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“To that end, you could say that people who bought homes in 2022 bought at a low price, which means they stand to gain more since home prices start to recover in 2023.”
AMP chief economist Shane Oliver agreed that 2021 was the peak of the market and said market tops are usually the worst time to buy.
“(The economic boom) is definitely not the best time (to buy a property) … people go to auctions and end up making rash decisions and overpaying.”
AMP chief economist Shane Oliver
“By the beginning of 2022, as interest rates are rising, (the housing market) is starting to struggle,” he said.
“The problem is, if you bought in 2021, you bought at the high … you’d be better off waiting until 2022 when the boom is over.”
Oliver said people tend to feel more pressure to buy a home when the market is hot, even though it’s more difficult to buy a home and doesn’t make sense from a financial perspective.
“FOMO kicks in. Whether you’re an investor or an owner-occupier, you’re afraid if you wait too long you’ll have to pay more,” he said. “The history of the Australian property market exacerbates this sentiment because the trend of the market is to go up over time.
“(But during the boom) it’s certainly not the best time. People gather in crowds to attend auctions and end up making rash decisions and overpaying for properties.”
Wakelin Property Consulting director Jarrod McCabe said Australians were willing to pay more for property in 2021 because the lockdown had changed their priorities and they were unable to spend money on holidays or other discretionary purchases.
He said buyers typically stayed in their homes for 10 to 15 years and one year’s capital growth didn’t make much difference over the longer term.
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“You’ll see these ups and downs, but if you hold on to the end of that 10- to 15-year period, you’ll be fine. If you bought a property in Melbourne at the end of 2021 and only held on to it until the end of next year, you wouldn’t do as well,” he said.
“That’s part of the problem, you don’t hold onto properties long enough. If you look at it nationally you’re still ahead. You’re still 7 per cent higher than you were then.”
McCabe said during good economic times, better properties are more likely to be listed for sale, and buying your dream home isn’t always possible.
“We’re having this conversation with a lot of clients,” he said. “You can’t be sure when the right property is going to sell. If it’s the right property, you can’t decide to buy it in 2021 and then buy it in 2022.”
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