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When looking to purchase real estate it's important to understand how the property cycle works and the four stages, so let’s take a look:
Peak Stage - Marks the top of the market:
- Prices will have increased very rapidly (as much as 20% year on year), but have reached the highest point of the cycle and can start to decline.
Value Stage - Prices are flat, leading many people to believe it’s a good time to buy:
- Prices will have declined and are approaching the bottom of the market or are at the bottom of the market.
The Growth Stage - Prices begin to rise, slowly at first before picking up the pace:
- The market is at the start of recovery, it’s continuing to rise or is approaching the peak stage.
The Correction Stage - Prices will moderate or stay stagnate:
- People often equate a correction to a price crash, it’s typically where prices come back to normal levels after the peak stage. Sometimes a correction is simply a long, slow period where prices stagnate.
The property cycle generally takes around 7 to 10 years and ideally, one full cycle will see the price of property double (given other key investment criteria is met).
People always ask "when is the best time to buy?". And we always say, "the best time is now". Given Australia is such a diverse market, there are always areas at various stages of the property cycle to invest in, depending on your brief. Read our blog on the current property cycle or watch this short video and see where each state and territory currently sits.
Milk Chocolate was founded seven years ago by Richie Ragel and Michael Cleary, to purchase residential and commercial property in Australia on behalf of our clients, looking for a home or investment property. To see how we can help you get in touch here.
Thanks, Michael
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