Property Prices in the major capital cities of Australia including Sydney and Melbourne are volatile in the short run, which is due to:
A high percentage of investors: investors are usually sensitive to policy changes
Prices are high in comparison to other capital cities, therefore, buyers are cautious about the policy changes or market fundamental changes
Sydney and Melbourne are small markets with only about 5 million people, which are relatively sensitive to sudden changes in demand and supply
However, at Milk Chocolate, we look at the property market from a long-term perspective. The experience shows that the Australian property market is a safe bet:
Prices generally go up at the rates of 5-6% across capital cities
Prices may go down quickly in the short-run, but usually, a quick recovery followed after a downturn: prices went down by 13% during the Global Financial Crisis and 14% during the lending tightening policy in 2012, but the market also quickly recovered one year later
The property market is a pillar of the Australian economy, generating jobs and revenue to the government, therefore, government policies tend to implement policies to sustain the market should adverse events happen
The Covid-19 is no doubt a major economic and social crisis for the Australian economy: the unemployment numbers within the scope of 1-2 months is unprecedented. However, the government’s reactions were also bold and targeted to the most vulnerable segments of society. In addition, the economic fundamentals remain strong, which includes:
High population growth
Favourable business environment and open economy for foreign investment
Strong mineral and resources sectors
Long-run Price Trends ($000, detached houses)
Sydney Property Market
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