I'm Jeremy Sheepard. >> And I'm Daniel. >> We use data to expose deceitful property experts and their marketing BS. >> This is the expert busting series. >> I often hear professionals advise investors buy at the bottom. Is this just marketing disguised as advice?
In this episode, I'm going to look at historical data and see whether it is possible to even identify the bottom of the market and secondly whether you really want to and that's the interesting part. So the idea of the experts claim uh is to buy before the market gets too hot. Uh that means you don't have to fight with other buyers and you can take your time and you also get the full growth cycle because you get in there early. Uh the idea for this episode comes partly from these these sorts of uh claims by fake experts, advice by fake experts, but also by uh investors who are clients of us who use the demand to supply ratio to pick markets to pick hot markets. And their first complaint is, "Jeremy, I can't buy in this market. The agents aren't even returning my calls.
There's hardly anything available for stock. How do I get a foot in the door? Do you have anything long-term? Do you have anything easier? Can I get in before the market gets hot? Uh, and so I just wanted to address that that complaint.
And of course, the advice by these um halfbaked experts. So, it's not easy to get into the right market, but the effort is well worth it like with most most things in life. Um, what great accomplishments uh have you achieved that took practically no effort? Most of it requires some effort. So you do have to get put in some effort to get into these hot markets. >> So what is buying at the bottom, Jeremy?
>> All right. So markets don't always go up in a consistent uh manner. Sometimes they have a peak and then they retract before leveling off and then resuming their growth sometime into the future. Each cycle is different from the one in the past. Uh there's no consistency. However, the general pattern is surge, sloth, repeat, surge, sloth, repeat.
So it makes no sense obviously to buy at the peak. Um so it sounds reasonable in theory to buy at the bottom. Uh the problem is going on to the next slide. How do you know when a market is at its bottom? Here's an example of some good growth uh seen in Sydney house prices. Uh it's followed by a peak and then a retraction in values and what looks like a leveling off.
So is this at the bottom? So assume you are an investor at the end of 2005. You see in the bottom right hand corner there, it's roughly the end of 2005. Uh we might think that this is a good time to buy since prices have bottomed and they've leveled out. Uh but this example highlights one of the problems of trying to pick the bottom. Let's see how the next few years panned out.
>> So we extend the graph to what 2007 now? Another two years. >> Yeah. So this is the same chart for Sydney house prices, but it's now been expended extended 3 years. And as you can see, the curve is flat after the point that we assumed to be the bottom. And this is one of the uh big problems of picking the bottom.
It may drag on for longer than you thought. Uh just because the market has found the bottom doesn't mean it will bounce right back up again. And Sydney houses stayed on the bottom for nearly three years. That might not sound like a long time, but it is enough time for prices to rise elsewhere by as much as uh 50%. Which is a huge opportunity cost. >> And I've got a slide, the next slide shows some examples of that exact uh opportunity cost.
>> So where Sydney's peak, this is where you can maybe go, okay, well, if you've got a property in Sydney and you're just still in your accumulation phase and it's an investment, you could hopefully pull some equity out and buy again. That's sort of more a passive approach. You still hold on to Sydney for the long long term if you don't want to sell. Or the other approach is you release equity, buy a property elsewhere, so you get a bit of diversification. The other option is you sell that property in Sydney altogether and you might buy two or three properties in other markets. So you're you're taking a bit of a would I say gamble maybe um a bit more of an active approach to try and build up your asset base a lot quicker.
So maybe what 6 months after that's flattened out or Sydney's come back you might go okay well there's some hotter markets out there you might look to sell and pivot into another location. So it is something where you hear a lot of these professionals will say buy and hold never sell. That's fine if you've got a long-term view and you've done all your numbers and the capital gains or what do we call it? Re uh recycling costs. >> Yeah. Reallocation of equity.
Yeah. There's a cost to capital gains tax. Uh which could make the idea of selling a property and buying a replacement um too too costly. >> Well, buyers agents fee, selling agents fee. Um >> so that all adds up pretty quickly. So it just needs to be worthwhile going into another market which you know we can do those numbers for our clients but back over here is that's where you can really take an active approach and in the next example you'll be discussing how you could make more money while uh like while sleeping than working really can't you?
>> Yeah. Yeah. If you go to the next slide so this is just a few of the areas that you could have bought in instead of Sydney. Uh Perth, for example, had 67% growth and this is over the precise period when Sydney was completely flat. So for a $500,000 property, that is more than quarter of a million dollar in missed opportunity costs over three years. So how much would you were you earning in 2005 to 2008 uh peranom?
uh it's it's it's like working for nothing uh for three years uh that sort of opportunity cost. So timing can make a huge difference in property investing even with a relatively small budget. It's like yeah working for for free and and also note that these figures here this is 2007 so almost 20 years ago >> in today's terms that'd be a lot higher. So like we was just saying Sydney what what is Sydney priced at now? Let's say Sydney was uh having that curve but in today's dollars um like 1.5 mil and then for the next 3 years it's flat somewhere else grows by 50%. 50% of a mill it's now half a million dollar opportunity cost.
So yeah big dollars you make mistakes in real estate it it costs big dollars and with these examples I mean these are some of the best but the rest of the country had 20% growth in that period. So for a $500,000 property, 20% that's $100,000 opportunity cost for those three years. If you had decided to buy at the bottom in Sydney after that brief retraction, >> so Sydney was lagging pretty much through that period. If there was 20% growth, Sydney was flatlined. >> Yeah. Yeah.
For those three years, there was 20% growth elsewhere and Sydney was flat. All right. Let's uh fast forward another year on that chart. So uh this slide extends the right edge of the chart. You'll notice the end month in the bottom right hand corner uh is now a year in advance of the prior chart. >> Mhm.
>> And you can see that the uh curve in the top right has started to turn upwards. So it looks like the recovery started in late 2007. That long flat bottom has now ended and prices are finally rising. So, we've already missed some of that growth. If we're choosing to buy now in Sydney, this is a recovery. We've already missed some of that growth.
We might now be at a point where we're fighting with other buyers. >> Uh, but at least we've now we're now making a decision not to buy at the bottom, but to after we're seeing some growth. So, is this now a buy signal? I think this is a buy signal. Is it? >> Well, for me, it'd be well, what's the DSR score >> exactly?
Yeah. But let's extend the right of edge of the chart again. And as you can see, the upturn in values was a false positive. >> This was not a good buy signal. Prices went backwards and took 18 months to return just to where they had started. >> It's co there, right?
>> Uh not yet. >> So not co it was the GFC. >> GFC. Yeah. >> GFC. Uh so it's looking more like a recovery takes longer than we thought and along the way there might be some of these false signs of recovery.
So let's extend and wait until prices have clearly breached prior peaks. So let's extend the chart a bit more. Uh this is now a year later. The curve has now broken into new territory. Is this now a buy signal? Uh this does not look like a mild upturn.
It's a pretty solid upturn. Um it's not really the bottom though. But is this now uh a buy signal? Let's fast forward and see how things panned out. Uh and again, we got it wrong. Another three years passed with almost no improvement in buy price.
Uh we're waiting for an improvement in prices to have confidence that the market's now moving into its next boom. But as [clears throat] you can see, uh, prices slumped again. Now, how is this point right now? So, where are we? End of 2013. >> How is this point in time any different from ones we've seen in the past?
Is this latest upswing in values another false positive? We've been fooled before, so is now a good time to buy? Let's extend the chart again. And yes, finally, a boom. So Sydney was the right place to buy in early 2013. Uh but there's nothing different about the movement in prices beforehand that we could guess whether this move was a correct buy signal or whether it was another false positive.
Uh so yeah, small year-to-year price movements like we've seen in this example are not reliable means of timing entry into a market. Anyway, let's move forward another couple of years. The next slide. Uh, so this chart's now been extended to the end of 2019. Uh, prices have peaked and retracted. Uh, does that look like the bottom?
Is this the next time to buy or is it another false positive? So, has the boom passed and we're about to see more growth or is it still too early? Because we've seen this sort of thing before. We know not to jump in too early. It's been 2 years since the last peak. Is that enough?
>> Well, even the the earlier retractions there like the the price points have come back for example in Sydney that could have been the best performing market at that time. Did the whole market go backwards or was it just Sydney? Maybe it was the right time still to buy in Sydney. You've still outperformed the market, right? >> Uh yeah, if Sydney was performing whilst the others were going backwards. Yeah.
Yeah, but like let's say Sydney was going backwards at let's say 2% peranom, but all the other markets were going back 10%. Well, you'd be doing pretty well then, right? >> Okay. But that's not the case of buying at the bottom. It's just a case of picking the better market. >> Better market.
But the back end, this was around 2019. Do you remember what this was? Why was there a sharp drop around this period? >> Uh in Sydney or probably just um you quite often find a retraction after a big boom in a market. I think over here though could you say that the election had a big impact because I know there was a period there >> where there was election remember talking about abolishing negative gearing and I think Labour were looking to get into government and then Liberal ended up winning but you remember but I remember >> losable election >> there was a lot of um uh I think transactions were a lot slower in the like all of the market not just Sydney through that period. >> Yeah.
could have been due to the election or there could have been just uh people run out of money and they're looking at prices in Sydney and thinking are you kidding? I'm not paying that much. Um I can't afford to. Or there could have been a change in interest rates. Yeah, can't remember. >> I think back then the rates were still quite low.
I think they started picking up after co-ish time. >> Well, they got really low during CO. So >> they did or after CO, I guess. >> All right, just extending the next one. Uh so despite there being only two years since the last peak uh the market actually had a very brief bottom >> and took off again. Uh so if we were waiting for more price correction we would have missed this boom.
Um and yeah look at the long four-year bottom of 2005 to 2009 and now compare that with the short bottom of 2019. So yeah, that inconsistency very common. No market cycle seems to be the same. So using Sydney as an example, it's uh easy to get into early buying at the bottom. But it is also easy to wait too long and miss the start. So yeah, picking the bottom is not easy.
Uh except in hindsight. If you go to the next slide, I've put in where those um markers are. I think a lot of if you're an investor or a home buyer, you're seeing that market go back. You're thinking, I want to get a bargain. It's going to keep going down down and then it starts picking up quickly and that's when you need to move quickly, right? >> Yeah.
And you've missed out. Yeah. So, in hindsight, super easy uh to pick the perfect buy points. They are 2001, 2012, uh so you have to wait 11 years and 2019. >> 2014, you mean? or it would be a little bit >> uh 201 oh yeah 2014 yeah sorry >> it could have gone a little bit earlier though it could have gone 2012 but you want to see a bit of that consistency right and again over here this is the one that moved really quick around 2019 I think that was the election around that time I remember >> yeah but it could have been coincidental to the election you don't know what unless you survey buyers um >> combination >> hard to hard to say >> but yeah you can see that there's no consistency there.
You have a short uh dip and then a a reboom or I mean someone might argue, hey, that's all one boom from 2014. But uh yeah, anyway, this is just one example and uh that's a very small sample size. So what we really need is a formula for picking the bottom >> uh and see if it is successful once applied many times over many markets, not just uh one but thousands. So uh I wrote some code and uh it's to pick markets supposedly at their bottom and the parameters I used were a decline of 10% or more experienced over the last year. I tried a few other combinations but uh uh there were either too few cases or the performance was no better. Uh then what I did is I applied this formula to groups of suburbs called SA3s.
So SA3 is short for statistical area level three. It's um it's a group of suburbs defined by the Australian Bureau of Statistics. It's probably the most equivalent is a local government area, a council area. It's about that sort of size. So um I got some stats on it. There are Yeah.
So there are 500 local government areas around the country. Roughly 500. Uh there are about 300 SA3s. So an SA3 is a little bit larger than an LGA. Uh then what I did is I grouped the suburbs to SA3 to make uh the data more reliable. Uh suburbs are quite often a little too um too small to get a truly reliable measure of capital growth.
Now, yeah, in that case, the median bounces up and down from month to month, making that decline uh in prices difficult to identify. Uh but if measured for an SO3, it's more than likely going to be an accurate value uh at least for the majority of SA3. Some of the really regional ones are difficult. Uh all right, so what I'm looking for is a decline in an SA3's typical value of at least 10% over the last 12 months. uh and that is supposed to be a trigger to buy in that SA3. Then what I did is I calculated how well that SA3 performed over the next few years and that's to see if buying at the bottom works to see if it's good advice firstly and the next slide shows how using uh the buy at the bottom approach worked in the past.
This is when it's applied to a large amount of historical data. So the median peranom growth rate following the buy signal resulted in growth of 7.5% peranom for the next 5 years and that's actually better than the benchmark which is the growth of the rest of the nation um which is 6.5% so it outperformed by 1% peranom this is >> is this just for houses? Yes, just for houses units are really quite small. There's only um you know the the major state capitals, even in the major state capitals of Sydney, Melbourne, Brisbane, >> um there are more suburbs where there's >> a house value and no unit value than there are suburbs with a unit value, no house value, >> or or even both. >> Uh okay, so I 586 observations, right? So I only found 586 cases where this occurred.
This is looking at all 300 plus SA3s over the last 40 years of data. Um now 40 years is 480 months. So we need at least 500 observations. Uh double that would have been more reliable but I can only find 586 cases. Um so if we don't have a buy signal for a month um because there is not a single SA3 that we can pick from uh then we would need to consider the opportunity cost of not being invested for some period of time. So that's why I needed at least 500 observations.
Um yeah so I say this because there were better combinations like see the prior chart I said I'm looking for a 10% decline over the next year. there were pro there were better combinations that G gave a better outperformance of the benchmark but there were too few observations. So uh for example, instead of a 10% decline, I tried a 5% decline. I tried a 15% decline and I tried a 20% decline. And instead of uh a decline taking place over 12 months, I tried 18 months, 24 months, 36 months. Um and instead of measuring subsequent growth over five years as we've got here um that is after the buy signal after the bottom I tried measuring over 3 years over four years but five years turned out to be the best.
So some combinations had better performance but were too infrequent to be uh considered. Um, for example, a decline of 20% for an SA3 was between four and five times less common than a decline of only 10%. >> Well, that makes more sense, right? >> Yeah, it's [clears throat] it's rarer. Yeah. So, 586 observations, just enough to consider this formula as uh reliable.
All right. So, from this analysis, we can say that buying at the bottom is better than random suburb selection. M >> so it's not terrible advice. It actually works. It outperforms by about 1% peranom over the next say 5 years. Now this is assuming that you can uh pick the bench uh the the bottom using this formula.
Right? But here's what I did next. If you go on to the next slide, I wrote some more code. Uh this is to test whether buying in a boom would be better advice. Now, you can't buy at the bottom at the same time as buying in a boom. Like the market is either in a boom or it's at the bottom.
It's not both. So, I wanted to see which is better advice. Is it better to buy at the bottom or buy in a boom? So, remember the problem with buying at the bottom is you don't know how long you don't know where the bottom is and you don't know how long that bottom is going to last. >> The problem with buying in a boom is that it's already started. you've missed out on some growth and you're fighting against other buyers to to get in the market.
>> So, one's buying too early, the other's buying too late. >> But I think how do you negate that? Like I think the early one for me is easy. I would want to see, let's say the market's been flat for a while and then it starts picking up, but I guess it's hard with that Sydney example because it started picking up. So for me, I just look at the DSR score. It makes my life easier.
[laughter] >> Yeah. >> But it can be scattered though, right? It can be scattered. Like it might pick markets in Melbourne. might pick up some markets in Perth. It might pick up some markets in Townsville.
And that's why we're very big on looking at that whole area. And then you get that ripple effect potential and all these different things. But the the more interesting one is the incline because you think, "Oh, this market's grown by 30% the last 2 3 years. I've missed the boat and it grows another 50%." >> Yeah, exactly. In fact, I I come up with some examples of that. So, these are the parameters that worked out best.
Looking for an increase in prices of 20% or more over the last two years. M >> and you'll see on the next slide comparing with buying at the bottom. >> So um I measured the growth in SA3s for the 5 years after the buy trigger and they performed better than using the buy at bottom approach. The buy at bottom approach was not useless though. Remember it resulted in 1% more growth than random suburb selection. But buying in a boom delivered 1.7% more growth.
And you'll notice there were a lot more opportunities, 937 versus uh the 586 for buy at the bottom. Uh and what's more, there were more combinations of those parameters that showed promise. For example, 30% growth over the last 3 years is another good one. That's a buy signal. So this outperformed random suburb selection by 1.5%. And uh it was definitely better than the buy at the bottom approach.
Now the interesting combo though uh which ended up being equal to buying at the bottom that is no better no worse than buy at the bottom. So it had 1% more growth than random suburb selection. The parameters were 40% over the last three years. Now, I know on our websites a lot of investors will rule out will scratch out a suburb from consideration if it's had too much growth in the recent period of time. And they >> typically use three years probably because the charts in DSR data were only three years long. Uh and I don't know what their threshold is, but it's around that 30 40%.
But looking at historical data, you're actually better off, not worse off. You you shouldn't scratch suburbs with that. You should actually buy in them if they've had this much growth looking at historic data. So if you're making data driven investment decisions, you would not take that approach. And it is rather a uh a blunt approach. It's not really a data science approach.
It's it's more of a a human has come up with this idea uh suggested oh we should scratch suburbs if they've had too much growth what is too much growth over what period of time they've arbitrarily chosen those two numbers >> market [clears throat] cycle timing metric that we have that uses a range of growth periods >> and uses um uh a score so it's not all or nothing scratch it from consideration score it add that score in with the demand to supply ratio. So, it's a a much more um sophisticated way of of doing things >> because you might have had a market that has had 50% growth over the last 3 years, but over the last 10 years, it's had 60% growth. So, it's only through so that from that year um 1 to 7, it's barely had any growth and then the last 3 years it's absolutely skyrocketed, but the demand still might be there. >> Yeah. And yeah, this this belief is from an arbitrarily chosen figure. They think, "Oh, 30%." Sounds like it's too much.
We've already missed it. >> Yeah. But looking at historical data, uh you're actually better off buying in a boom, even if it's had uh 30 or 40% capital growth already because of what's happened. >> What I love about this is you actually show the observations. Obviously, you've done in the database, you've done all the research here. We're just seeing what the final output is.
But 9.9%. So like let's say you went into a market that's just had that uplift of 20%. You feel confident. Now you jump in and the amount of growth you still have 5 years after. What I'd love to see eventually is let's say a market's had 50% growth. Do you still go in there and let's say it's one of the highest scoring DSR markets.
Do you still jump in? Well, if yeah, if demand exceeds supply uh and you've got a high DSR score, then yeah, that market could easily grow by 100%. >> In total over that growth surge. That's right. >> Yeah. Markets have doubled in value in a short period of time.
So, saying that it's had 30, 40, or even 50% capital growth doesn't immediately scratch it out. It's it's it's like a um an all or nothing approach. As as humans, it makes sense. like if it's had too much growth, we don't want to invest there because we're more than likely towards the peak than towards the trough. But you need to you need to come up with a score for that, not scratch it completely. So I see people uh on on the platforms, they'll put in uh I I don't want to buy in a location that has a vacancy rate above 2%.
>> Scratch it off completely. >> Yeah, they scratch it completely. Rather than scoring 1.9% 2% 2.2% and then integrating that score in a sophisticated manner using data science into an overall score for the suburb. They like to just look at one thing at a time, vacancy. Okay, I've understood the concept. I now know what a good vacancy rate is, what an ordinary one is.
If it's above the benchmark, scratch it. So you could have a suburb, fantastic suburb, best suburb in all of history of property data, >> but for the month you're looking at it, there's one property that's vacant and there are only 40 rental properties in that market. So one out of 40 is 2.5%. Oop, scratch, gone, and you miss out on that opportunity. And the same with online search interest, same for past growth, same for the more metrics that you try and filter by, uh, the worse it gets for you. Well, I think this is what I I've learned over my investment journey and obviously having discussions with you is that I focused at a point in time a lot on stock on market.
Lower stock prices are going to rise, right? So, but for me, I understand DSR is what I should be looking at over time. So, if I'm looking at a market where this would matter more to me, let's say there's two markets, one then they've both got, let's say, a DSR score of around 80 each, similar. we'll just use. So, we got two different markets, but one's had 50% growth and the other one's only had 20% growth. Well, I'm going to lean more to the one that's maybe had has a better MCT score, if that makes sense.
And maybe it might have a better yield. So, you sort of have to come up with your own um again depending on your price points. And the other thing is like if they're even sort of markets, are the typical values different? Maybe in one market you're only getting 300 square meters. And that's something that we've also got at the back end for um anyone that comes through and like wants to do use any of our services consulting. We've actually got that there, haven't we?
We've got block size averages. >> Sure. Yeah. >> So, you might want to have a bigger block size to potentially add a granny flat or um do a a town houses down the track. I know I'm going a bit off here, but I'm just >> Yeah. But just back to that point, the market cycle timing which does look at a range of growths over a range of periods of time and scores them and integrates it into the DSR that's already been considered.
So yeah, if there were two markets with the same DSR uh and trends is another one. Is it a rising DSR at 70 or falling DSR at 70? The DSR score actually takes into consideration the trends. So they are the same whether they're rising or falling, whether it's past growth or not, that's all being considered. So yeah, anyway, um we are getting off track. What I found with this analysis of the historical data is that it's not a good thing to scratch a suburb from consideration if it's had 40% or more growth in the last 3 years.
You're actually slightly better off including such suburbs rather than excluding them. So, if you're using data to drive your decisions, um, don't use that approach. U, that's, yeah, that was an aside. Anyway, the key point here is that buying at the bottom, uh, although it's not terrible advice, the better advice would be to buy in a boom, uh, and you're not missing out on much if the market's grown by 20 or 30% already. Even 40% is not too much growth, uh, in most cases. Um, so why is it that getting in late is better than getting in early?
According to the data, it is, but why? We like to have reasons um other than just pointing at the data and say because the data tells me so. It's nice to to have a an explanation. >> I think it's a bit more consistent, right? Shares can jump up and down and certain suburbs and metrics can jump around also. That's why I like looking at um the the SUAS, the LGAAS, cuz they're not as volatile when you look at the data.
If you look at one suburb in isolation, like you said, the vacancy rate for a suburb might be 2.5, but in that local government area, it might be one. It might just be one anomaly maybe for that one month. So, I wouldn't scratch it out altogether. the LGA and the SUA is more important for me or the SA3 because you think that you're going to get the perfect suburb, but it's just like it's never going to be perfect. If we can get like an eight out of 10, like if we can get that suburb part right, yeah, the property depending on how much we pay for it, like at the end of the day, how have you gone in 3 years time? Judge us on that.
>> So, I think back to that point is more consistency in property. The data doesn't move around as rapid compared to the share market. Yeah, I've I've just listed a few suggestions here. These are just um examples. I don't know for sure, but um I'm thinking that investors assume uh that booms >> booms and go on for short periods of time. They don't realize just how long they do they do last.
>> I've seen investors, it's interesting. I don't know about you, Jeremy, but I've seen investors buy they go, I bought a bargain. that bought in a regional market with a low DSR. I've got a great discount. You got a discount for a reason, right? That market's not moving.
>> Yeah. Yeah. Yeah. It's come back to me in three years time and and brag. Then >> that's the time >> and I'll show you what you've missed out on. >> Yeah.
So, what some of the options here um uh because flap periods and booms go on for longer than most investors assume. Uh it's a lot easier to identify a boom than it is to identify a bottom. Um and I think the inferior approach of trying to buy at the bottom might have been born out of a bit of familiarity like you were saying with the stock market. Um they have a thing called a dead cat bounce when it when prices plummet. Uh they reach a bottom for a very short period of time and then they jump back up again. Whereas that uh that phenomena doesn't happen much in property.
Um it also might be a belief based on convenience. it's uh hard competing with other buyers. Uh so it would be easier to believe that buying at the bottom is better than buying in a boom. Um so yeah, it's it's not easy, especially in those insanely hot markets where the DSR is around 80 like you were saying. >> U but my advice is just persevere. You'll be better off if you persevere.
>> Or you can do what I do, hire a BA. I don't I'm not on the phone with agents. >> We we Yeah, we do a lot of the suburb analysis. We don't have the time to to do the actual buying. That's why we utilize um our relationships >> to to have someone on the ground. But what we do specialize in are the suburbs.
And um I know you got some more points there, Jeremy, but I just wanted to jump in. What what can investors do? So for me on our platform, historical charts, I use it all the time. It's if you want to play around with this, you can back date data. You can have a look at this point in time. Let's say January 2026 at the time of recording.
You can go back the last three years, the five years, look at different markets like play around so you get an idea of what we're actually talking about and then obviously suburb search to look at what are the best markets now and you can just see how they've performed. So with our platform you can do that right you can go back >> you can back to >> and have a look. >> So even though we show these graphs here you can get it from our historical charts. >> Yeah. So getting into the hot markets may be difficult but I would recommend you you persevere give it a go. I mean, if you do get fed up, um, get in touch.
We'll we'll see if we can help you out. Lastly, um, I also think there might be some investor psychology at play. So, every investor wants to grab the whole growth cycle. They want to be there right at the start. They don't want to miss any of it. So, the suggestion of a strategy to buy at the bottom, it just might appeal to more investors who are hungry for everything.
Anyway, I'm just guessing um why buying in a boom is better than buying at the bottom. There may be other reasons. Um all I know is what the data says. Oh yeah, last little bit. So, uh some analysis I conducted to estimate the time a property market spends in these lackluster growth periods. Uh I found that there's no typical market cycle period.
uh it's a little easier to specify the percentage of time in each phase than to estimate the years in each phase. So very roughly uh a flat or declining time is around about 30% of a market's total cycle. Uh around 30% is in boom conditions and about 40% it's just moving a moderate or ordinary sort of growth. >> Uh but these are very rough estimates and there's no there's no real cycle that you can say this is typical. So take these numbers with a with a grain of salt. >> I like those odds.
>> Yeah, a cycle could play out in 5 years. It could take 15 years to complete. Every market's different and every cycle for the same market is different. So >> there's just always more demand on property, especially now. >> Yeah. Yeah.
I can't see it getting uh any easier for uh for buyers. >> Conclusion, don't buy at the bottom. Buy in a boom. >> Buy in a boom. Yeah. If you try to buy at the bottom, there's a chance uh you're not quite there yet.
Uh and you endure further falls or a longer period of time at the bottom. Um you're much better off buying into a boom even though it's already hot, even though you've missed out on much of the growth. You've just got a greater chance of success doing that according to historical data. >> Next up in the expert busting series, 22. Yes, sorry. Just be I've just realized >> uh one really important point.
Don't confuse buying, you know, into a boom with buying at the peak. So, you definitely don't want to buy at the peak. That's that's a disaster. Um and the peak could happen after only 20% growth. So, uh just clarifying buying in a boom but not at the peak. I think the takeaway was, as we [music] mentioned earlier, look for those high DSR markets because the probability of getting it right is a lot higher than just having a crack or just going to a BA firm where the office is located in and [music] that's they're just buying in their own little pocket.
The reason why they don't go to other markets, it's difficult. You got to set up the area, you got to [music] get the licenses, it's more leg work. What does that um what does that hurt? Profitability. that slows you down [music] so that it's just easier for them to put you in a in a market that they're familiar with. So, thanks for watching.