Bubble What Bubble?

Graeme Salt

Every newspaper I open seems to have stories about huge increases in property prices. The Sydney Morning Herald even reckons that prices are going up by $500 a day.


 


This is being reflected in some of my clients' attitudes; they are concerned that they will get priced out of the market.  Last month, I advised purchasers how to manage a rising market. That advice still stands, but now I want to encourage everyone to get some perspective.


 


 If a property spruiker tells you that you have to buy now, tell them to take a hike.


 


Maybe we are in a bubble. But bubbles nearly always burst and there are often rich pickings when they do.


 


Most of the bubble talk is centred on Sydney. Our largest city has been in the doldrums for years and many experts think that its property market is simply catching up on lost ground. According to ABS data, house prices have risen 15.9 per cent over the past five years, which means the annual average increase for half a decade has been just 3 per cent. Some experts think that Sydney's property market will calm down once it has done its catch up.


 


But, even if Sydney is in a boom, it does not mean that there are no bargains out there. Right now the market is in full swing. Come December however, some sellers decide to fold and accept what they can get for a property before everything shuts down for Christmas.


 


Similarly, other states are not going gangbusters. According to RP Data, last month three capital cities had price growth but five others went backwards. Maybe its worth looking at an investment property interstate instead? Good mortgage brokers have access to databases such as RP Data so they can help you get suburb profiles for other cities. Who knows, these comparisons may help you find value elsewhere.