One of the most frequent questions I get asked by property investors and homeowners is whether they should try to “time” the market. The perennial debate about time in the market vs timing the market has raged for decades across all investment markets; not just property.
Timing the market tempts with quick gains, while the other, time in the market, holds the key to long-term growth.
As a buyer’s agent operating on the Central Coast, I’ve had a front-row seat to our local property market’s dizzying ups and downs over the years. Through my experiences, I’ve uncovered valuable lessons that can transform your approach to investing, guiding you towards a strategy that minimises risks and maximises your potential for real wealth.
Let’s get to the bottom of the timing the market vs. time in the market debate and find the road that leads to lasting success in the property world.
Risks of Trying Market Timing
One of the biggest pitfalls I see investors fall into is trying to time their property purchases based on herd mentality. As the famous quote from Warren Buffett goes:
“Be fearful when others are greedy and greedy when others are fearful.”
When there is widespread consensus that it’s a good time to buy property, that’s usually a signal that increased competition has already driven up prices. By the time the herd is bullish and piling in, you’ve likely missed the optimal window. Following the crowd often means overpaying and buying near a market peak.
Another major risk is that even if you pick your entry point well, the market may not move in the timeframe you expect. Property markets can stagnate or stay flat for years before experiencing meaningful growth again.
If you purchase based on the expectation of short-term gains and that doesn’t transpire, are you financially prepared to hold onto the property for the long haul until prices recover?
I’ve also seen cases of “analysis paralysis,” where investors become so obsessed with timing the market perfectly that they simply procrastinate and miss opportunities. As the saying goes, research gives you confidence, but action gives you results.
At some point, you have to pull the trigger when the conditions are favourable rather than waiting endlessly for the “perfect” time.
The Unpredictable 2023 Property Market
A recent example that clearly illustrated the dangers of trying to time the market based on traditional indicators was what happened in 2023. As interest rates started rising rapidly in 2022, conventional wisdom suggested this would put downward pressure on property prices.
Historically, when interest rates go up and borrowing capacities are reduced, we see the market soften due to uncertainty and less buyer demand.
Many clients I spoke to in 2022 expected that once rates went up, many distressed properties would hit the market at fire sale prices as owners struggled to keep up with payments.
So, these investors decided to hold off purchasing in 2022, theoretically waiting for prices to bottom out over the next year.
However,
The complete opposite transpired—in 2023, property prices continued to grow across Australia, bucking long-standing historical trends.
Those who tried timing the market progression missed out on solid gains. Meanwhile, buyers who took a long-term view and purchased in 2022 when they could afford to, rather than speculating on short-term dips, were rewarded. This demonstrated how even indicators that have held in past cycles can prove to be false signals.
Key Indicators Have Their Limitations
While some indicators, like days on the market, available inventory, vacancy rates, and rental yields, help us analyse where the market is at a given point, no indicator is foolproof. As I mentioned with the example of 2023, sometimes the traditional signals that have held true in past cycles can prove to be misleading.
Ultimately, it’s important to put only a little weight on any single metric or data point when trying to time market movements. Having a long-term perspective and being prepared to ride out the inevitable peaks and troughs is crucial when investing in property to create wealth.
Conclusion: Embrace Time in the Market
Regarding the perpetual debate of timing the market versus time in the market, I fall firmly in the “time in the market” camp based on insights from experienced investors and my observations as a buyer’s agent.
As the recent 2023 example illustrated, timing property market movements based on traditional economic indicators and past cycles is fraught with risk. Markets can remain irrational longer than expected and confuse even the most seasoned forecasters.
Building real, lasting wealth through property has historically involved taking a long-term, patient approach—riding out the short-term peaks and troughs while allowing your assets to compound in value over decades.
Attempting to perfectly nail market timing is not only extremely difficult but also potentially self-defeating if it causes you to miss out on the early phases of an upswing.
My advice?
Do your research diligently, understand the market dynamics, and pull the trigger when the conditions are right for your personal situation and goals.
But don’t obsess endlessly about trying to time the button. The investors who win big are those who take advantage of opportunities when they can afford to and stay invested for the long haul through discipline and conviction.
I’d happily provide my professional guidance if you want to enter the Central Coast property market as an investor or home buyer. As a buyer’s agent, I can help you secure an investment-grade property that generates strong returns and fits your criteria without the stress of trying to perfectly time-shift market conditions.
Feel free to get in touch to learn more about how I help my clients successfully build wealth through well-researched, fundamentals-based property investing for the long run. Reach out today to discuss your goals!
