In this article, I’d like to explain the property market situation in the biggest Australian cities. This will help you understand where you should be looking to invest in.
Australian property, through the past 100 years or so, has followed a property clock. This is a cycle which every property market in Australia goes through.
By understanding where each of Australia’s major cities currently are in relation to the property clock, you’ll be able to understand where the best investment opportunities are located.
Sydney- 1:00 (Starting to decline)
The Sydney market has been growing rapidly since mid-2013 until December 2015.
The last peak cycle in Sydney was 2003 and most suburbs kept going up in value until end of 2004.
The media didn’t believe housing prices would continue growing in Sydney back then, and tried to convince investors and home owners to sell their properties before 2000. Statistics showed that as many as 94% of the investor population sold their properties in Sydney at that time due to the doom and gloom being touted in the media.
The exact opposite happened as after 2000 there was a sharp growth that continued to 2003 -2004.
The same cycle repeated itself a few years ago, with massive grow starting in 2013 and continued until 2015.
December 2015 was a weak month and since then the market has slowed down, and even valuations of properties have started to decline. The Sydney market has clearly overheated and is now at the start of a declining market.
Perth – 3:00 (Declining Market)
Perth that had a huge bubble due to end of the resource boom. Perth’s economy is hugely dependent on the mining industry, but that has now come to an end in the past few years. There is much panic and fear in this market as it has entered the declining market stage.
It’s not advisable to enter the Perth market at this stage as there is likely a few more years to go until it comes out of its slump. However, long term investors could find bargains in the current market.
Melbourne 11:30 (Peak of Market)
The Melbourne market always follows the tail of the Sydney property cycle, and has experienced a great jump in property values over the last 12 months.
Melbourne is a strong market with a diversified economy, and is experiencing good population growth. Therefore, the Melbourne market will still be strong in the near future. On the property clock Melbourne is about 11-12 and is currently a hot market.
However, I expect the current boom to last another 12 months at the most before prices will slow down again based on the property cycle clock.
Brisbane, Gold Coast & Adelaide 9:00 (Rising Market)
The next group of cities are Brisbane, Gold Coast and Adelaide. These three cities have passed the recovery stage and are entering a rising market.
Therefore, I believe these are the best places to invest according to the property cycle clock, as we want to gain maximum capital growth.
This is not to say that all investments will do well in these cities as market research is still vitally important to identify the best areas. However, investing at the right property cycle in the right area can help you grow your equity very quickly.
Brisbane has historically always been 2-3 years behind the Sydney property cycle. Another supporting factor is that the price gap between Sydney and these cities is that the price gap now is very high. Historically, this means that these markets will play catchup in the coming few years to narrow the price gap with Sydney.
Conclusion
I hope this article has given you a good overview of where the investment opportunities are in the Australian market, based on the time-tested Australian property clock cycle
But remember, it is still always important to do good research and not be affected by media hype.
Ultimately, before you start investing, you should start working on a personal plan to accumulate wealth safely. Property should always just be used as a vehicle to achieve your wealth goals.
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