying to time the market and instead maintain a long-term outlook for their property investment. Since property investment is a process rather than a one-time event, there is no ideal or worst time to purchase property. Attempting to time the market may result in missed opportunities, and waiting for the perfect moment to invest may result in a more competitive market and potentially higher prices. Planning is critical in property investment, and a well-executed plan may help investors attain their financial objectives and optimise their wealth creation through property. A Strategic Property Plan should comprise several components, such as an asset accumulation strategy, a capital growth strategy, a rental growth strategy, an asset protection and tax minimisation strategy, a finance strategy, and a living-off-your-property-portfolio strategy.


There are several so-called experts on social media who confidently forecast the direction of our real estate markets and property prices for the balance of 2023 and beyond. However, if these individuals knew how to predict our markets, they would most likely be living a luxurious lifestyle, reaping the rewards of their market insights. The majority of forecasts are educated guesses at best and misleading at worst. Bank economists, financial institutions, and research houses have also made incorrect predictions over the last few years, such as the interest rate cliff or the unemployment cliff, which never materialised. During the onset of the COVID-19 pandemic, some predicted a significant market downturn that did not occur. Many also predicted price declines of 20 to 30% due to rising interest rates, which did not come to fruition. While we have experienced a year of falling property prices, anyone who purchased a well-located property two or three years ago is likely sitting on substantial equity gains.



So what should an investor do?

As mere mortal investors without access to a crystal ball, it's crucial to adopt a long-term perspective for property investment instead of attempting to time the market. The timing of property investment is not a one-time event, so there is no perfect or worst time to buy property. Rather than focusing on buying property in 2023, it's essential to consider investing when all the necessary preparations have been made. For some investors, 2023 may be the worst possible time to purchase property, while for others, it could be a window of opportunity to jumpstart the next property cycle after the market reset in the middle of the year. Those who mistimed the last upswing may have missed out on profitable opportunities but are now ready to buy when the market shifts. Waiting for the "perfect" moment to invest can lead to missed opportunities as other buyers re-enter the market, making it harder to find a desirable property at a reasonable price. The fundamental economic principle of supply and demand comes into play, and waiting for the market to "improve" may result in a more competitive market with potentially higher prices for quality properties in desirable locations.




Isn’t it too early to get into the market?


Over the years, many investors have expressed remorse for not buying top-tier properties earlier. According to leading research firms such as Dr. Andrew Wilson's My Housing Market, PropTrack, and SQM Research, the housing market downturn in Sydney and Melbourne is now over. They predict that the influx of migrants, coupled with a shortage of housing, will boost prices. Although some housing economists are hesitant to declare a market bottom and suggest that prices may fall further if interest rates continue to rise, they also acknowledge that the faster-than-anticipated return of immigration following the pandemic will provide support for the housing market.



You need to plan


Although property investment has the potential to generate significant wealth for many Australians, statistics indicate that 50% of those who purchase an investment property sell it within the first five years. Additionally, of those who remain in the investment game, 92% never progress beyond their first or second property. This is because creating wealth requires more than just luck—it necessitates a well-thought-out plan. Planning involves bringing the future into the present so that you may take action right now! Let me make one thing clear: buying an investment property is not a strategy in and of itself. It's critical to begin with the end game in mind and understand what you need and want to achieve. Then, you must create a plan, a strategy to get there. The property you ultimately purchase will be the physical manifestation of a slew of decisions that must be made in the correct order because property investment is a process, not a one-time occurrence.



If you're new to property investment and looking for a proven strategy, or an experienced investor feeling stuck and in need of a second opinion, our team can create a customised Strategic Property Plan to help you achieve your financial goals. With a Strategic Property Plan, you'll be able to:


  • Establish realistic financial goals

  • Evaluate your progress towards your goals and ensure your property portfolio is working for you

  • Identify ways to maximise wealth creation through property investment

  • Identify potential risks The advantage of a Strategic Property Plan is that you can grow your wealth faster and more securely than the average investor. The following components should be included in your Strategic Property Plan:

  1. An asset accumulation strategy

  2. A capital growth manufacturing strategy

  3. A rental growth strategy

  4. An asset protection and tax minimisation strategy

  5. A finance strategy that includes long-term debt reduction

  6. A strategy for living off your property portfolio.



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