Ang Kalatas Volume V September 2015 Issue | Page 17

THE MESSAGE. BRINGING INTO FOCUS FILIPINO PRESENCE IN AUSTRALIA
www.kalatas.com.au | Volume 5 Number 12 | SEPTEMBER 2015

PROPERTY MARKET

17

Understanding the property cycle when buying

T

he property market moves in cycles. Property values may rise due
to strong market
growth, as it has in recent times,
or it could remain steady or
even decline during certain phases of the cycle. As an investor it
is important to know where the
market is within the cycle to ensure you secure your property at
the right price.
As is depicted in the graph,
there are different stages of the
property cycle. Property values
may increase, remain steady or
decrease, however ultimately,
the value of property increases
over time.
PROPERTY CYCLE
PHASES
At different stages of the
property cycle, property values will exceed the long term
trend (i.e. in boom times) and
at other stages will fall short of
the long term trend (i.e. property slumps). This is because the
property cycle passes through
four phases:
THE BOOM PHASE
The boom phase tends to be
the shortest in the cycle, during

Source: "What Every Property Investor Needs to Know About Finance Tax and
the Law", by Michael Yardney
which property prices increase
at a rapid rate. This phase generally begins slowly as investors
recognise that property returns
such as rental payments and
property prices are increasing.
As a result of the boom,
properties often sell for more
than their asking price, as buyers continue to compete with
each other and vendors continue
to push up asking prices.

As the boom continues,
many try to get on board to
make the most of the current
stage of the cycle; new investors join the market and builders, developers and existing
home owners flood the market
with properties. This leads to
excess supply, which eventually brings the boom phase to an
end and creates the consequent
phase.

Sydney’s median house price
hits $1million mark
HELPFUL TIPS WHEN
BUYING PROPERTY
The Sydney median
house price has increased to
$1,000,616, according to Domain House Price Report June
2015, making Sydney more
expensive than London and
fast approaching New York.
The talk of housing ‘bubble’ in
Sydney and Melbourne, also
doesn’t make it any easier for
any prospective buyer. Suddenly everyone seems so fearful of making the ‘wrong decision’ that they end up doing
nothing, which is probably the
worst decision of all and thereby missing out completely!
Deciding what to pay for a
property can be a daunting experience for anyone, most especially for a first home buyer,
but armed with the right information, you can get some confidence in making a decision
and still get a great deal.
SOME SIMPLE TIPS
TIP #1. STICKING TO A
BUDGET
One of the most basic aspects of buying is knowing what you have to spend.
By having conscious limit as to what you can affo