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When is it the right time to invest real estate?


There's a Chinese proverb you've probably already heard around the traps: "The best time to plant a tree was twenty years ago. The second-best time is now".


The same could be said of real estate investment, except I'd add one caveat: "The second-best time to invest in real estate is when you can afford it."


You might be keeping an eye on whether property values are on the rise or ready to fall before you pull the rip cord. Or maybe you're trying to decide if mortgage rates are going to climb back up before you search for an investment property. And these are most definitely important metrics to keep in mind when trying to determine the right time to invest.


But, ultimately, trying to decide when the market is perfect is a zero-sum game. These things are almost impossible to predict.


It's also problematic if you believe that investing in property is going to make you money because it always has in the past.


In fact, the latter is a common rookie investor mistake-one that as many as 56% of Australian investors are making when selecting a property for investment, according to a recent ME Bank survey.


When asked by ME Bank what made them confident that their property investment would make them money, the majority of the 1500 respondents said it was because Australian house prices have always gone up in the past.


This attitude breaks the golden rule of investing - one should never use past performance as a guide for future success.


Additionally, 11% responded that their investment must be safe because so many others were investing in property (i.e. there's safety in numbers), while only 34% were confident because they'd analysed the market or sought advice.


And while it's true that analysts note there's been a whopping 6556% growth in property assets over the last 55 years, that's no reason to throw caution to the wind, particularly as property prices are currently so high and interest rates are so low.


Because, if there's anything the recent pandemic has taught us, it's that the world can change on a dime.


Studies show we humans aren't always rational when making financial decisions, often bucking the advice of analysis. That's because our bias towards experiential learning leads us to believe we'll have an equally good investment experience when we see others doing so.


So, if you're currently considering a property investment, remember to always remain objective about an opportunity.  Analysis and advice is always the best basis for making any investment decision, particularly if you're tempted to rely on past performance or basing your decision on what other investors are doing.


It's also important to acknowledge that Australia's property market is diverse - properties do not perform equally at any one time. For example, as Melbourne, Hobart and Sydney markets grew in recent years, Perth experienced a downturn and new Brisbane apartments outstripped demand.


If you have a good credit rating, low debt levels and the funds to support a long-term investment, by all means, now is a good time for you to invest in property. But if you can't quite afford it right now, don't-a better opportunity will likely present itself.