Australian property cycles

If you’re researching when to invest in property, you may have heard of the property cycle – so what is it and how could it affect you?

Property cycles in Australia fluctuate across a seven to 10-year period. By keeping track of the phases, you could capitalise on your investment. A property purchase is a big decision, and property cycles can help make that decision an informed one.

What influences the property cycle?

Several key factors influence the property cycle across Australia. While the overall economic outlook of Australia has a general influence on property cycles, each region is different and the property cycle often crops up in ‘micro-cycles’ in suburbs and towns, regardless of what’s happening in neighbouring areas. Unemployment, population growth, exchange rates and interest rates all have an impact on Australian property cycles.

When should I buy?

For many would-be buyers and property investors, timing is important, but it’s not everything. While many home buyers and investors would like to time their purchases at the right time of property cycle, this is very difficult to do. Even experts have difficulty picking the phases of the property cycle. 

Keeping an eye on the market is a good idea, however it’s more important for buyers to focus more on affordability. If you can afford to buy and support your mortgage repayments, then anytime is a good time to buy.

Choosing when to buy a residential property will have a lot to do with your personal circumstances, the type of home you’re purchasing and whether you intend to sell that property in the future or turn it into an investment property.

Where are we in the property market cycle now?

Property cycle phases are much easier to identify retrospectively; given that property across Australia enters and exits various cycles in the property cycle at different times, where you live or are looking to buy will largely determine what phase of the property cycle you are in. 

Towards the end of 2014, Melbourne and Sydney were at the mature stage of their property cycles, while Perth and Darwin reached their peaks a number of years ago and are now into the slump stage of their cycles with prices falling. Sydney and Melbourne are currently at a mature (peak) point in their property cycle, but are slowing. 

So what can property buyers do?

Given that property cycles often occur at a suburb-by-suburb level, thorough research into market trends in your area(s) of choice is a really good idea. Speaking to a financial planner could be a good move, so you can be more confident in making the right property investment decisions to suit your family. Or get in touch with us to walk you through some options.