The best time to buy Sydney property to capitalise on price growth was roughly a decade ago, new analysis shows.
Those who bought just before the start of the property boom in 2012 have made significant gains, but it was home owners bold enough to strike during the global financial crisis who made the biggest windfall.
Analysis of price movements over the past 15 years by Domain also challenged the widespread belief that more time in the market translates to better capital growth.
“If you ask someone the best time to buy in Sydney in the last 15 years, they might say ‘the earlier the better’,” said Domain research analyst Eliza Owen.
“But this data set shows us that holding onto a property longer has not necessarily been better. The highest capital gains might actually be for someone who bought five years later, during the global financial crisis.”
Ms Owen added that major structural shifts in our economy, such as the global financial crisis and the once-in-a-lifetime mining boom, created very different experiences for property owners across Australia’s capital cities.
The analysis, which adjusted historic median prices to account for inflation, found late 2008 to early 2009 was the opportune time to buy a property in Sydney to see the strongest capital gains.
Despite Sydney’s median house price dropping 11.4 per cent to $1,062,600 over the 18 months to December, someone who bought during the GFC is still close to $400,000 up on average, even when 2008 prices are adjusted for inflation.
For units, the real gains are $238,000.
Recent sales results show the capital growth that some who bought during the GFC have enjoyed.
On Sydney’s Northern Beaches, a Manly home bought for $900,000 in 2008 recently sold for $2.4 million.
Meanwhile in the city’s inner west, a three-bedroom house sold for $1.9 million — more than double the $925,000 it last sold for in 2009.
“[However] those who bought more recently have not been as lucky, with prices returning to 2016 levels,” Ms Owen said. “Since the market peak in June 2017, the median sale price for Sydney houses declined $173,000 in real terms.”
For example, in Killara on the upper north shore, vendors who paid $3 million for a five-bedroom house in early 2017 sold it for $2.74 million just 18 months later.
Similarly, the owners of one Pymble home lost $282,000 when they recently sold for $2,068,000 one year after buying. The agent handling the sale, Luschwitz’s Mark Blake, said the couple had bought the home to be closer to their daughter, but then had a change of mind.
“He ended up buying a waterfront property that was on the market for $5 million, and he paid $3.6 million,” said Mr Blake. “So he’s lost on one hand but he’s gained on the other.”
Vendors in a rush to sell because they have already bought and settled a second property are among those exposed to the steepest losses, said Henny Stier, principal buyers agent at OH Property Group in Sydney.
“They just need to let them go because they have two mortgages,” Ms Stier said. “They are bleeding cash.”
Divorce or the need to relocate for work were other common reasons home owners sold at a loss, she added.
Those forced to drop their prices in order to secure a quick sale could be unintentionally impacting the rest of the market.
“Even the ones that don’t need to sell [quickly] are being affected because buyers are saying ‘I won’t buy yours, I’ll go buy the one that is $200,000 cheaper down the road’.”
The Agency director of sales and chief auctioneer Thomas McGlynn said buyers should be wary of trying to pick the bottom of the market, particularly if this stopped them from making an offer on their ideal home.
“If your’e buying a home for the next 10 years, that extra 2 or 3 per cent that you pay is negligible,” he said.
Mr McGlynn said last year a lot of vendors were “severely disappointed and very frustrated” because they missed the opportunity to sell at the peak.
“We’re now past that and I think most people coming to market now realise what they’re dealing with,” he said.
This article was first published in www.domain.com.au. Here is the link to the original article: https://www.domain.com.au/news/when-you-should-have-bought-a-house-in-sydney-797822/