Have we reached the peak in Property Market Values?

The recently released RP Data-Rismark Home Value Index for May shows clear signs that property values have already reached its cut off point, with values for key capital cities dropping to a combined 1.9% for the month of May, the first time the values decreased since May 2013.

Melbourne property values lead all capital cities with a decline of 3.6%, followed by Adelaide at 1.8%, Brisbane by 1.7%, Sydney by 1.1%, Perth at a 0.8% decrease and Hobart rounding up the list with a 0.6% drop. Only Darwin and Canberra posted a growth in value, with 1% and 0.1% respectively.

RP Data research director Tim Lawless believes that these results are too early to determine whether property values are on a downward trend, saying that growth cycles in Australia normally last for two years. He also attributes a possible seasonal resemblance to the trends experienced at the same time last year as a possible factor for the decrease in property values.

Read more about this on the Adviser website.

An in-depth look at Property Prices

Here’s an in-depth look at the Australian Property Market and how the current prices affect the economy. Arek Drozda from the Property Observer breaks down the issue, and whether we really are facing a property bubble.

He points out an interesting correlation between Home values, median cost of buying and personal incomes. Home values have increased drastically, and economists fear that this can reach unstable levels. Despite this, commodity costs have barely increased as opposed to personal incomes, therefore the cost of buying is more affordable than 27 years ago. This shift only means that we have enough to go around, and that prices are moving.

The income capacity of Australians, according to the article will be the key. Home affordability is never an issue for as long as we are earning more than we spend.

Read more about this on the Property Observer website.

Align your strategies according to the property value cycle

Here’s an advice to property investors as the property market goes through its cycle: Prices, interest rates and valuation change as we go through the property cycle. You strategies should, too.

Ed Chan from the Property Observer outlines the 2 major parts of this cycle: the Growth and the Decline stage. It is crucial that investors have a clear understanding as to what phase they are at. During the Growth Stage, it is advised that the property’s potential is realized, and that loan strategies are considered to maximize cash flow. For the Decline Stage, property value is assessed by external factors, such as economic conditions which will have a direct effect on the value of your assets.

Knowing these two stages will give investors the ability to maximize profit value and minimize losses. Investors must have a flexible strategy and should be adaptive to changes.

Read more about this on the Property Observer website.