Should I wait to buy property until prices fall?

Jun 30, 2022

This week it's all about... property prices and interest rates.

This week's video is in response to the many questions I've received from so many people asking whether they should put off buying property until prices fall as a result of rising interest rates. (You may already guess my answer but watch to see why).

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Welcome to Mel's Money Musings.

So today I am responding to many of the same questions that I've been receiving when it comes to property and interest rates, and that is around the timing of buying property. And a lot of the questions goes, something like this: Hey, Mel, I'm looking to buy a property and I'm wondering with rising interest rates and the property market going to drop, should I delay the timing of buying my property?

And I'm really curious about the language for a lot of these questions around because interest rates are rising, the property market is going to drop. And I really want to challenge that assumption. Because I've also talked to a lot of people who, when COVID hit, experts everywhere came out of the woodwork and very respected economists who said, because of all the uncertainty, because of COVID and the devastation that it will have on the economy, property prices will drop 20 to 40%.

And I saw a lot of people pause. And of course, we know what's happened over the last two years. Property prices actually rose by 20 to 40%. And that's the problem with presuming. None of us has a crystal ball. None of us have been through unprecedented times because they are by its very nature, unprecedented.

So I think it's a very dangerous game to choose to wait and to see if property prices are going to drop. Cause certainly in Australia, we haven't seen those large drops that we perhaps have seen overseas. Historically, for example, when the GFC hit, if we look to the UK, for instance, there was a really marked drop in property prices. Yet here in Australia, yes, we saw the GFC happen, but we simply didn't see that same drop in property prices. And I think part of the reason is because Australians have a different appetite for property than potentially people do overseas.

Now, am I saying that property prices won't drop? No, that's not what I'm saying.

Certainly in some sectors, in some areas we have seen a softening over the last six months. Mind you in some sectors, we've also seen a pushing ahead over the last six months.

So instead of trying to time the property market, what I want you to think about is time in the market. It's no different from any other long term investment that you're gonna make, whether it's shares, whether it's property or other. If your intention is to hold that property for 10, 20, 30 years, which is the case for most of us, then it doesn't matter if you are buying it at the high. It doesn't matter if you're buying it the low, ultimately because over time that is going to wash out.

Certainly for me, with my own home in the Blue Mountains, we bought it in, in the high, um, about 15 years ago, it did not move in value for probably about seven, eight years. And yet certainly in the last few years, we've started to see that change. Did we beat ourselves up and go, oh my gosh, we should have just waited, we should have bought it earlier? No, because we don't have a crystal ball.

Instead. It is about doing the basics.

If it comes to your home, it's not overextending. It's repaying your mortgage as if interest rates were one to 3% more.

If it's an investment property, it's making sure that all the basic tenents are right. Making sure what the low, uh, whether you're after capital growth or whether you're after rental return or both, it's checking what vacancy rates are like. It's making sure you have access to schools and transport and more. It's making sure you're not buying in an area where, um, that area could be susceptible to one industry. And if that industry was to go, then that could really affect, uh, the prices.

And it's being aware of trends. Certainly we've seen a move away from the capital cities, which has meant that areas sort of an hour away from Sydney and Melbourne are booming. However, we've seen a drop in Sydney and Melbourne's prices for apartments say in capital cities. But as to whether that trend is going to continue or not, that's something that it's about listening to what experts are saying, but also gauging it for yourself.

But I think trying to time the market's very dangerous game to play. Instead. I want you to remember that it's about time in the market, not timing in the market.

If you've got any questions as always just, uh, hit me up at or DM me over on Insta at More Money for Shoes.

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