How does a property cycle work?
We already know that Australia’s
property markets move in cycles.
Then each state has its own individual
property cycle and there are further cycles within each depending on the area,
price point, and even the property type.
Historically, cycles start with a
period of rising values, followed by a lull period where prices stagnate or
even decline, before starting to increase again.
While you’ll often hear that property
cycles last seven to 10 years, the length of an individual cycle varies
depending on a combination of economic factors as well as supply and demand,
rather than a period of time.
Generally, there will be a period of 2-3 years when
the market is flat or when there is a decline in property values.
This is followed by a number of years
of low capital growth, followed by a shorter period of solid
price growth that we know as a ‘boom’.
But that's not what happened in the
most recent property cycle which started with a bang.
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Jason Gwerder
Wednesday, 20 July 2022
