Most markets in the world consistently go through periods of growth contraction, and the property market is no different. While some might feel that this constant shift means that getting the most out of their property investments will be difficult, it is the opposite. If you are looking to make a property investment in Australia understanding the property cycle is one of the best ways to ensure that you are ready for any changes. After all, an event that you know is going to happen, is an opportunity.
In short, the cycle takes place over four stages:
- Boom, where the market experiences a lot of growth over a given period of time
- Bust, in which the market becomes saturated, and prices begin to stagnate
- Bottom during which prices fall back to lower levels. This part is also called a correction.
- Recovery, where the market begins to stabilise, and growth resumes
It should be noted that the contraction phase of the cycle doesn’t mean that prices plummet, and are actually closer to a slowing of overall growth.
Australia, like many other countries, is not relegated to a single cycle. Instead, various locations go through their own localised cycles. The best way to show this is to look at Brisbane’s current growth, versus Sydney’s moderate to slow growth over the past couple of month in terms of its suburb’s median house value.
Experts normally state that these cycles take place over various years, but after the financial collapse of early 2000, some of these cycles have been occurring more frequently.
One of the biggest reasons for the increase in cycles is the changes made to monetary policy, although it’s not the single determiner of growth. Unemployment, consumer sentiment, job security and other socioeconomic factors also play a role.
The increase in frequency of the property cycle means that if you keep a close eye on these changes, that you can optimally invest in property that’s ready to go into a boom phase, ensuring that you achieve maximum return. If you don’t have the time to keep your finger on the pulse of Australia’s real estate market, why not let us do the hard work for you.
Contact us today to kickstart your property investment returns.