The property growth cycle is continuing for now, but appears to be closer to the end than the beginning.
Australia’s median property price rose 0.5% in August, which was the 19th consecutive month of expansion, according to CoreLogic. However, “the pace of growth is showing clear signs of slowing”, CoreLogic added.
CoreLogic has identified two reasons for the slowdown.
First, affordability constraints are kicking in – buyers can’t keep paying higher prices forever while household incomes remain at their current level. Second, although demand continues to exceed supply, the gap between the two is closing.
Sooner or later, this growth cycle will come to an end, which will be perfectly normal. Historically, Australia’s property market has moved in cycles: prices tend to rise for a while and then fall for a while, with the upswings generally exceeding the downturns.
The nation’s median property price has increased by 70.2% over the past 10 years, 157.9% over the past 20 years and 425.9% over the past 30 years, according to CoreLogic.
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