Considering that property markets move in cycles and that over a seven year period prices tend to oscillate between periods of growth, regression and inactivity, investors should be wary of suburbs that have remained flat for two property cycles.

As Positive Real Estate chief executive Sam Saggers points out, property cycles are a fairly ubiquitous trend in established suburbs and for a market to defy this trend, local conditions need to be particularly strong – or weak.

“Market cycles take seven to 10 years,” says Saggers. “There’s first the bottom of the market, then the market begins to take off. The market will become hot, before finally peaking – a good time to sell but not a good time to buy. After this the market will start to slide from its peak value, before reaching a trough.”

By looking at average annual growth rates, investors can get a good indication of how much property prices have grown in a specific market. The figures track the level to which prices have moved up over the last decade, revealing how markets have averaged across good times and bad.

The Australia-wide average is for property prices to see an average annual growth rate of 7% to 8%. Markets with growth rates significantly below this can be considered flat.

An average annual growth rate of less than roughly 3% can often mean that price growth has underscored inflation and that property prices have actually fallen in real terms.

For Western Melbourne’s Point Cook, the figures show a market that continues to struggle. The suburb is the only unit market in all of Melbourne to record a negative average annual growth rate, suggesting there is limited demand for properties there.

Median unit prices in the suburb are also lower today than they were in 2002, at their peak price point, and lower than the median unit price in 1999.

Owing to the huge supply, or rather, oversupply, of properties that came onto the market during Melbourne property’s last boom in 2009/10, it is also no surprise that the areas that saw the largest portion of development – Docklands and Southbank – have also remained flat. 

 

Suburb

Average Annual Growth rate

POINT COOK (U)

-1.1%

SOUTHBANK (H)

0.3%

WOLLERT (H)

1.0%

PARKVILLE (H)

1.1%

PRINCES HILL (H)

1.5%

SOUTHBANK (H)

1.9%

DOCKLANDS (U)

2.2%

SEDDON (U)

2.3%

CARLTON (U)

2.4%

KEILOR DOWNS (U)

2.5%