Patterns and cycles are all around us. Your sub-conscious will be aware of them even if your conscious is not. To ‘see them’ requires an opening of the mind, and a look at the ‘big picture’.
Famously the Fibonacci patterns in nature (google it for a fascinating deep dive!) have been extended to daily use in financial analysis.
Unfortunately, most people fail to see cycles and patterns, largely due to seeing the world through a narrow looking glass. Human minds often fail to see the bigger picture.
This failure in vision has daily impact in life, and in finance.
The Property Cycle is a Wealth Cycle
Today I am thinking about property cycles and considering the last 5-year movements in capital city dwelling values.
The odd one out is Melbourne! It is astounding how poorly Melbourne has performed since Covid. There are reasons of course, including how the extended covid lock downs affected the city, and State Government policies.
This will cycle. Already we are seeing the beginning of the upturn.
What to do?
From an owner occupy perspective – prospective Melbourne first home buyers would be advised to buy sooner rather than later, or the market will run away from you again. Likewise for upgraders – moving now will be beneficial.
For those looking to downsize to a lower value home – financially you will be better off to defer that. A 10% increase in both your sale and purchase properties will leave more cash in your pocket if you wait for this expected large jump!
The investor perspective is the most interesting – for the first time in over a decade, specialist investment property companies are recommending Melbourne at the top of their ‘best to invest’ lists. Increased rents have covered the increased holding costs, capital growth forecasts are substantial.
The need for ‘new builds’ combined with depreciation benefits shines an even greater spotlight on that investment market segment.
Melbourne property prices will ‘catch up’ to the other cities in a relative sense. That is the cycle. Continued strong population growth and limited new housing supply there will underpin the strength of that recovery.
Integrity Finance Australia has been serving the community since 2006. If you have any questions on the issues raised in this article or borrowing capacity or your home loan in general, then please email support@ifafinance.com.au , or call us on 03 9511 8883.