The property market can be daunting with its fluctuations and dynamic nature. Understanding these ups and downs can help buyers, sellers and investors to make informed decisions with confidence.  We have written a guide to riding out the highs and lows starting with understanding the property market cycle.

Understanding the property market cycle

Understanding real estate cycles is the first step to gaining some much-needed insight into the market. The cycle consists of 4 different phases. Being able to understand and recognise the phases is important. This means you will be able to engage in the appropriate strategies that best suit your goals:

These four phases are:

 

  • Boom
  • Downturn
  • Stagnation
  • Upturn

A cycle states with a boom when prices and demand are high with limited supply. This is followed by a downturn or slump which can happen due to an oversupply in properties. When prices start to even out and there are fewer buyers on the market this is known as stagnation.  Slowly the market starts to recover and buyers come back to the market entering the upturn phase.

Recognising the current stage of the market will help you determine what your next step should be.

Recognising opportunities and challenges

Real estate investing is a great way to build an investment portfolio however, it is not without its challenges due to the ever-changing market and economy, as well as supply and demand.  

Challenges such as:

 

  • Economic downturns - a decline in economic activity and confidence
  • Interest rate changes - interest can fluctuate greatly affecting affordability
  • Vacancy rates - this affects how easy it can be to rent your property and the market rate for rent
  • Socioeconomic factors - such things as income and employment will affect borrowing power and the rental market

 

Being aware of these challenges can help you see the bigger picture and make adjustments to your strategy and goals if necessary.

 

However it’s not all doom and gloom, there can also be opportunities for those looking to build their portfolio and generate income:

 

  • Diversification into regional markets - exploring properties in high-growth regional areas. These can often be more affordable and have better potential compared to large cities
  • Focus on sustainable and smart housing - as sustainable properties become more desired, properties with sustainable and green features can often help increase property value and appeal
  • Making the most of government incentives - these are important for first-home buyers and investors

Strategies for buyers, sellers and Investors

There are always going to be different strategies, depending on if you are buying, selling or investing

When it comes to buying your best strategy is:

 

  • Do your research and understand the local market
  • Get pre-approval, this will help strengthen negotiating power
  • Be patient and avoid rushing

When selling:

  • Timing is key to achieving the best price
  • Enhance street appeal for strong first impressions
  • Be realistic when it comes to pricing your property to avoid long listing time

For investing:

  • Spread risk with different types of properties and locations
  • Focus on long-term potential and growth
  • Keep up with market trends and economic forecasts

Key factors influencing the Australian and QLD property market

If you want to look at what influences the Australian market in particular, here are some of the big factors

Interest rates

Fluctuating interest rates can often impact affordability and borrowing power. Lenders need to know that if there are rate rises you are still going to be able to afford your financial commitment to them. If you are borrowing at the top of your capacity then this may be tough, you need to ensure that you have room for movement.

Economic conditions

Economic conditions such as employment rates and wages also influence the state of the market and consumer confidence. 

Government policies and incentives

During different phases of the market, governments will often introduce new policies and incentives to get the market back on track and help those who may need it. This includes things such as home buyers grants and changes in property laws.

Supply and demand

Population growth, housing and business developments and availability can all affect property prices. Researching the areas you are interested in can tell you if now is a good time to do what you wish to do.

Global factors

There are also factors that affect the Australian market as a whole:

  • International economic trends
  • Foreign investments
  • Global events

The property market is dynamic, surviving the highs and lows of the property market can be done with knowledge, strategy and adaptability. Understanding the market and its cycles as well as influencing factors will help to make informed decisions with confidence. So stay educated and informed and consult the real estate professionals.

If you wish to talk to a real estate professional about the current state of the market and your real estate plans, the NXTGEN team have over 35 years of local and market experience.

Looking to sell or rent your Home? Our Team can help