Catch it

I’m conscious over the last couple of years the only thing that would pop into anyone’s mind when they heard the expression ‘catch it’ would be COVID…the very thing nobody wanted to catch. Whilst I’m sure that sentiment still exists, there are many now firmly focussed on how to catch something quite different: the easing market. Is it possible?

I think the financial slang expression is ‘to catch a falling knife’ meaning the aim is to wait for the price of an asset to hit bottom before buying it, but it can be a tricky and somewhat dangerous gamble.

The question is, can you successfully catch a falling knife? Does anyone really know where the bottom is? And is the risk really worth it?

I do get it. Paying more for a property than it is ‘worth’ is every buyer’s worst nightmare. Paying more today than you might need to pay in a month can also be a bitter pill to swallow…to awkwardly mix my metaphors. I understand why they might wonder why buy now if values are supposedly still going to ease?

My respectful, but perhaps slightly infuriating response, is to answer that question with a question. Do you want the property? If so, why do you want it? I’m not trying to be a smart arse in turning the conversation around. They’re actually very valid and genuine questions that, weirdly, potential buyers often forget. And the answers really matter.

It is incredibly important to remind potential buyers why they’re here looking. And why they’re looking now, because the facts show that residential property is a big picture, long-term financial commitment. Contrary to what you might expect given our national obsession with residential real estate recently released research highlights that owner-occupiers hold their property for an average of 24 years. Even investors, for whom you can assume the motivation is purely return rather than mixed with emotion, on average hold their property for 13 years.

So. Let’s be realistic. If you’re looking at a property as your first home, growing family home, upsizer, downsizer or as an investor, over the duration of your ownership the market is going to move. Values have moved lower over recent months but don’t lose sight of the fact that had risen by double digits for a lot more months before that and the same movement can, and will, happen again.

In my view, you don’t have to ‘catch the knife’. There is value to be found in the market now. Vendors are increasingly realistic in terms of accepting a healthy return on what is predominantly an investment they have held for over a decade. Deals can, and are, being done on quality properties at healthy prices but importantly with the capacity to deliver further capital growth over the years to come.