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Does no one negotiate any more?

In terms of property investment, I think we’re in what’s called a seller’s market, where people are just buying properties without actually negotiating a better price for themselves. I’ve spoken to some real estate agents about prices on property, and they’ve both advised that there’s no ‘or best offer’. The price is the price, and there’s no room for negotiation.

Playing Monopoly

I was also quite shocked to find that the questions I ask about properties, no one else is asking. I’m doing due diligence with researhc and gathering information, and I’m absolutely shocked to find out that on one else is asking questions of the real estate agents. People are just buying properties without entering into any discussion towards getting better prices.

It feels quite indicative of something approaching a panic, but instead of panicking about prices going down and trying to sell fast (a buyer’s market), they’re panicking about prices going up too fast, and so they’re just trying to buy fast (a seller’s market) before the best prices disappear.

It’s really quite amazing.

I’ve been finding out this past few days about property cycles, and how you can tell where the market is at on the property cycle. It’s been really fascinating!

For the past 200 years, there’s been an 18 year cycle in the US and in Europe (outside of major world wars, of course) where there’s 14 years of significant growth in property prices, followed by 4 years of significant decline, followed by another 14 years of growth, and so on. The idea is that if you know where the cycle is at, you can predict when you should buy property and when you should sell.

There was a major crash in 1990/91 which lasted 3-4 years before there was growth again for another 14 years, so that by the time we reached 2008 we were at the end of the 18 year cycle – which is when the GFC (Global Financial Crisis) occurred. Four years of decline later and it was 2012, where property prices started to appreciate again after having bottomed out.

Here in 2015 we’re in the 3rd year of the 14 year growth period, and you can tell if you look around. Everyone’s talking about booming property prices, residential and commercial developments are in progress with an expectation of being finished in the next 18-24 months, and the property market is looking great.

Now’s a great time to buy (3 years ago would have been better), hold and appreciate for a few years, and then sell them by about 2024, when the appreciation period will be peaking. Sell before the next major crash at the 18 year point.

The idea there is that the cash you’ve gained from your property sales can be reinvested into shares, or you can hold on to the cash for a few years until the property market bottoms out again, and buy more properties at a cheaper price. Rinse, repeat.

I’m loving what I’m learning!

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