Property markets move in cycles; moving from the bottom, through the growth phases and back to the bottom over a seven to ten year time period.
This is why, as a property investor, the most important factor you must grasp is the ability to forecast property market trends. When you move ahead of the market – anticipating where growth will occur – you can purchase at the lowest price and achieve the greatest gain.
The following property market trends are like signposts along a highway – when you watch for them and know what they indicate you are more likely to succeed at your investing efforts:
Low interest rate environment – encourages people to get into the market that delivers upward pressure to the rents and/or property values.
Supply and demand – affected by population growth, interest rates, government policies and consumer sentiment. Right now Australia is experiencing a massive undersupply as a whole, although some markets have an oversupply.
Capital city yields – leading cities across the globe, when compared to our world-class cities such as Sydney, Melbourne and Brisbane, have performed poorly.
Rising home sales – increasing sales are a strong indication of confidence in the markets and it’s that confidence which drives prices upward as more and more individuals compete for a limited number of houses.
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