What can we learn from previous price cycles in Australia?
Nicola Powell from Domain latest article presents various data to support that property moves through upswings and downturns and using garner lessons from previous price cycles to help shape our understanding of what could lie ahead.
Australians can feel uncertain about their future property journey when property prices fall due to the unknown outlook: Will Australia enter a recession? When will the RBA stop hiking the cash rate? How much will prices fall? Would it be better to buy or sell now?
Domain’s analysis of almost three decades of Australia’s combined capital house price cycles reveals that:
- House prices do not go through wild boom and bust phases, we tend to see a period of gains (quite often surging), followed by a slight decline or flatlined pricing.
- On average, an upswing sees house prices rise 32.7% from the point of price trough to peak, spanning 2.75 years.
- On average, a downturn sees house prices decline 3.0% from the point of price peak to trough, spanning 0.75 years.
- On average, downturns have been just over one-quarter the duration of the preceding upswing.
This evidence supports the argument that Wealthi Co-Founders Peter Esho and Domenic Nesci have been saying:
"It is not timing the market that is important, it is the time spent in the market that counts."
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Carla has almost a decade of experience in marketing and real estate across Sydney & Newcastle. Connect with our Lending Specialist on LinkedIn.