As a Mosman homeowner, it is likely you also have an interest in investing or a portfolio of properties as a strategy to grow your wealth. To be a successful investor and maximise your returns, it’s more than worthwhile to understand the concept of the property clock. This will help you make the right investment decisions.
The property clock can also give you a good idea as a homeowner in Mosman as to when is the right time to sell.
What is the property clock?
Every geographically different property market is unique but tends to follow a ‘rise and fall’ cycle over time. Any experienced real estate agent will explain that they have seen the market ebb and flow repeatedly over the years.
Over the long term, the trend is always upwards, unless something occurs such as an oversupply of properties followed by a permanent drop in local employment opportunities.
The term ‘property clock’ refers to where a particular market stands at any moment in time. At ‘12’, the area is at its peak desirability, with buyers flocking to make strong offers. Generally, this peak follows a period of growth and low interest rates.
Places including Melbourne and greater Sydney hit 12 on the property clock in late 2017. From there, a range of changed conditions, including restricted lending, led to the ‘clock hands’ moving their way down to the 6.
Between 12 and 6, the property market is in decline. Prices either stagnate or stumble as buyers pull back.
With property, there is almost always a bottom floor. Once the market hits a low, it will eventually begin to rise again as prices recover.
Using the property clock to invest
If you’re investing in property, do your research as to where the area where you would like to buy is at on the property clock.
For example, a suburb where there hasn’t been a great deal of action over the past six months may be hovering around 6 or 7 on the property clock. However, a major infrastructure project being announced nearby will force those hands into action. The area will quickly become more desirable and this is the time to buy before prices are pushed up too high.
Strategically, you should aim to sell when an area peaks in value. This can be difficult to identify but if you sell between 11 and 1, so long as you have bought towards the bottom of the clock, you should make a profit.
Careful research and the advice of a savvy agent will help you determine where an area is sitting on the property clock.
The Mosman property clock
If you take a look at retrospective data, you will see that the Mosman property clock dipped down to 6 in 2012 and has continued to rise since then, with house prices jumping from an average of $2 million to around $4 million, and apartments rising from around $700k to over $1 million.
While greater Sydney has experienced a low on the property clock over the past 18 months (making now a good time to invest in many areas), Mosman has held reasonably strong.
A number of properties sold for well-above reserve during the first half of 2019 and Mosman was recently reported to have experienced a 12-month growth rate of 4.4 per cent, plus a healthy five-year growth rate of 68.9 per cent.
After a slight drop during 2018, the average price of a home in Mosman is now over $4 million. Data from real estate industry provider CoreLogic shows Mosman is Australia’s fastest growing suburb in terms of prices, with house values growing by an average of $299,000 every year for the past five years. This represents five times the average annual equity gain for the rest of Sydney.
From the above statistics, it would be easy to say the Mosman property clock is at or approaching a high, although the only true way to determine the peak point is once the market begins to decline.
Time to sell?
When you’re a savvy investor, the property clock is key to maximising your returns and it pays to watch trends closely.
As a homeowner, the property clock is less imperative as sometimes the time is right for you regardless of the current market conditions. With that being said, however, it always makes sense to try to sell when buyers are at their most motivated.
Current data and the property clock trend give evidence that now is a strategically good time to list your Mosman home for sale. However, the best approach is to speak with an experienced and knowledgeable local agent, to get their recommendations based on your personal goals.
