9th March 2015
The Property Cycle – Where are we?
Outside Sydney & Melbourne, which are markets that are well reported on in the media, we have now moved into in the “strong recovery phase” of the economic cycle. In an environment of falling interest rates and less restrictive lending, there has been wide media coverage of a strong property market recovery across many parts of the country, led mostly by investors and owner occupiers upgrading their existing home.
In markets where there is limited supply of available housing, investors have competed aggressively in recent months for housing stock, which has pushed up prices in these localities. In this phase of the market, capital gains by suburb are typically “patchy”. In previous market cycles as values climb in these more sought after areas, rental yields (annual rent as a proportion of the purchase price) typically fall and purchasers begin to seek out other nearby locations exhibiting stronger rental yields.