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Staying ahead of the curve

Wednesday, 2nd Sep 2015

counter-cyclicalAt a time when Australia’s various real estate markets are in different stages of the property cycle, investors need to remember one golden rule.

When explained, counter-cyclical investing is a logical concept however, for most people, it goes against our natural instincts as we generally feel safer following the herd.

For those who aren’t aware, counter-cyclical investing is doing the opposite of the current cycle or trend. In other words, buying when everyone is selling and selling when everyone is buying.

The strategy is used to secure a strong price when selling and a great deal when buying.

While counter-cyclical buying and selling is not the be-all-and-end-all to property investing, it’s definitely important to remember.

As a property investor, one of the quickest ways to diminish your wealth is to overpay for your investment, which is a common mistake made by many when a property market is peaking.

When investors overpay for property in these circumstances, they potentially have to wait years for the value of the asset to recover.

Over the past 12 months we’ve seen varied performances across Australia’s major property markets.

Sydney and Melbourne have recorded significant capital growth and are close to hitting the top of their current growth cycles.

On the other hand, the Brisbane is in the early stages of a growth cycle and Perth markets have remained subdued and represent a good time for investors to consider an acquisition.

The time many investors get into the market is often the worst, so make sure you are buying at the right stage of the cycle to maximise your long term returns. Ebbs and flows in these major property markets will always occur but investors need to remember that property investment is a long-term strategy.