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Why all property news is bad news: What to do when the headlines scream "The crash is coming!"


It seems like yesterday the media was bombarding us with headlines on how the property market was going through the roof, "prices in Melbourne were climbing by hundreds of dollars per day!"


Fast forward a few months it’s a completely different picture, the headlines are yelling “property prices now tipped to drop 10%” and “the crash is coming!”



I remember prior to purchasing my first property, in the years leading up to taking the plunge I would desperately search for guidance on what would be the biggest decision I’d made in my life to date. I would read article after article scanning for property related headlines trying the find that piece which would confirm the decision I was about to make was the right one!

Do you know what was funny? no matter the article, negative for the direction of property prices or positive they both had the same effect… to make me panic!

Why was that so? what I soon discovered, is it’s because human’s have what psychologists call a “negative bias” a term used to describe our collective hunger to hear and remember bad news. And this isn’t just a theory. Its evolutionary. You see as human beings have evolved over many thousands of years, for our own survival we have learnt to react quickly to potential threats. We seek bad news because its a signal we need to change our behavior to avoid danger.


So what should we do with relation to making decisions relating to a property purchases?


My 5 most important pieces of advice when deciding on whether to buy a property are below:

  1. First and foremost never let our decision be solely influenced by media, the opinion of friends (or sales agents!) no matter if times are said to be good or bad!

  2. Ask ourselves why am I purchasing this property? What are the factors that make this property a desirable home or investment? i.e schools, employment, population growth, amenity and would other people see things the same way I do?

  3. Location and lifestyle is this property right for my specific needs?

  4. Do I have a clear understanding of which type of property is right for me? Not all properties are created equal and some properties perform better than others. Am I looking at the right type of property for my desired outcomes?

  5. Fluctuations in supply & demand like all things are seasonal but fundamentals predict long term trends. What are the fundamentals for the area I am looking to buy in:

  • Is population growing or declining in this area?

  • Are there more or less jobs being created in my area?

  • Is there a level of good infrastructure being planned to sustain the economy in this area long term?

  • And the big one - have I researched enough properties to determine a fair value?


Remember guys, a good opportunity is a good opportunity no matter the headline.

If you’ve done adequate research you no longer need to focus on the right headline to know the right time to recognise a great deal!


Wishing you continued property success

MDP

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