When's the best time to buy?
It's a question we get every week at Thrive, and it is fully justified. Who doesn't want to know when the best time to buy is?
Unfortunately, there is no silver bullet to answer this question.
But there is data out there that indicates when a "good time to invest" is. For example, according to TradeMe, 55% of investors think now is a good time to buy, and 38% of homeowners think now is a good time to buy.
With so much uncertainty in the current economic climate of New Zealand, this data gives us a clear indication that savvy investors and prospective homeowners are gearing up to jump on the cheap deals as they start appearing more and more.
Let's have a look at some pricing indications.
The graph above compares the median sale price for properties in Auckland, Wellington, and Christchurch from February 2003 - February 2023.
The reason we use this graph is to illustrate how market cycles flow over a period of time. There isn't always linear growth in the property market and a lot of the growth actually comes in small waves.
This is unsurprising but should give investors confidence that even though there are periods of growth and period of falls, the general trend is up, and this shows why so many people have been successful with property investment over the long term.
Since 2003, the median sales price for all three locations has more than tripled.
Remember, time in the market always beats timing the market. Sticking with your investment for as long as possible is the best way to produce the highest return on your investment.
Selling investment properties for no good reason interrupts the compounding capital growth and ultimately halts your investment performance.
If an investor bought a property in Auckland for the median sales price in 2003 ($330,000) and then sold it for the median sales price in 2023 ($1,142,800), that investor would've made an equity gain of $812,800 over 20 years.
If you chose not to invest over that period, you'd need to save $33,124 per year out of your own pocket, every year, to achieve those same results.
Easier said than done.
So, to answer the question, the best time to get in the market is when you're financially able to.
It's easy to get caught in trying to time the market perfectly, but in reality, if you're investing for the long term, the difference between buying now and three months from now is minimal, so your best bet is to get in as soon as you can and let the market take care of the rest.
What do we do?
We help Kiwis build wealth through property investment. Our advisors will take the time to understand your individual needs and recommend suitable investment properties to help you build wealth and set up your retirement.
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