Buying a house is about more than just finding the perfect time in the market – it’s about finding the right moment for you, your finances, and your chosen location. However, whether you’re a first-time buyer or an experienced investor, understanding the “property clock” can be useful when deciding when to buy a house.
Real Estate Cycle Fundamentals
A visual representation of the real estate cycle, the property clock helps buyers identify where the market stands at any given time. The clock breaks the market into four key phases that mirror economic activity:
Market Peak Indicators
At 12 o’clock, the market is at its peak. Demand has driven prices to their highest levels, often fueled by low interest rates, economic confidence, and strong competition. Properties frequently sell above asking prices, with auction clearance rates soaring.
This is the riskiest time to buy. The fear of missing out (FOMO) can tempt buyers to overextend their finances, paying inflated prices for properties that may lose value as the cycle shifts. Be aware of these red flags that signal a pending downturn:
- Increasing vacancy rates
- A rise in new construction creating oversupply
- Longer selling times for properties
Downward Trend Phase
The clock transitions to 3 o’clock as the market begins its decline. Prices stabilise or start falling as supply exceeds demand. The number of unsold properties grows, and the days on the market increase.
This phase offers opportunities for patient buyers, particularly those who can negotiate better deals with vendors eager to sell. However, financing may become more challenging as lenders tighten their requirements during this phase, and caution is essential to avoid buying into properties with little growth potential.
Investment Opportunity Window
The market reaches its lowest point at 6 o’clock, commonly referred to as the bottom of the cycle. Prices are at their most affordable, and well-prepared buyers who enter the market now can secure excellent deals.
This is traditionally considered the best time to buy, but the challenge lies in pinpointing the bottom. It’s often only recognised in hindsight as the market begins to recover. At this stage, buyers should focus on:
- Properties in areas with long-term growth potential
- Securing financing to capitalise on available opportunities
Growth Phase Dynamics
The market moves into a recovery phase at 9 o’clock, where prices begin to climb again. Demand increases, and the oversupply from the downturn starts to shrink. This phase marks the beginning of a growth cycle, making it a favourable time for buyers who missed the market bottom.
Investors and buyers entering at this point often benefit from capital growth as the market heads toward the next peak. Signs of recovery include:
- Lower interest rates
- Increased buyer confidence
- Reduced inventory and higher competition for properties
Strategic Purchase Timing
There’s no one-size-fits-all answer to the question of when to buy a house. Timing depends on individual circumstances, such as your financial position, goals, and tolerance for market fluctuations. However, buying during the recovery phase is generally regarded as the most advantageous. Prices are affordable, and there’s potential for capital growth as the market improves.
For those buying during the downturn phase, patience is key. While prices may seem attractive, buyers must be cautious of overextending themselves, especially if the market takes longer to recover.
Current Market Analysis
In recent years, Australia’s property market has experienced significant shifts due to external factors such as the COVID-19 pandemic, inflationary pressures, and interest rate adjustments by the Reserve Bank of Australia (RBA). These influences have caused fluctuations in housing demand, affordability, and borrowing costs.
Based on CoreLogic’s January 2025 report, the property boom we’ve seen since early 2023 according to the national home value index (HVI) is cooling off. For the first time in almost two years, house prices across Australia dropped slightly in December 2024 (-0.1%).
However, different cities tell different stories: Perth, Adelaide, and Brisbane are still going strong, with Perth house prices up 19% over the year. In contrast, Melbourne saw prices fall by 3%.
Looking ahead to 2025:
- Interest rates will start coming down
- House prices could become more affordable as wages increase
- We’re expecting fewer overseas migrants, which could ease rental pressure
- There’s still a shortage of new houses being built
The bottom line?
While the market is cooling, it’s happening gently rather than crashing. Some areas are still seeing strong growth while others are taking a breather. As always in property, location matters more than timing.
Risk Assessment Guidelines
Market Sentiment Risks
Media coverage can amplify booms, creating fear of missing out (FOMO). This can lead to impulsive decisions that ignore long-term affordability and market conditions.
Interest Rate Implications
Rising interest rates can mark the transition to a downturn. In Australia, recent rate hikes have already begun impacting borrowing capacity and housing affordability.
Investment Strategy
Property is a long-term investment. Don’t base your decision solely on short-term trends. Ensure your financial position is strong enough to weather market fluctuations.
Professional Consultation
The complexities of the property cycle and mortgage landscape make expert advice invaluable. Mortgage brokers, real estate agents, and financial planners can help you make informed decisions.
Financial Advisory Services
Buying a house isn’t just about timing the market; it’s also about securing the right financial foundation. Mortgage brokers play a critical role in helping buyers navigate this process. At Unlocked Finance, our expert mortgage brokers can:
- Assess Your Financial Position: We can evaluate your income, expenses, and borrowing capacity, ensuring you don’t overextend yourself during a volatile market.
- Secure Competitive Rates: We have access to a wide range of lenders, allowing them to find the best interest rates and terms tailored to your situation.
- Provide Market Insights: We understand the property clock and can advise you on timing your purchase based on current market conditions.
- Navigate Lending Requirements: During downturns or recessions, lenders may tighten their criteria. We can help you meet these requirements and increase your chances of loan approval.
Expert Recommendations
The property clock offers a powerful framework for understanding Australia’s real estate market. By recognising the signs of each phase, you can identify opportunities, avoid overpaying, and get the keys to your dream home with confidence.
Nevertheless, timing isn’t everything. Our expert Toowoomba Mortgage Brokers can help you make informed decisions, protect your finances, and make the most of market opportunities.
So, is it a good time to buy a home? Well, every journey is unique – let’s chat about yours! Book your FREE consultation today and discover the options that make sense for your dream home.
