{"id":6578,"date":"2015-12-09T01:00:56","date_gmt":"2015-12-08T14:00:56","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=6578"},"modified":"2015-12-09T01:00:56","modified_gmt":"2015-12-08T14:00:56","slug":"what-happens-when-property-markets-correct","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/what-happens-when-property-markets-correct\/","title":{"rendered":"What happens when property markets correct? – Michael Yardney"},"content":{"rendered":"

 
\nWhat happens when property markets correct? Not crash but correct because as Michael Yardney<\/strong><\/a>,\u00a0from Metropole Property Strategists, points out, that is what is likely to happen. In today’s show we talk about this.
\n <\/p>\n

Transcript:<\/h4>\n

Kevin<\/b>:\u00a0 Is Australia\u2019s property market really a precarious house of cards waiting to topple? Well, there\u2019s a lot of debate at present raging. Some say that the future for property is bright, while others suggest that the markets are set to crash.
\nObviously, if you\u2019re considering investing in property or about to buy a home, it would be really good to know who\u2019s right \u2013 and history does actually teach us some great lessons. What can we learn from the past that we can take forward into the future?
\nMichael Yardney from Metropole Property Strategists has been looking at this for us, and he joins me.
\nHi, Michael.
\nMichael<\/b>:\u00a0 Hello, Kevin.
\nKevin<\/b>:\u00a0 Michael, what lessons can we learn from the past? The market probably isn\u2019t always going to move forward.
\nMichael<\/b>:\u00a0 No.
\nKevin<\/b>:\u00a0 There are times in the past where it has actually checked. What have we learned from that?
\nMichael<\/b>:\u00a0 Well, no, it\u2019s not going to keep moving forward, Kevin. But I guess the first lesson is our markets are fragment. There\u2019s not one property market. There\u2019s where people get it wrong to start with.
\nNot only is each state its own state of its property cycle, but, Kevin, even within each state there are different market segments behaving differently. Some of them are geographic, some of there are different price points or different types of property.
\nThe first lesson is there isn\u2019t one property market, and we have to define more clearly where we\u2019re talking about
\nKevin<\/b>:\u00a0 You know, there might be another lesson here, too, Michael. Firstly, is there a bubble? And just because there may be a bubble doesn\u2019t always necessarily mean that it\u2019s going to burst.
\nMichael<\/b>:\u00a0 Well, some people say it\u2019s a bubble because house prices are high and unaffordable to some. But you\u2019re right, Kevin, that doesn\u2019t mean it\u2019s a bubble, and it doesn\u2019t mean it\u2019s going to burst.
\nI think we could take some lessons from what\u2019s happened in the past, because it\u2019s likely that the future will repeat itself in one form or another.
\nKevin<\/b>:\u00a0 Has there ever been a time, Michael, where the market has checked?
\nMichael<\/b>:\u00a0 Well, the market\u2019s corrected. If we want to be honest about crashing \u2013 in other words, where it\u2019s dropped significantly, albeit for a short time \u2013 it was after the Second World War and during the Great Depression.
\nOur financial markets were very different then. The world\u2019s circumstances were. In the 1940s, house prices dropped 17% over a twoyear period. But, Kevin, they jumped back and grew strongly afterwards. And you can understand during the war why that could happen.
\nOf course, in the Great Depression when unemployment was high, property prices corrected significantly, as well. But, Kevin, no one is suggesting there\u2019s a depression on the horizon for Australia. Sure, our economy is slowing a bit, but it\u2019s still the envy of most developed nations.
\nKevin<\/b>:\u00a0 Michael, what\u2019s happened at other times when the market has actually corrected?
\nMichael<\/b>:\u00a0 Corrected is what normally happens, and to understand what\u2019s ahead, let\u2019s have a look. Sydney was in a terrific property boom between, probably, late 1990s and the end of 2003, early 2004. It was one of the best performing property markets for that period of time; helped by the excitement of the Olympic Games.
\nBut after this boom, the Sydney property market corrected. Kevin, it didn\u2019t collapse. It just corrected. Property values dropped from their peak by about 9% or so, but, Kevin, it didn\u2019t happen instantly, either \u2013 it took 23 months to play out \u2013 and of course, not all parts of Sydney\u2019s property market dropped in value equally.
\nAgain, if you look at what happened in Brisbane and Perth where values peaked in around 2008, they had a really good run in the middle of the last decade, but again, property price didn\u2019t collapse. They just sauntered along for a while allowing fundamentals to come back into alignment.
\nMuch the same happened in the 1990s. I know you and I lived through those difficult times, the recession we had to have after a huge property boom in the 1980s, and at that stage interest rates rose to 17%.
\nKevin<\/b>:\u00a0 I know. Yes.
\nMichael<\/b>:\u00a0 But, again, properties didn\u2019t collapse; they just flatlined for a few years as affordability, supply and demand, and all those other economic fundamentals caught up.
\nMaybe just going back in our memories, most of us will remember, not that long ago, property prices peaked in late 2010, and that was the last time the Reserve Bank pushed up interest rates to slow our property markets down. In general, in the capital cities property prices gently eased; they didn\u2019t plummet.
\nNow, of course, if you\u2019re looking at certain very specialized markets, like the mining towns, like the holiday destinations, Kevin, like some regional areas where there isn\u2019t a lot of depth to the market by owner-occupies, yes, in those locations, property markets can drop in value significantly \u2013 and we\u2019re seeing that. But in the big locations, Kevin, unlikely to have a crash.
\nKevin<\/b>:\u00a0 Okay, Michael, thank you for your time. We will catch up and we\u2019ll talk more about this in future shows, as well.
\nThat\u2019s for your time, Michael.
\nMichael<\/b>:\u00a0 A pleasure, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

  What happens when property markets correct? Not crash but correct because as Michael Yardney,\u00a0from Metropole Property Strategists, points out, that is what is likely to happen. In today’s show we talk about this.   Transcript: Kevin:\u00a0 Is Australia\u2019s property market really a precarious house…<\/p>\n","protected":false},"author":176692471,"featured_media":6579,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,11,13,36,17,25],"tags":[101],"class_list":["post-6578","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-property-investment","category-sponsored-channels","tag-podcast"],"yoast_head":"\nWhat happens when property markets correct? - Michael Yardney - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/what-happens-when-property-markets-correct\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What happens when property markets correct? - Michael Yardney - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"  What happens when property markets correct? Not crash but correct because as Michael Yardney,\u00a0from Metropole Property Strategists, points out, that is what is likely to happen. 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