The question of whether now is a good time to invest in property is one many aspiring and seasoned investors grapple with. In a recent interview with Mayfield Director John Carew, a seasoned buyer’s agent, we explored this topic in depth. Here’s what he had to say about the long-term nature of property investment and how to approach investing in real estate.
Real Estate is a Long-Term Game
John emphasised real estate is fundamentally a long-term investment. Unlike other asset classes, property requires a significant time to realise its full potential. The costs associated with buying and selling property—such as stamp duty, legal fees, and agent commissions—mean short-term gains are often difficult to achieve.
“Real estate is absolutely a long-term game”, John said. “When we’re looking at securing a property for our clients, we’re not worried about what the market will do in six to 12 months or even two years. We’re looking at what this property will be worth in 10, 20, or 30 years.”
Key Takeaway: Property investment is not about chasing short-term profits. Instead, it’s about holding quality assets over the long term to benefit from capital growth and the magic of compound interest.
The Costs of Entry and Exit
One of the reasons property is a long-term investment is the high costs associated with buying and selling. John pointed out the total costs of entering and exiting a property can amount to around 8–9% of the property’s value. This includes stamp duty, legal fees, buyer’s agent fees (if applicable), moving costs, and agent commissions when selling.
“By the time you factor in all the costs, you’re looking at a significant amount of money”, John explained. “That’s why it’s so important to think long-term. You need to hold the property for a substantial period to offset these costs and see real growth.”
Key Takeaway: The high costs of buying and selling property mean investors should be prepared to hold onto their investments for the long haul. Short-term flipping is rarely profitable after accounting for these expenses.
Investment Timing and Financial Readiness
While some investors wait for the “perfect” moment to buy, John believes it’s more important to focus on financial readiness and long-term strategy.
“If you’re mentally prepared, have a cash position that allows you to invest, and if you’re looking to build long-term wealth, then yes, it’s a good time to invest.”
He also noted for those buying a family home, the decision should be driven by lifestyle needs rather than market conditions. “If you need a larger home because you’re starting a family or downsizing because the kids have moved out, you do it when your lifestyle demands it. Don’t gamble with the market.”
Key Takeaway: Instead of trying to predict market peaks and troughs, focus on your long-term goals and financial readiness. If you’re in a position to invest and have a buffer, now can be a good time to enter the market.
The Importance of Quality Assets
When it comes to building wealth through property, John stressed the importance of investing in high-quality, blue-chip assets. These are properties in desirable locations with strong growth potential, rather than high-yielding properties in areas with limited capital growth.
“We’re big advocates of buying blue-chip assets in quality parts of Sydney”, John said. “While you might get a higher yield in regional areas, the capital growth in those areas is often limited. Over time, it’s the capital growth that builds wealth, not just the rental yield.”
He also warned against common pitfalls, such as buying off-the-plan properties or house-and-land packages in areas with unlimited supply. “These types of properties often have low capital growth because of the oversupply issue. Investors can get stuck and find it difficult to scale their portfolio.”
Key Takeaway: Focus on quality over quantity. Invest in properties in prime locations with strong growth potential, even if the rental yield is lower. These assets are more likely to deliver consistent capital growth over time.
For those considering property investment, John’s advice is clear: do your research, focus on quality assets, and be prepared to hold onto your investment for the long term. By doing so, you’ll be well-positioned to build wealth through property over time.
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