Not that long ago, media property commentators were telling us that prices would fall significantly because of Covid, and even property experts from major banks were predicting that the property values would decline by as much as 32 percent.

Today the common theme economist have is that the property market in Australia is back in a bubble, mind you this theme has been around for the last 20 or so years.

As the famous quote by Barbara Corcoran goes, ‘A funny thing happens in real estate. When it comes back, it comes back like gangbusters’, so how do you pick the right point in time to enter the property market?

For starters, try not to pick when the market will turn in your favour because, even the smartest economists armed with current property data can’t do that.

Instead, as a home buyer or property investor, you should have your finance organised and be active in the market because the best time to buy property was yesterday and the next best time is today.

That said, there are some of indicators you should watch carefully for a signal that the market could be headed for a change.

The economic fundamentals

Previous property downturns have shown, our property market doesn’t work in isolation, so keep an eye on the macro-economic factors such as the world economy and Australia’s economy.

GDP, inflation and wages growth, all of which are likely to remain below long-term trends over the next few years. At the same time, keep a watchful eye on unemployment levels which will start creeping up once the country is open to new migrants again.

Finance

Recognising that our property markets are driven by the availability of credit, keep track of the ABS data on credit growth which is a leading indicator, turning positive before the markets do.

Currently APRA’s relaxed borrowing requirements plus the prospects of lower interest rates are positive signs for property and it is allowing borrowing power to counter the ever-increasing property prices.

At this time of the year, many Australians will have a little more cash in their pockets with tax refunds. That plus the beginnings of wages growth in some sectors due to restricted migration will help serviceability of loans.

Market Sentiment

Increased consumer and business sentiment point to good times ahead for the property market. State and federal government’s view that economic recovery and property market are linked, also makes property the go to asset for everyday Australian.

Supply and demand

Australian home buyers are experiencing FOMO due to rapid property price increases, and this is fuelling significant demand for property.

Sure, we have an oversupply of apartments in some locations, developers will slowly manage to sell these as affordability for free standing properties decline and more first-time buyers start leaning towards the unit market in-order to get their foot in the market.

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Some other metrics to follow

Housing credit growth – this leading indicator will turn up as home buyers and investor apply for loans before they purchase their next property.

Days on market – As buyers compete for properties, sellers do not have to wait long to sell their homes. Decreasing time on market means prices may start to rise soon.

Rather than waiting for reports of rising median selling prices, which only come to light months after the market has turned, keep track of Asking Prices which are an accurate real time indicator of what’s happening in the market and closely track eventual selling prices.

And of course, auction clearance rates are a good indicator of consumer confidence, particularly in Melbourne and Sydney

The best time to buy

Rather than trying to be smart and pick a correction in the market, now is the right time for long term growth and return if you buy the right property.

In fact, we saw values in Melbourne and Sydney fall and recover so quickly that the current boom is predicted to outpace our post GFC boom due to the cheap supply of money.

But be careful – as always correct property selection will be critical and remember money is made when you buy the property, not sell.

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This article does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.