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Practical ways to figure out if it’s the right time to buy property, depending on whether you want to buy a home or an investment property.

I was just chatting with a good friend of mine who lives on the Sunshine Coast in Queensland. He was asking what am I doing here in Melbourne with everything that is going on at the moment. He proceeded to highlight all of the wonderful things in his neck of the woods in a not-so-subtle attempt to entice us to relocate up there.

As it happens 3 of our close friends have moved their families up to South East Queensland from Melbourne over the last 18 months. They tell me the lifestyle is great, there is plenty of work and most of all, it is very affordable.

This reminds us that there are many different property markets in this wonderful country of ours and the population keeps moving so…

What is the truth about buying a house in Australia right now: is it a good time to buy?

Well, it depends on what you want to buy and your situation – do you want a home to live in or an investment property?

Let’s explore both scenarios and you’ll see what you need to consider to help you figure out if now really is the right time to buy:

  1. Buying a home
  2. Buying an investment property

1. You want to buy a home

If you plan to buy a home to live there throughout property cycles, then there’s no right or wrong time as your primary goal is not to make money from it. If you find your dream home and can afford it, go for it.

In this situation you need to consider the following couple of questions:

Can I afford the mortgage repayments if they increase by 3-4%?

If you can’t, then you need to be prepared that you may have to sell the property prematurely if this occurs.

What’s my opportunity cost?

If I am buying at a peak in the market, will having my funds tied up in a home make it harder for me to invest? (if that is something you wish to do)

Doing a quick check will give you an idea about whether buying a home is right for you at the moment.

NOTE: If you’ve never bought a home before, you might be eligible for $25,00 – $45,000 (or more depending on the state) of extra grants and benefits available to help you during Covid (conditions apply). Check out HomeBuilder (Dept of Treasury page) for state-based eligibility and application processes.

Key takeaway about buying a home:
Know what you can afford to maintain/service the loan and what you’re giving up by having your funds tied up in the home.

Perhaps you are looking further than a home. Instead, you’d like an investment property to set yourself up for retirement or to set the kids up.

Is it the right time?

That’s what we’ll look at next.

2. You want to buy an investment property

Which ‘market’?

You’ll hear the media talking about “The Australian Property Market”. It’s a general, unhelpful way of talking about property.

What you need to know is this:

There are hundreds of property markets within Australia
And there are markets within markets.

That’s right.

The Australian Property Market isn’t one market

Each state is at a particular stage of its property cycle.

Within each state, there are multiple property markets separated by:

  • Location
  • Price
  • And type of property, for instance, house, apartment, duplex, commercial property.

Each of these markets performs differently based on local factors such as:

  • Demographics
  • Economics
  • Supply and demand.

So you can see that listening to market commentary about the Australian property market in general – or even the Sydney or Melbourne property market is far from helpful.

How can you time the market so you get a property at the right stage of the property cycle?

Unfortunately, no-one has a crystal ball – no matter how much some make it seem.

So what do you do?

Look at facts and figures

There are many facts and figures to take into consideration around population movement, demographics, employment, infrastructure, planning and development however a couple of time appropriate figures are:

1. Debt-to-income ratio

The percentage of your monthly gross income that goes toward paying off debt. This has been an important figure since the restrictions on foreign investment a few years ago, certainly for Melbourne and Sydney markets.

It is also important to look at this figure for any area you are investigating to invest because if this ratio is ‘red-lining’ you may be waiting a long time for growth.

2. Interest rates

With interest rates being so low over the past few years (Source: RBA), investors have been able to borrow more. This has affected the value of property in some markets, in particular Melbourne and Sydney.

But there’s a ceiling when it comes to borrowing, what’s called a ‘credit ceiling’ (aligned with debt to income ratio which incorporates a lot of factors).

And when that borrowing ceiling is reached, technically the market can’t climb any further until other factors change – such as income increases or expenses (eg. interest rates) decrease.

That being said, with interest rates being so low, it is possible to get highly cash-flow positive investments that can create its own equity regardless of growth in the short term.

Where to look if you can’t afford to buy in the area you want

Look at other, more affordable markets that can give you more from your investment:

  • Regional areas
  • Other states

But not just any regional area, or any state.

  1. Make sure there’s a constant and wide range of employment opportunities in communities with more than 100,000 people.
  2. Invest where the population is set to grow, long into the future.
  3. Look for areas with scarcity – of land and available properties. If a community has scarcity of these then you’ll most likely get faster capital growth and rental growth.

But what if you really don’t want to invest outside your backyard?

If you don’t feel comfortable investing outside your backyard and it will cost too much to invest – wait until it’s a buyer’s market again – in the specific market you’re looking at.

It may take a little while. But history has shown it will happen.

Challenge your assumptions

When investing in property it helps to challenge your assumptions – why aren’t you comfortable investing interstate or regionally?

Get curious and find out why many investors do invest outside their own backyards.

You don’t deserve to miss out on a great investment just because you can’t get past your way of thinking.

Focus on the right facts and figures to understand why an investment makes sense – rather than base it on emotion, biases, or assumptions.

Don’t miss the boat because of your assumptions. Or what the media says. What family and friends say. Or if you have no clue what to do.

Key takeaways about buying an investment property

  • There are many property markets
  • Look at facts and figures
  • Consider investing outside your backyard to make your investment worth it over time
  • Challenge your assumptions.


The truth about whether it’s the right time to buy a property in Australia right now is this:

It depends on what you want to buy and your situation.

What you’ve learned today is it depends on whether you’re buying your own home or an investment property.

Buying a new home
Ask yourself whether you can maintain your repayments. And whether you’re happy to have your funds tied up in your home.

Buying an investment property
There is no ‘Australian property market’. There are many markets. Explore each one. Check facts and figures.

Consider looking past your backyard for better opportunities – especially because Covid has made working outside our capital cities more appealing. Understand your mental roadblocks and challenge them.

These are the ways successful property investors thrive – and how you can too.

As always, if you’d like to see what options best suit your family’s situation, give me a yell.

Oh yeah and don’t forget to download your free ebook: 5 Common Mistakes Families Make When Buying Their First Investment.


5 Common Mistakes Families Make When Buying Their First Investment

Understand these mistakes and avoid them to enjoy easier, low-stress investing – while others lose time and thousands of dollars in investment blunders.

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    Nick Holden

    Nick Holden is the Founder of Simple Property Investment and an insured, qualified Property Investment Advisor under the ASPIRE Network industry body. He is a Licensed Real Estate Agent, holds a Diploma of Financial Services (Financial Planning) and Cert IV Financial Services (Finance and Mortgage Broking). As there is no 'one size fits all' with property investment, he is on a mission to help ordinary Australians create wealth for their futures with personalised strategies and advice.

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