Should I sell my apartment? – Head vs Heart

The debate about selling or holding an apartment is a Heavy Weight Title Fight between traditional rivals your “Head” and your “Heart”.

Your “Head” says hold and is the logical and rational side with an enviable record in these debates. However your “Heart” says sell and is no push over when it comes to making real estate decisions.

In the Red corner weighing in at 1,500 grams is “Head” who says sell and is undefeated in this weight division.

In the Blue corner, weighing in at only 320 grams and well outside its normal weight division is “Heart” who has a very good win / loss record.

Ding Ding – Round 1

“Head” bounces out of the Red corner swinging with arguments for holding. The 6 months prior to Covid-19 were very positive for the Melbourne apartment market. Sales results were strong, prices were ticking up, population growth was solid and the pipeline of future apartment projects was low meaning lower supply placing upward pressure on pricing.

“Heart” gives a dismissive wave of the hand, has a sip of red wine and gazes to the horizon before moving in.

There is a lot of things we could do with that money you know.

I just feel uncomfortable about having debt at the moment.
What happens if our tenant leaves and we can’t find another one?
Points are pretty even after Round 1 and the rested warriors resume hostilities.

Ding Ding – Round 2

“Head” and “Heart” trade blows with plenty of logic and emotion mixed in…

• I reckon all this coronavirus / lockdown thing is about over now. Life will be back to normal in no time.
• America and Europe are all through it and we will be soon too.
• We would be mad to sell for less than we paid for it.
• It’s more relevant to think what is going to happen to the market in the future and if values will rise or fall from now on.
• Whether it’s value is more or less that we paid is academic and irrelevant to this decision.
• Many buyers recognise now is a great time to buy and are out looking so the market is solid.
• Interest rates are at all time lows and are likely to stay that way for some years.
• Auction clearance rates are not indicative of market values and in any case are more relevant to houses.

That’s the end of Round 2 and still the points are all tied up.

The referee calls both warriors to the centre of the ring for a bit of independent coaching.

With the diplomacy skills of Kofi Annan the referee congratulates each of them on the struggle so far and relays a few important truths.

Even in relatively stable economic times experts cannot agree on market forecasts so given we are such volatile times no one knows how this is going to play out.

Yes apartment values have not grown at the same rate as houses recently but the gap can only widen so far.

The economy has taken a hit as have major drivers to the apartment market like population growth and the appetite remains for foreign investment to Australia.

All markets move in cycles and property is a long term hold and is not something to be traded in market cycles.

Round 3… With words of wisdom front of mind they stroll to the centre of the ring and after a quick discussion turn to the referee to declare the battle is resolved. “Heart” and “Head” have decided they don’t have to sell right now and will hold for the time being and review again in 12 months.

Metaphors aside the apartment market remains reasonably solid and there are many buyers out looking. First home-buyers are out in force and the biggest issue right now is getting everyone vaccinated so we can get out of lockdown and the economy moving again.

Most economic forecasters agree the various government economic stimulus packages will drive a sharp recovery through 2022, 2023.