When talking about property cycles, I find a lot of people are surprised to learn that prices can and do fall! However, over a ten year period or longer, property values have increased in our capital cities.
In Australia, the property cycle usually takes 7-10 years. The upswing or boom phase is the shortest phase of the cycle – it usually lasts 2 -3 years – and during a property boom values can rise by 20 to 30 percent. During a downturn values can fall 10 percent on average.
When discussing which stage of the property cycle we are in, remember different markets have their own cycle. For example, people often talk about how the Gold Coast market is performing, but the Gold Coast market includes; waterfront, acreage, units, vacant land, high rises etc, and each of these markets may perform differently at any point in time, depending on demand and supply. For example, there may be a glut of units and a shortage of vacant land.
Herron Todd White – the largest property valuation firm in Australia – publish a monthly report showing where different towns and cities around Australia sit on the property clock. I highly recommend their report called Month in Review which is available free online.