Warren Buffet is arguably one of the worlds best investors and he has a saying about the stick market and investing in general.
“Be fearful when others are greedy and greedy when others are fearful.”
For those that have been watching the Perth Property market, you would be well aware that the overall trend of the market has been negative for the past 5 years. With current levels at the lowest they have been probably since the 90s. Herron Todd and White Australian Property Valuers have placed Perth at the bottom of the cycle. Indicating we are in a Buyers’ market. But why is it called a Buyers’ Market?
Well it’s called a Buyers Market as historically when we look at times like this there are more properties on the market then there are buyers. Hence buyers have negotiating power and there is a lot of selection and due to this, a bargain or great value can be had. Humans though tend to feel comfort in support and as such when people should be buying they don’t and they tend to follow the herd when the market moves to purchase. When we think though of those that are successful they generally are due to the fact that they take action when others are not and hence they receive a positive response when others don’t.
So when I reflect on Warren Buffet’s saying, what I would say is the writing is on the wall Now is the time to be greedy, Now is the time to take action as it won’t stay this way. Perth is already starting to show green shoots that a recovery is on the horizon. This is not true for the whole market though so please ensure you get good advice or carry out appropriate research and due diligence before committing.
I have been in discussion with many investors who are currently sitting on the fence, mainly due to the impending election. What I will say about that though is that there is an opportunity that presents for the next 9 months. If Labor does get in they have indicated that they want to abolish negative gearing on older properties and increase the Capital Gains tax that needs to be paid via the investor. Both of these policies if adopted though will not be implemented until 2020. That is were the window of opportunity lies. Any property purchased now until then will not be impacted.
As a lot of our clients purchase older properties with potential to develop. This is a prime time to purchase were you can still benefit from negative gearing and when developed you can continue to benefit due to the end product being a new construction. The capital gains benefits will also not be impacted if purchased prior to the adoption of a new policy.
So if you are sitting on the fence, maybe now is the time to take action!