Ninja in a blazer – 2nd June 2022
May 31, 2022Ninja in a Blazer – 7th July 2022
July 7, 2022We had a training session today and we talked about the property cycle clock and every agent had a thought as to where we were situated on the clock – the majority of agents agreed it was between 1-3 on the clock, with a few others at 4 and 6.
Sorry Brad, you lost me.
Have a look at the diagram below:
Here’s a brief description of the property clock below:
12:00 – Top of the market; prices are increasing as there is an under-supply of property
1:00 – Rental returns start to drop
2:00 – There is now a surplus of properties for sale
3:00 – Increasing interest rates; the market is evenly supplied
4:00 – Decline in the rate of property sales, properties take longer to sell.
5:00 – Decline in the rate of construction of new dwellings
6:00 – The Bottom of the market; prices are dropping and there is a market oversupply
7:00 – Rental returns are increasing
8:00 – More buyers than sellers. Demand for property is greater than the supply available
9:00 – Interest rates are dropping, supply is tight
10:00 – Rate of property sales are increasing
11-00 Construction of new dwellings increases
Now, there’s no exact phase and usually we don’t realise until after we’ve gone past the point on the clock, however the market is always moving.
In 2021, the market moved as astonishing 35%, and at one stage it was reported to have been moving $1000/day, in 3 months it probably moved over 10%. So to say the market couldn’t drop at the same rate downwards is crazy.
We do know that Brisbane is still undervalued as compared with other capital cities, and with the Olympics in 10 years, it’s expected to see a lot of growth prior.
The one thing I’m saying to most buyers is to keep an eye on APRA rate as affordability goes. APRA used to have a 5% buffer, which is now down the 3%, but there’s no saying it couldn’t go back up to 5%. This means that if your loan is at 2.5%, the bank has to make sure you can afford the repayments at an extra 3% (i.e. 5.5%).
To put this into perspective, when I purchased my house at loosely 9%, I had to be able to afford it at 14% interest rates to get the loan to purchase it.
So, if you’re looking to save yourself $50,000 by waiting a few months, I would continue to look and if the right property comes up, buy it, because in 10 years time when the Olympics is on our doorstep, you should be laughing.
