We all would like to know what property prices will do in the next few years, but no one really knows. There is a theory that the property market moves from boom to bust in 18.6 year cycles.

The theory is there are fourteen up years where the economy grows steadily and property prices rise but with a mid-cycle pause or recession around year 7. After that, prices then continue to rise until the final two years when there is strong speculation in the property market. After fourteen years, there follows a spectacular collapse. This crisis, crash and recovery lasts four years until the cycle begins again.

After the 1987 stock market crash, Australian investors deserted stocks. For the next two years they speculated in property, chasing 25% p.a. returns. However, in 1990 property prices crashed. The Reserve Bank cash rate reached 17.5%, unemployment was 10.8% and we had record insolvencies. Cash was king - it was Paul Keatings recession we had to have. Lets hope we don’t see that again.

Eighteen years later in 2008, the Global Financial Crisis (GFC) struck with the collapse of Lehman Brothers. Leading up to that was the US housing bubble with loose credit and dodgy mortgage-backed securities. The global financial system was under enormous strain, asset prices declined, and governments had to guarantee customer bank accounts (they still do).

Generally, in the run up to the peak of the market, there is freely available credit, speculation in assets and a rise in the gold price.

Our property cycle was interrupted by COVID in 2020. Enormous Government stimulus and near zero interest rates pushed property prices up. Interest rates then increased, which led to a pullback in property prices. Property values in Melbourne are now moderately above pre-COVID prices and seem to be rising again.So, as we approach 2026/27 – being 18.6 years from the GFC bust, will we see another property crash?

In Melbourne and Sydney we are not seeing wild property speculation, just a recovery from the post COVID rise then fall. It is, however, different in Perth, Adelaide and parts of south-east Queensland where prices have seen double digit rises in the past 12 months.

With Labour’s return to Government, their policies to assist first home buyers and low-income earners to buy property, will have the effect of increasing property prices. I think their objective to build new houses - to increase the supply of housing - will take some years to have any real (if any) impact on prices.

A major driver of property prices is freely available credit and low interest rates. Could lower rates be the catalyst to spark speculation in the Australian property market? NAB predicts the Reserve Cash Rate to fall from the current 4.1% to 2.6% by next February. Let s see how this plays out and the impact on property prices.

One of the predictors of the final years of the Property Cycle is a rising gold price. In the past 12 months, US Gold has risen over 40% and looks like moving higher. This is an indicator investors are concerned about the economy and want to protect their wealth.

The world has changed with the Trump Presidency, and there is no going back to the way it was. Governments now have to face many new challenges including tariffs, expanding wars in the Middle East and of course, Trump Derangement Syndrome.

Any of those challenges could cause a global economic downturn impacting property values, but if you believe in the 18.6 year Property Cycle, it should be a couple of years before the end of this cycle and we see a property crash.

We provide a free appraisal to vendors to advise on what should be done to present a property in a cost-effective way. If our clients don’t have money to spend on presentation works, we will fund those costs with repayment from sale proceeds. This has benefited many clients who would have otherwise missed out on tens of thousands of dollars.

Call me on 0418 517 643 or Phil on 0402 890 830 if you would like to discuss a property.

Regards, Robert Allanadale | Director m: 0418 517 643

Tower Property Advisory is an independent consultancy that specializes in managing the end-to-end process of property sales on behalf of Vendors