Ask Paul: Should we wait for the property market to correct?

Good day, Paul.

This year we sold our house in regional Western Australia and moved to Adelaide. We're currently renting - half is paid by our wages and the other half by interest on the bank account holding the house sale money.

My question is: Should we buy a property here straightaway or wait until the market corrects? It feels like now is the wrong time to buy. Thank you.

My crystal ball is very flawed, Andy. But I can tell you with great certainly that market timing is not a game I am willing to play.

With all of my investments - property, shares and super - I simply invest when I have the money. I have absolutely no idea what markets will do in the short to medium term, but I have a lot of confidence about long-term returns.

Over four decades, my wife and I have changed the home we own (mainly as kids came along) five times. On each occasion, we thought prices were too high.

But we bought what we could afford at the time. Our starter was a semi in the 'close to city' Sydney suburb of Artarmon in 1982. We paid $90,500, which was a real stretch for us at the time. I thought it was outrageous!

Time went by and we had two children. So, we sold the semi for $270,000 and paid what I thought was an outrageous $365,000 for a bigger home nearby.

Another child came along, and we needed another bedroom. So, we sold that for $425,000 and bought a bigger house nearby for another outrageous sum, $503,000. That we sold for $850,000... and on our story goes.

With hindsight, as the market rose and at times fell, we bought a couple of our homes at the wrong time, but time washes that away. I can tell you where your main risk lies - that is not being in the market. Cash at the bank has historically always been our worst-returning asset after tax and inflation in the long term.

I'll accept the argument that if Adelaide's population will fall, due to no job creation or economic growth, property prices will fall. But I see no facts to support that argument. Population growth drives property prices; limited supply exacerbates this.

Andy, with hindsight, you may well be absolutely right. You may well look back and feel you bought at the wrong time. But your biggest risk is not buying.

If Vicki and I had flapped around about markets falling back in 1982 and had not bought, the reality is we would still be renting 42 years later and a heck of a lot poorer!

I can't guarantee anything, but in your shoes, providing you have a long-term view, I'd be buying a well-located property that suits your lifestyle, sooner rather than later.

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