Trick to timing and making a bigger profit when selling property

Trick to timing and making a bigger profit when selling property
Trick to timing and making a bigger profit when selling property

Many home buyers and investors believe the length of time in the market is more important than the timing of the purchase when it comes to making a bigger profit on selling.

There is always a debate about which is more significant.

It was brought home to me in the dearest and cheapest sales last weekend across Sydney. 

An expatriate infrastructure guru sold his Mosman home - a six-bedroom Bradleys Head Road trophy home on 2244 sqm - for around $16 million.

It had set a non-waterfront record for the suburb when it last sold at $7.15 million in 2001, but not this time.

Having generated five percent annual price appreciation, I'd suggest while the quick bullish sale was noteworthy, its price had presumably plateaud for much of the 15 years.

Sydney's cheapest sale was at Harris Park where a two bedroom unit fetched $490,000. It had last sold in 2011 so the $200,000 sale price jump reflected 10 percent annual price growth.

Certainly an impressive gain with the time almost coinciding with the boom that began in 2012 and has continued to run, with a few brief, mild dips along the way.

Yet many stick to the theory of time in the market rather than timing the market.

Anyone can wait and hope as real estate will typically rise over time.

But more money can be made with less duress by investors understanding markets as to where to buy next and when.

Australia comes with very different state-based property market cycles that all have distinct patterns ranging from bottom of the market to the top. 

Sydney is currently a bit like the champion thoroughbred, Lord Fury who won the 1961 Melbourne Cup leading from start to finish.

But beware sometimes Sydney flounders.

Indeed Sydney withstood a challenge as the priciest capital city in which to buy property from Perth during the 2007 mining boom, then from our southern neighbour, Melbourne around 2012.

Today Perth resembles a property basketcase. If you followed the investor boom herd into Perth, then the past few years have shown how the property market can falter, and CoreLogic's head of research Tim Lawless says there no signs the marketplace was yet starting to level out.

Westpac, the nation’s second-biggest mortgage lender revealed this week that 90-day mortgage arrears in Western Australia had rocketed to more than double a year ago.

Overall Australian mortgage arrears of 90 days or more are up 21 basis points compared to 2015, but Perth is up 130 basis points.

Not that it is anything like the last recession as in a total loan book of 1.6 million mortgages, Westpac has only 262 houses in possession – equating to 0.02% of its portfolio.

Westpac chief executive Brian Hartzer said the flow-on impact from the collapse in the mining investment boom had forced the bank to step back from the state.

“We began winding back our exposure in WA a while ago ­because of concerns about what was happening in the mining sector, so although those percentages look relatively high they’re pretty small in the scheme of things in our book,” he said.

“This is being offset by continued low stable delinquencies in NSW where economic activity has been robust."

Many suburban markets across the capital cities typically perform without omnipresent boom-or-bust patterns. 

Of course if you’re canny you can make money no matter what the market is doing, but investors will always make more by running counter to the cycle. 

This article first appeared in the Saturday Daily Telegraph.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

Tags: 
Property market Residential Sales

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