I had an interesting question from a reader a few weeks ago:
‘Hi Catherine, I read your last article and watched your interview with Greg Canavan. ‘You mentioned that in the last 3 cycle downturns [sic], there hasn’t been anywhere the value decreased more than 15-20%.
‘The biggest downturn was during the recent slump in 2017-2018 which was around 10%.
‘So that means at the peak of the cycle it never exceeded that number. So why is that and what’s the point of worrying about the peak?
‘I understand that 10% was a national average where some areas might fall further than that.
‘I am always struggling to picture what the peak of the cycle looks like in terms of the decrease in value…’
Shifts in the median price hide a lot.
After all, the median is just the middle number of a bunch of sales.
If the top end of the market falls sharply (as in most downturns), the median will come down somewhat — but the actual fall in property prices can be far more apparent.
Take this recent downturn through 2022.
The change in median values from peak to trough wasn’t all that substantial.
Down 8.40% nationally.
Below is the breakdown per city (and regional areas) over the past 12 months:
Source: CoreLogic
However, the change in actual property prices was far more pronounced — particularly for some sectors of the market.
For example, I assisted a vendor in mid-2022 who owned a premium two-bedroom apartment in McMahons Point, Sydney.
A beautiful, renovated, established apartment — flooded with natural light and overlooking the bay.
Source: realestate.com.au
At the end of 2021 and beginning of 2022, prices on some apartments in the complex were nearing (and in some cases exceeding) $2 million.
Source: Pricefinder
Source: Pricefinder
A few months later however, large discounts were needed to secure a sale.
Source: Pricefinder
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