By Graeme Salt
Forecast rate rises and the Iran War has added pessimism to the property market. But is it well-founded?
Long-term research by Suburb Trends shows that some locations are under-performing while others over-performing, despite recent declines if consumer confidence.
Australia has many different property markets, whose economic performance tends to revert to the mean in the long-term. One year one city may be straggling, only for it to bounce back as soon as it looks good value to purchasers.
A case in point is Melbourne which, according to the research, is 15 per cent below where it should be (which represents a ‘saving’ of $154k).
Meanwhile Perth, Brisbane and Adelaide continue to run above their long-term average.
The growth in these locations has occurred despite recent rate rises – demonstrating there are multiple factors influencing property markets. The same interest rates nationwide, different outcomes in different cities.
And nationally, according to Cotality, there have only been six years in the last 40 when prices have gone backwards – even in the face of interest rate rises. One of these years saw a drop of only 0.5 per cent!
The Suburb Trends research shows that some markets are up, and some are down.
And surprisingly given how expensive it is, Sydney is pretty-much where it should be according to long-term averages
Over the past 50 years, the Australian property market has endured:
- five recessions
- interest rates from 0.1 per cent to 17.5 per cent
- a pandemic, and
- a global financial crisis.
Ultimately the Australian property market comes good – it’s just a question of where and when.
Graeme Salt is an award-winning mortgage broker. For a no-obligations consultation on your home loan needs, please contact him on 02 9922 5055.
