The headlines focus on what’s happening now. The data tells us what tends to happen next.
Falling prices. Policy changes. Market uncertainty.
It’s easy to look at the headlines and conclude that Australian property is in decline.
But step back from the news cycle and review 56 years of property data from Cotality, and a different picture emerges.
Property markets do fall periodically. But historically, significant declines have been relatively rare, and periods of weakness have ultimately been followed by renewed growth.
Property cycles don’t last forever
Cotality’s long-term data identifies just three instances (in more than five decades) where a major Australian market recorded a median decline of more than 10%:
- Sydney, 1990: prices fell 16.7% during recession and significant economic tightening.
- Melbourne, 2011: prices fell 13.4%, following an exceptional 26% increase the previous year.
- Sydney and Melbourne, 2018: prices fell 13.2% and 9.8% respectively, following tighter lending regulations.
Each downturn had different causes. But the common thread was that the falls were temporary, not permanent.
That’s an important distinction for long-term investors.
The lesson isn’t that property prices never fall. They do.
It’s that short-term weakness needs to be viewed within the context of the longer-term cycle.
Australia isn’t one property market
Perhaps just as importantly, not every market rises or falls at the same time.
Conditions can vary significantly between states, cities, and suburbs.
While some higher-value markets may be experiencing softness, particularly at the top end, other areas continue to perform strongly, driven by population growth, infrastructure, employment and a shortage of housing.
That’s why asking whether “the property market” is going up or down can be the wrong question.
The better question is: Which markets have the fundamentals to perform over the long term?
The fundamentals still matter
Australia continues to experience population growth while housing supply remains constrained in many areas.
That imbalance creates ongoing demand for homes and, in turn, supports rental demand across many markets.
It’s also why our investment strategy remains focused on where we buy, rather than trying to predict every short-term movement in the market.
Build new. Buy below the median house price. Focus on markets with strong underlying fundamentals.
Because the market that’s falling isn’t necessarily the market we’re buying in.
So, where could the next growth come from?
While the headlines focus on today’s market movements, long-term investors need to look further ahead.
- Where will Australia’s population grow?
- Which regions will attract the next wave of demand?
- And what could these demographic shifts mean for property investors?
These are some of the questions we’ll explore at our upcoming Exclusive Client Briefing with renowned demographer and social commentator Bernard Salt.
Bernard will share his latest data and insights into Australia’s changing population and what the demographic trends could mean for property markets now and in the years ahead.
Tuesday 15 September | 7pm AEST | Live online
Exclusively for Custodian clients.
Register for the Exclusive Client Briefing →
Because successful long-term investing isn’t about reacting to the headlines. It’s about understanding what’s happening beneath them.
