Couple of words about how Australian property market works.
It is pretty much like sunrise occurs on the East and sunset on the West.
Australian property on average grows 9% a year, meaning property doubles in price in about 8 years.
In reality growth is cyclic, and the lengths of the property cycle is abut 11 years. That is property cycle is not interfered with, like RBA did for the last two property cycles, keeping interest rates artificially high. Economy does not like these games, and sooner or later it starts to die out, which forces RBA to go for record low interest rates. Like now.
RBA games led to the situation that from one side we have got unprecedented shortage of property, and on te other - huge pent up demand from people who were waiting for the myth of "Australian property crash" to materialise.
Property cycle is different in different parts of Australia. In Sydney and Melbourne it is usually boom followed by flat price growth.
In QLD and WA it is usually constantly depressed market, with some splashes made when property boom is close to its peak.
Adelaide is different from them all. Because of abundance of land it is pretty much boom-bust cycle.
Boom usually starts as a ripple effect of a Sydney boom - two years after the beginning of a boom in Sydney. It is mild, but reaches its peak about one year after Sydney's market peaked. Then property slowly loses its value.
This article states the obvious:
Sydney enters its third year of a property boom, and it is of a record proportions. Which means that property boom in Adelaide does what?
Unfortunately, it has already started few months ago, but because it is slow - there is still the best time to buy a property.
Those who would have bought now are going to be winners, but only if you stick to simple basic rules:
1. Do not buy love nest. Home is your biggest investment, look at your purchase as if you are buying money making machine
2. Remember that when buying a house, in consists of two components. Building always depreciates. The fastest depreciating are new homes. Land - it depends. If you buy a land that is in short supply - it will appreciate. Otherwise it will lose all gains during the bust time of the cycle. In reality it means three things:
a. The only land in short supply in Adelaide is waterfront and land with waterviews. Buying anything else - waste of money.
b. Stay away from flats, units, townhouses - anything that is not on a Torrents title
c. Stay away from new estates. In new estates you overpay - inevitably. GST on new land, GST on new building, builder's margins.
And of course - this is not a good time to rent. If in other times you can weigh your options - whether to rent or buy - at this time the answer is written on the wall. Do not waste money on renting.