What Is The Property Market Cycle?

The property market cycle is based on years of data, and resembles a circle of boom and bust.  But is it different in Perth this time around?  As the sales market remains tight and the value of properties continue to rise, the market is looking more like a escalator.  The question is … is there a plateau or a drop off once we reach the top?

It may help to step back and look at the bigger picture.  If we do this, we can probably see that the market is still working in a cycle, it’s just that the circumference of the circle is bigger than what we have previously known.  There is a longer run in rising property values and it looks like there may be a period where is flattens out before returning to a more normal market.

So when is the market right to build your next investment property? Well, the short answer is “anytime”; as long as you do your due diligence and work out what is best for your own circumstances. There are opportunities to be had in both a slow or booming market.  If the market dictates a continuing rise in house values, this generally means that there is still the opportunity for capital growth. However, this will at some point come to an end and maybe see a correction when the market slows down. 

While you may not have a crystal ball, it’s prudent to engage a range of professionals such as financial planners and accountants to help you work out the who, what, when, where and why when it comes to property investment.  Doing your research is all part of the overall plan to creating wealth.  The more you understand the property cycle, the better equipped you will be to push the pedal when it’s the right time and squeeze the brakes when needed.