Should I Buy Another Property Now, or Wait?

It’s probably one of the most common questions property investors are asking right now:

Should I buy another property, or wait?

It’s a fair question.

Interest rates are high. Negative gearing has been restricted. Property prices have softened across many parts of Australia, and no one can say with certainty whether we have reached the bottom.

With all of this happening at once, waiting can feel like the safer option.

And for some investors, it may well be. If you don’t have sufficient borrowing capacity, deposit or cash-flow buffer, waiting can be the sensible choice.

But if you are financially ready to buy, should you still wait?

There are three common concerns that may make you want to wait. Let’s look at each of them.

“I’ll wait until rates come down”

This is perhaps the strongest argument for waiting.

Higher interest rates mean higher repayments and greater holding costs. So why not wait until rates are lower?

Because the conditions that make property easier for you to buy can also make it easier for everybody else.

Over the past 20 years, Australia has experienced three major rate-cutting cycles following periods of rising or relatively high interest rates. As the charts below show, each was accompanied by a strong recovery in house sales volumes, with buyer activity picking up sharply as rates fell. This is a clear sign of demand returning to the market. Lower rates improve borrowing capacity and buyer confidence, encouraging more buyers to enter the market and increasing competition.

You may eventually get cheaper debt, but you could also find yourself competing with significantly more buyers for the same property.

Today’s higher rates are uncomfortable. But that discomfort is also one reason competition has reduced.

“Negative gearing is gone. Why buy now?”

The restriction of negative gearing for established properties has changed the investment equation, particularly for investors who previously relied on tax deductions to offset their holding costs.

But waiting six or twelve months won’t bring the tax benefits back.

In fact, the reform reinforces something investors should have been focusing on all along: property investment should be driven by market fundamentals, not tax benefits. What and where you buy matters more than ever.

Australia is not one property market. There are still dozens of sizeable markets offering gross rental yields above 4.5% (see chart below), including regional cities and parts of our capital cities.

Rental yields in regional centres such as Bendigo, Wagga Wagga, Cairns, Dubbo, Rockhampton and Launceston are all currently around 4.5%-5%, which can offer a much healthier cash-flow position than expensive, low-yielding houses in Sydney, without relying as heavily on tax deductions to offset holding costs.

Of course, rental yield alone doesn’t make a good investment. Long-term growth prospects, supply and demand, and property quality remain essential considerations.

The goal is to find a property that stacks up under today’s conditions, rather than waiting for yesterday’s tax benefits to return.

“What if prices keep falling?”

They might.

Buying today does not guarantee that your property won’t be worth less three months from now. And trying to pick the exact bottom is little more than guessing.

But waiting until the recovery is obvious comes with a trade-off.

Prices are not necessarily the first indicator to turn. Buyer activity can start recovering while prices are still weak. Properties can begin selling faster before sustained price growth becomes obvious.

Sydney’s previous downturns illustrate this well (see charts below). Each highlighted period ends when the price trend had turned clearly enough to confirm a recovery. However, by those points, days on market had already fallen substantially from their peaks.

In other words, by the time price data gave buyers greater confidence that the downturn was over, competition had already strengthened.

You have gained certainty, but you may have given up some of the lower competition and negotiating power available when the outlook was less certain.

So, should you buy or wait?

If you don’t have the borrowing capacity, sufficient buffer or ability to comfortably hold another property, waiting may be necessary.

But if you are financially ready, my preference would be to buy rather than wait.

Not because prices cannot fall further. Not because rates are guaranteed to come down soon. And not because every property is worth buying.

It’s because today’s uncertainty comes with something investors often struggle to find when everybody is optimistic: less competition and greater negotiating power.

If you can find the right property, and it stacks up under today’s interest rates, today’s tax settings and conservative growth expectations, you don’t need to wait for the market to feel comfortable.

Because by the time it does, other buyers will likely be feeling comfortable too. Competition will increase, negotiating power will weaken, and today’s low-competition buying window may already have closed.

If you’re considering your next investment but aren’t sure which markets still stack up under today’s conditions, book a free 15-minute discovery call with InvestorKit. Let’s understand your options and identify where the opportunities may be for your next purchase together.