22 February 2018 How to ride the cycles like a savvy investor

The news around property investing right now is not rosy. Doom and gloom abound from almost every media outlet: ‘bloodbath in the property market’, ‘yields at all-time lows’, ‘the boom is over’. 

And yet there is a breed of savvy investors that are still spending up big on property. What’s their secret? Do they have a crystal ball? The answer is no, they simply know how to read the property cycle better than most and aim to invest at the bottom of the cycle.

‘With a long term view, the property cycle has observable patterns,’ said DHA’s Chief Economist Dan Carton. ‘Prices rise, fall or stablise and then they rise again. These stages of the cycle vary in length in different markets depending on a variety of factors including the macroeconomic environment. The key for an investor desiring capital growth as a part of their return expectations is to pick the bottom of the market and jump in.’

With this in mind the media would have you believe that the entire country is currently in the fall stage – or perhaps even free-fall. But that’s not entirely true.

‘Different markets across the country are rarely going to be at the same stage of the cycle at the same time,’ Mr Carton said. 'Take for example the Perth market which is coming off an extended period of low to negative growth and is now seeing the first signs that positive growth could return to the market.’

In comparison Brisbane apartments have experienced some price corrections in the last 12 months or so due to fears of an oversupply of units in the market.

‘This means that the Brisbane apartment market could be at, or is approaching, the bottom of the cycle. With time, it is reasonable to anticipate prices will rise. At this stage those riding the market cycles might choose to adopt a long-term hold strategy for Brisbane apartments knowing that they can buy in now and wait for the market to swing back up.’

And while the doom and gloom still abounds on the front pages there are already indicators that Brisbane is indeed on the move. Both CoreLogic and Deloitte have reported that the March quarter has seen improved job markets and an increase in migration to the southern Queensland capital.

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The advice contained in this article is for general information only and should not be taken as financial advice. Investment is subject to DHA’s lease terms and conditions of sale. Investors retain some responsibilities and risks including property market fluctuations. Prospective investors should seek independent advice.