It's a question we get every week at The Property Factory, and it is fully justified. Who doesn't want to know when the best time to buy is?
Current data suggests that the majority of places around New Zealand have reached the bottom of the market, with most locations now on the rise again.
At The Property Factory we use the property clock to show where we believe the property cycle is for the each specific locations where our deals are located.
Based on current data we believe New Zealand as a whole is currently at about 6-7 on the clock. This suggests that we are on the bottom of the cycle or just off the bottom with a number of locations showing a recovery. A great time to buy!
The majority of people tend to buy between about 9 and 11 on the clock as market confidence is high during this time which gives buyers confidence.
In actual fact the best time to buy is between 5 and 7 on the clock when prices are at the lowest in the cycle.
This property clock illustrates where we think the NZ market is at as a whole currently. Check out our deal pages to find out where specific the property locations are currently at in the cycle.
How do we come to this conclusion. Let's have a look at some pricing indications.
The graph above compares the median sale price for properties in Auckland, Wellington, and Christchurch from February 2003 – October 2023.
The reason we use this graph is to illustrate how market cycles flow over a period of time. There isn't always linear growth in the property market and growth rates change as we go through these property cycles. We can see from this that we are at the start of a new growth cycle currently.
When we look at this we need to be aware that property should be a long term investment. Even though there are periods of growth and period of falls, the general trend is up, and this shows why so many people have been successful with property investment over the long term.
Since 2003, the median sales price for all three locations has more than tripled.
Remember, time in the market always beats timing the market. Sticking with your investment for as long as possible is the best way to produce the highest return on your investment.
Selling investment properties for no good reason interrupts the compounding capital growth and ultimately halts your investment performance.
If an investor bought a property in Auckland for the median sales price in 2003 ($330,000) and then sold it for the median sales price in 2023 ($1,142,800), that investor would've made an equity gain of $812,800 over 20 years.
If you chose not to invest over that period, you'd need to save $33,124 per year out of your own pocket, every year, to achieve those same results.
Easier said than done.
So, to answer the question there are better times to get into the market than others but if you are looking at property investment as a long term investment the best time to get into the market is when you're financially able to do so.
It's easy to get caught in trying to time the market perfectly, but in reality, if you're investing for the long term, the difference between buying now and three months from now is minimal, so your best bet is to get in as soon as you can and let the market take care of the rest.