Why all the drama?

The slowing of the Sydney property market has re-ignited the fears of a market crash. The words ‘property crash’ now ringing loud and clear as they hold a place in the title of every property related news report or article. It seems fitting that we provide some perspective and again, highlight that this is something we’ve seen many times before.

So before going any further, let’s take a step back. What we’re seeing is a market which experienced median house price growth in excess of 70% and has recently seen a 10% fall in median prices. Doesn’t sound so bad anymore, does it?
What we’re experiencing is a normal part of a market cycle. We’ve just experienced a property boom and what follows is a period of correction and stagnation. Often absent from the dramatised, exaggerated media reports is a sense of perspective and a more levelled outlook.

As discussed in a previous article, Sydney is likely to experience a period of correction and stagnation and history suggests that it is likely to last for around 8 years.

The stability of property as an asset though should not be questioned by the slowdown or correction of the nations outperforming capital city.

The reality is, it’s all been heard before. Sydney peaked in 2003 and in 2004 a similar story was being told about the property market.

“Going, going… The property bubble has burst” read an article by The Age. (21st May 2004)

 

By no means are we projecting a quick bounce back by the Sydney market however, a subdued performance is likely rather than the advertised national property meltdown. As seen at the height of the previous cycle in 2004, the talks of a widespread market crash were over-inflated and in reality, only Sydney experienced a slight correction and period of stagnated performance. Some other capital cities experienced their strongest performances throughout this period.

Property is a long game, we’re lucky enough to live in a country where each capital city has an individually segmented property market. What this means, is that challenges or negativity in one market doesn’t necessarily spread throughout other markets. Our job is to keep perspective and identify the opportunities in other markets for our clients.


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