Cash in on a bargain

Reports of lacklustre auction results and even more lacklustre prospects for price growth might suggest now is no time to consider buying a new property.

In fact, however, market forces are aligning to create what could be an exciting opportunity for buyers – and there is clearly interest in some quarters, even if it’s limited.

The volume of listings is solid in most markets, and rental prices are forecast to rocket.

What’s more, several of the nation’s capital markets are regarded as being at, or close to, the bottom of their market cycles.

So could it actually be time to buy? Maybe buyers who are resolved to swim against the tide could find they have picked the ideal time, positioning themselves for significant returns in the future.

A buyer’s market, in which the volume of property listings exceeds buyer demand, typically exists during periods of weak or negative consumer sentiment – just the sentiments reflected in the current economy. And we’re in a buyer’s market right now.

Certainly, with plenty of bad news – natural disasters; the threat of rising interest rates; lingering fears surrounding the stability both of the property market and the broader economy, following the global financial crisis – many Australians are sitting tight.

But remember, with fewer active buyers, selling property becomes more difficult, tipping the power in favour of buyers. However, less buyer activity doesn’t only mean better buying power; it usually signals a superior time to buy.

Buying when nobody else is buying has long been a popular investment strategy among seasoned investors. So popular, in fact, that it has its own name, ‘counter-cyclical investing’.

The value for investors of counter-cyclical investing lies not only in less competition with other buyers but, more importantly, in the ability to get in at the bottom, or close to the bottom of the property cycle. This should allow greater capital growth over time.

Bucking the trend is not easy though, and it takes a determined buyer to master the art of this form of investment.