The debate between timing the market and time in the market is a crucial one for property investors. Understanding the difference and the strategies used by seasoned investors can provide valuable insights into property investment.
Historical Context
In 1970, the median property price was $18,700, rising to $76,500 by 1980 — a 109% increase. The trend continued with prices reaching $184,000 in 1990 (a 241% increase) and $312,000 in 2000 (a 169% increase). From 2000-2010, prices rose from $312,000 to $575,000, marking an 85% increase.
Despite predictions of a market crash in 2010, property prices soared from $575,000 to $1.6 million by 2021, a 278% increase. This trend defies the linear growth model, underscoring that property values don’t always rise steadily but tend to increase over time.
Throughout each decade, there were claims that property was too expensive and prices were bound to fall. Yet, history shows a consistent trend of growth, despite these predictions.
Future Projections and Understanding the Market
By 2050, property values in Sydney are forecasted to reach a median price of $6.4 million, a 402% increase. This projection highlights the importance of understanding the long-term nature of property investment.
A conversation between Amazon Founder Jeff Bezos and Warren Buffett revealed an essential truth about investing: many people seek quick wealth, while successful investing often requires a long-term approach.
The property market experienced a 5% drop in value from 2007-2008, but from 2008-2018, there was a 70% increase. This demonstrates that regardless of short-term fluctuations, long-term gains are typically realized in property investment.
The TMAP Approach: Patience
The TMAP philosophy emphasises patience, discipline, and a long-term view. By holding onto property and allowing the market to work, investors can see significant gains over time.
While the best time to buy property was 20 years ago, the next best time is now. Understanding the dynamics of the property market and adopting a long-term perspective can lead to successful investments.
