Humans are strange, but also predictable. Here’s proof from the property market.
The market just went “opportunity grade”.
Let me show you what I mean. At this stage in the cycle, you can say that the recovery is established.
That is, prices have given us a very clear direction. The market is posting consistent gains, and no one doubts that the cycle has bottomed.
You can see it in the monthly price data.
You can see that the monthly price data tends to move in long cycles – it doesn’t jump around month to month. And so with three solid monthly gains behind it, the market is gearing up for another bull run.
And based on recent form, the bull run will probably run to 2023, maybe even 2026.
Okay, so that’s happening. This isn’t one of my obscure theories about life. This is what’s in the data and what pretty much all the experts are saying.
And yet, housing finance remains weak.
Take a look at the quarterly credit data – growth continues to slow:
This is growth in the stock of mortgages, and the stock level is affected by people paying back their mortgages.
Still, when you just look at new housing finance, that has yet to turn around, with new housing finance growing less and less quickly each month.
So, how long do you reckon that situation lasts – where prices are picking up and housing finance isn’t growing strongly?
Not long, ay?
And this is what I mean when I say the market is “opportunity grade” right now.
This is always the way it goes. It’s human nature. We’re over-enthusiastic at the top, and spend more than we should.
But then at the bottom, we’re overly pessimistic, and buy less than we should.
We’re at the bottom right now.
So what are you going to do? Wait to get at the top, when the market has given you an even clearer signal?
Don’t be that guy.
The buyers are not back in force just yet, but they’re on their way.
If it’s one thing I know about economics is that opportunities don’t stay opportunities for long.
The window on an opportunity grade market is short.
Time to get ready. Time to get active. Start building that capital base. Get up on the board and ride it all the way to 2023, maybe even all the way to 2026.
And if you miss it, don’t say you weren’t warned.