The property market cycle explained


Understanding the property market cycle

The property market cycle is a well-established way of predicting how a housing market will act in the coming years. Prices will rise, fall and stabilise in a rhythm that is more predictable than you might think. If you’re considering investing in property, understanding the property market cycle is a useful way to predict trends or periods of high growth in a particular city, area of suburb of interest.

 

What is the property market cycle?

There are four stages of the property market cycle:

 

1. Value

Prices are flat, there is a little activity in the market

 

2. Growth

Prices begin to slowly rise, then with greater pace

 

3. Peak

After a rapid increase, house prices reach the top of the market

 

4. Correction

Prices stagnate or fall as the market is moderated

 

Generally, the property cycle will last from seven to 10 years. During that time, it’s not uncommon for the price of a property to double.

 

What influences the property market cycle?

There are a huge number of factors that can have an impact on the property market cycle. From large scale infrastructure investments and new transport links, to a surge in new businesses or amenities, to the price of similar properties in surrounding suburbs. There are dozens of factors to keep an eye on when predicting where an area might be in its cycle. Some key influencing factors include:

 

  • Unemployment

Low unemployment in an area or city means that there are organisations, businesses and headquarters within commutable distance, which makes the area a much more attractive place to buy a home or investment property.

 

  • Population growth

If there are more people arriving in a city, it follows that they will need a place to live. Often, property supply is slow to keep up with demand, which means that property prices will rise as the competition for a home increases.

 

  • Funding environment

If banks or mortgage lenders are freely lending, the likelihood is that the property market will thrive. If lenders become more cautious and start imposing strict lending criteria, it’s common to find that certain types of properties in certain areas will slow.

 

  • Infrastructure investment

Transport, schools, amenities and other investments in an area can make prices soar. It’s can mean that the growth stage of the property market cycle is activated, so it pays to understand where the government are planning to spend their infrastructure dollars.

 

Things to remember

The property market cycle is useful, but it’s not everything. While the property market cycle offers a dependable rhythm, it’s important to remember that there are variables across suburbs, markets and areas. Because there are so many factors that affect the market, buyers shouldn’t rely solely on the property market cycle when making an investment decision.

The right timing also depends on you. Other factors such as your finances, how long you’d like to hold your investment, how much you have to spend, and the kind of return you’re looking for will all affect your purchase. Of course, timing makes a difference in property investment (after all, no-one wants to purchase a property at the peak of a boom) but you should also make sure that it’s the right moment for you.

 

To learn more about the property market cycle, discover which areas are entering their growth phase, and discuss your personal financial goals, book a free consultation with one of our property experts. Learn more about our free consultations


 

Share:

Facebook
Twitter
Pinterest
LinkedIn

Latest Posts

Free Resources

Social Media

Your Name *
Phone Number *
Email Address
Cover Letter
Maximum file size: 5 MB
Resume
Maximum file size: 5 MB
how-to-identify-real-estate-hotspots-in-2022
10 tips for successful property investment PDF
Property Investment in South East Queensland
How to Buy an investment property without a deposit
Property Investment in Bendigo
What's In Store For Residential Real Estate In 2022
Guide To Your First Investment Property

Take the first step and

INVEST IN YOUR FUTURE

FREE APPOINTMENT.

Book a free consultation, no fees, no obligation, no pressure.

buy-an-investment-property-with-smsf

Content Unavailable

We’re making some changes to our website and the content you are looking for is currently unavailable. Please check back later or book a free consultation by clicking on the button below.

Income tax calculator

Want a breakdown of your income tax?

Drag the controller for your income and discover your take home pay and tax rates.

Stamp duty calculator

Confused by stamp duty?

Enter the property’s value and state or territory to discover exactly which fees and charges you’ll be required to pay.

Check out our other calculators too

Borrowing-power calculator

How much could you borrow on a home loan?

Enter your income details and spending habits to discover your borrowing-power on a future home loan.

Check out our other calculators too

Loan repayment calculator​

Want to work out your repayments on a home loan?

Enter the details of your loan and discover how much you’ll be paying each month.

Check out our other calculators too

Online budget planner

Have trouble sticking to a budget?

With the budget planner, you can log your incoming and outgoing expenses to keep track of your finances and set saving goals.

Check out our other calculators too

Property Investment in South East Queensland
What's In Store For Residential Real Estate In 2022
Property Investment in Bendigo
How to Buy an investment property without a deposit
10 tips for successful property investment PDF
how-to-identify-real-estate-hotspots-in-2022