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Booms Historically Trump Downturns

Booms Historically Trump DownturnsOwners may worry the slowdown after Australia’s property boom will result in huge price drops, but new analysis has disproven this theory.

A Domain review of the housing market’s peaks and troughs over the past 30 years, finds in general the duration and steepness of an upswing is longer and greater than a downturn.

On average, during a boom Australian house prices rise by 33% from trough to peak over about 2.75 years.

During a downturn house prices, on average, drop only 3% from the point of peak to trough over the course of 0.75 years.

There have been four periods where house prices across the combined capitals declined annually in the past 30 years: 1995–1996, 2008–2009, 2011–2012 and 2018–2019.

During all four of these periods the annual drop in prices was less than 10% even though the rate of increase during the proceeding peak was more than 10%.

Domain chief of research and economics, Dr Nicola Powell, says the results of the analysis should give owners confidence in the current market.

“When property prices fall it can understandably make many Australians feel uncertain about their property journey, however, it is important to remember that property has historically moved through upswings and downturns, and there are lessons that can be learnt from previous price cycles,” she says.

She says when the Australian market moves into its recovery phase it will affect premium price point markets first.


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