Why Being Fearful Right Now Could Be Costing You Your Next Property

“Be fearful when others are greedy, and greedy when others are fearful.”

It’s one of Warren Buffett’s most famous investment quotes, and right now, it may be more relevant to the Australian property market than it has been for years.

Over the past few months, it feels like there has been no shortage of reasons not to buy property.

Interest rates remain elevated. Borrowing capacity has become tighter. The Federal Budget’s changes to negative gearing and capital gains tax have created uncertainty for investors. Every second media headline seems to predict doom and gloom for property buyers.

And yet, despite all of this, I can’t help but wonder whether many buyers are looking at the current market completely the wrong way.

Because when everyone is sitting on the sidelines waiting for certainty, that’s often when the best opportunities appear.

Less Competition Creates Opportunity

One thing I’ve learned after many years helping clients buy property is that most people don’t actually want to buy when conditions are difficult.

They want to buy when interest rates are falling, confidence is high, auction clearance rates are strong and everybody else is buying too.

The problem is that by the time those conditions arrive, you’re usually competing against dozens of other buyers who have been waiting for exactly the same signal.

Today we’re seeing a different environment.

Many buyers are hesitant. Investors are uncertain about future policy changes. Some people are waiting for rates to fall before making a move.

As a result, competition in many parts of the market has eased compared to what we would normally expect.

And when competition reduces, opportunities increase.

Vendors become more realistic. Buyers have greater negotiating power. Properties can sit on the market longer. The pressure to make rushed decisions decreases.

In short, buyers often have more control.

Banks Are Fighting for Business

Another factor that isn’t receiving enough attention is the way lenders are responding to the current environment.

While changes to negative gearing have created concerns around borrowing capacity for some investors, lenders are actively looking for ways to remain competitive and continue attracting quality borrowers.

Traditionally, many lenders have only used around 80 per cent of rental income when assessing a borrower’s capacity.

However, we’re already seeing some lenders review policies and explore ways to strengthen borrowing outcomes, including increasing the amount of rental income they’ll recognise.

The reason is simple. Banks still want to write business.

In a market where overall demand has softened, lenders are competing harder than ever for quality customers.

That competition doesn’t just show up through interest rates. It can also appear through policy improvements, servicing enhancements and more flexible assessment approaches.

Wealth Is Created Through Time, Not Tax Benefits

One thing I think many investors are losing sight of in the current debate around negative gearing is what actually creates wealth in the first place.

Whether it’s property, shares or any other investment asset, wealth is generally built by buying quality assets with strong long-term growth prospects and then allowing time to do its thing.

The biggest gains most successful investors make don’t come from tax deductions. They come from capital growth.

They come from holding quality assets through multiple market cycles and allowing compounding to work in their favour.

That’s why I often remind clients that negative gearing is not a wealth creation strategy.

It’s simply a by-product of your wealth creation strategy.

Nobody should buy a property purely because it generates a tax deduction.

The goal should always be to acquire a quality asset that has the potential to grow in value over the long term. If tax benefits help along the way, that’s a bonus, but they shouldn’t be the reason you’re investing in the first place.

The investors who build the most wealth over time are usually those who stay focused on the quality of the asset, not just the tax outcome attached to it.

Trying to Time the Market Rarely Works

One of the most common conversations I have with buyers is whether they should wait.

Wait for rates to fall. Wait for prices to soften. Wait for more certainty. Wait until after the next Budget. Wait until after the next election.

The problem is that markets rarely send an invitation when it’s the perfect time to buy.

If rates do begin falling, buyer confidence will likely improve.

More buyers will re-enter the market. More competition will return. And the very opportunities available today may disappear.

Of course, nobody knows exactly when rates will move. However, a growing number of economists and major banks now believe the next movement in the cash rate is more likely to be down than up, even if the timing remains uncertain.

If that proves correct, buyers waiting on the sidelines could find themselves competing in a much busier market than the one that exists today.

Buy When You’re Ready

I’m certainly not suggesting people should rush into property purchases.

Buying property remains one of the biggest financial decisions most Australians will ever make.

But I do think too many people spend their time trying to predict the market instead of focusing on the factors they can control.

The reality is that nobody consistently picks the bottom of the market.

The buyers who tend to achieve the best long-term outcomes are usually the ones who purchase when they are financially ready, have a clear strategy and find the right asset.

Not when the media tells them it’s safe. Not when everyone else is buying. And not when every uncertainty has disappeared.

Because by then, the opportunity has often already passed.

As Warren Buffett famously said, “Be fearful when others are greedy, and greedy when others are fearful.”

Right now, there is certainly plenty of fear around property.

For some buyers, that may be exactly why it’s worth taking a closer look.

Thinking About Buying Property?

If fear or uncertainty has been holding you back, now may be the right time to review your options with the right advice behind you. At Intuitive Finance, we help Australians understand their borrowing capacity, compare lender options and make confident property decisions based on their long-term goals.

Speak with our team today to discuss your next move. Contact us to get started.