Thinking about buying an investment property in Sydney this year? Stop! And watch this video now.

Have you ever heard that investing in property is a long-term game?

Well if so, this is the video for you.

Hi, my name’s Niro from Investment Rise where we help people invest in property, and I was recently speaking to a client of mine.

They were in their late 40’s, and they were looking to invest in property to set themselves up for retirement over the next 10 to 12 years.

And their question was this.

They said, “Niro, we understand that the Sydney market is falling right now, and so is Melbourne, but we also know those markets are not going to crash. So, if we’re looking to invest over the long term, why shouldn’t we invest in Sydney and Melbourne right now and just hold on? Because isn’t investing a long-term game?”

And they said, “Niro, even you say that you expect Sydney and Melbourne will always be our most expensive cities. So why shouldn’t we invest in Sydney and Melbourne?”

And I thought that was a really, really good question, because I see a lot of people who live in Sydney who want to invest, especially for a retirement over sort of the next 10 years or so, say,

“We know the Sydney market. We understand that the media headlines about the market crashing aren’t real. So, shouldn’t we just invest in Sydney right now? Because after all, investing in property is a long-term game.”

And here’s my response.

I said, “Almost everyone out there will tell you that investing in property is a long-term gameand it is, but there are some things you need to consider.

For example, picture this.

It’s 2008, and you buy an investment property in Perth.

In 2018, at the end of 2018, prices had fallen. So, prices in 2018 were less than what they were in 2010. 2008, rather.

Prices had not risen for 10 years.

In fact, the latest data shows that prices are expected to fall again in 2019.

So my question is this. How long is long-term? See, because here’s the thing about long-term investing…

You hold for the long term, but you buy in a market that’s either going flat like this, and you expect it to rise, or it’s already at the start of its upturn.

What you do not want to do is buy in a market that’s going south or going down. Or buy in a market that’s getting towards the end of its boom period. Like for example, what a lot of people unfortunately did when they invested in property in Sydney and Melbourne in late 2016, 2017, and even last year.

Why?

Because they would have almost been sucked in. What I mean by that is this. They bought a property. They would have seen that they got some growth and been quite excited until, of course, they wait a bit longer, and now we know that prices have fallen in Sydney to back what they were in 2016.

So, the key thing is this, and this is the key takeaway, is that when you’re buying property, yes, hold for the long-term, but ensure you do your research to determine when you’re looking to buy, because when you look to buy should always determine where you buy.

Right? And if you think, for example, that what happened in Perth can’t happen in Sydney, consider this.

I know a lot of people who bought property in Sydney in 2002. At the time, the Sydney market was getting towards the end of its post-Olympic games boom, and there was a lot of excitement in the market, and people bought in Sydney.

Yet many people didn’t get any growth until 2012, but worse. Interest rates rose, vacancy rates rose,rents dropped.

In fact, I know so many people who had to sell their investment properties after holding on for so long. They had to sell it in 2010 and 2011 after holding for seven, eight years because they couldn’t afford the repayments.

And they literally had to sell right before the market grew.

And we’re in a similar position right now.

We know that the Reserve Bank of Australia has said that their next movement with interest rate is going to be up. We know right now in Sydney, it is a time of the tenant, not the landlord. Rents are dropping. We have the most number of properties available for rent in Sydney that we’ve seen in the last 10 years.

So we’re in a very, very similar situation, so yes, if you buy right now, and you have a 15 year, 20 year timeframe, you might be okay, especially if you’ve got a high-paying job, and you can handle rents dropping, or you can handle vacancy, or you can handle the fact if interest rate’s rise, your payments might increase.

If you can handle that, then that’s okay.

But if you’re looking to retire in the next 10 years, if you’re looking to buy property that’s not going to eat into your back pocket, then you’ve really got to consider what type of market you’re buying in.

You want to make sure you’re buying in a market that’s either flat right now and is expected to rise or a market that’s already started its next upturn, and you’re going to take advantage of that. Do not buy in a market that’s falling right now, expecting to make capital growth over the next few years because if your long-term is 5 years, 7 years, 10 years, you may find out that you’ve made a decision that actually sends you backwards financially rather than forwards.