It all means that the property market is in a constant state of flux as supply and demand try to stay in balance.
Or at least, that’s how it’s meant to work. In reality, it’s more complex than that, particularly because properties take a long time to build and to buy. This makes the property market pretty inflexible, which means that supply and demand are rarely evenly matched.
The picture is further complicated because together with a large ‘national’ property cycle, there are lots of other smaller local cycles as well … all at different stages and of different durations and sizes.
These can create anomalies, such as in 2007, when the Sydney real estate market was definitely in the doldrums, while prices in Brisbane, Melbourne and Adelaide were booming.
There are many reasons why this can happen, though it’s often because there are particular local supply and demand conditions that are having a major influence. For instance, it could be that there’s an oversupply (or shortage) of a particular type of property in the area, which affects prices in a way that’s different to what’s happening elsewhere.
Or, there could be specific business and economic drivers that effect one location and not another. So, if a major new employer moves into town, property prices could be forced up as lots of new employees come into the area looking for homes and compete for them with locals.
Or, the specific age make-up of the local population—its demographics—can also have an impact, particularly on certain types of properties.
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