The economy and our property markets
move in cycles. Booms never last forever, neither do busts.
That’s mainly because most of us get swept up in the optimism or pessimism of
others.
Don’t be surprised when they come around and don’t overreact. This will help
you avoid being sucked into booms and spat out during busts.
Despite the ups and downs, the
long-term trend for well-located capital city properties is rising values.
This long-term growth of property values is underpinned by Australia’s
population growth and our demographics changes as well as the underlying wealth
of our nation which allows us to afford more expensive properties.
Even though they are armed with all
the research available in today’s information age, economists never seem to
agree where our property markets are heading and usually get their forecasts
wrong.
You see…market movements are far from an exact science.
It’s more than just fundamentals (which are relatively easy to quantify) that
move markets.
One overriding factor the experts have difficulty quantifying is investor
sentiment.
Every year we get hit by an X factor
– an unforeseen event or situation that blows all our carefully laid plans
away.
Then every decade or so we have a major event and the world "breaks.”
There are multiple property markets
in Australia.
And even within each capital city, there are multiple property markets divided
by geography, price point, and type of property.
So when somebody tells you the Australian property market is doing this, or the
Sydney property market is doing that, don’t pay attention because this type of
information is of no use.
You need to examine what is happening to property markets at a more granular
level.
Jason Gwerder
Tuesday, 18 January 2022