When you’re next at a backyard barbeque with friends and family, I want you to try an experiment.
Bring up the topic of property and take note of the advice people offer. I don’t know you or your loved ones, but I’m willing to predict how it will go.
You’ll get a range of opinions about the best way to invest and there will be two camps – those who think you should focus on time in the market, and those who think you should try to time the market.
Time in the market is the idea that you simply buy any real estate and sit on it for life. The theory is that markets move in patterns and holding something for the long haul is “guaranteed” to deliver a return.
Timing the market is about focusing on high-growth areas, buying when they’re down, then selling when they boom.
Buying something, holding it and hoping for the best can be flawed, but so, too, can investing speculatively and taking on risk.
In my view, the best investment strategy involves time in the market as well as buying at the optimal time in a market cycle.
You should aim to buy the right investment with the right growth fundamentals at the right time and hold it for the long-term to maximise its return potential.
Plus, when people at that barbeque talk about the property market, what are they referring to?
The simple fact is there’s no one property market. There aren’t even several. There are hundreds right across the country that are at different stages of growth, or otherwise, at the same time.
Let’s consider Sydney over the past two and a half years, where prices have fallen about 10 to 20 per cent.
At the same time, there have been markets nearby – such as East Maitland – where prices increased by about the same amount.
So, if a novice investor had bought into Sydney at the peak of its market a few years back, using a 20 per cent deposit, they would have lost most of their equity.
However, if they had bought strategically in a growth market, they could have doubled their equity – just by utilising the sound research and advice of experts.
The reason why so many investors still get it wrong is that they simply don’t have the time to thoroughly examine every single potential market out there.
That’s why seeking the advice of an independent, qualified and experienced adviser is crucial.
Their teams are on the ground day in, day out and know what individual levers are being pulled to drive market growth – or decline – on a localised level.
They know what opportunities to pursue now – and which ones to avoid.