Real Estate: Why prices go up and down

Real Estate: Why prices go up and down

December 20, 2020 Off By Rob Prosser

If you wonder in real estate, why prices are going up or down, the simplest answer is to think about supply and demand, but there are still several questions and causes to consider. 

Taking into account that the Australian real estate sector depends, to a large extent, on the international real estate sector, political, legal, or regulatory issues can cause prices to go up or down.

However, what governs the rise and fall of prices, in a generic way, is supply and demand: when supply goes down, prices go down and when demand goes up, prices go up. 

However, as in everything, there are exceptions, because in the luxury and high standing sectors, despite the fact that demand and supply are decreasing, it cannot be observed that prices also fall. 

On the other hand, in new construction flats in Australia, there have been decreases, and up to 10-15%, since extreme prices have been seen with an increase of 35-40% in a very short time. 

With which, this makes Australia suffer a little more and consequences are obtained: After 2 years of low foreign demand, the owners assume a price drop to make sales possible and make Barcelona a place of profit with good future possibilities. 

Cities that have gone up and down

The increase or decrease in prices also vary depending on the area or its trajectory.

For example, the flats or areas that have experienced the least growth in recent years will surely be those that will register the highest price increase. 

On the other hand, important cities in Australia, in the last 3 years, have been increasing their fruits, but today, a stabilization trend can be observed, that prices continue to rise gradually. 

However, the areas that are experiencing significant increases are the peripheral areas of Australia, as investors and other people in search of their home, seeing the high prices in city centers, move and look for opportunities outside of these cities. Thus, the strong demand in these areas is causing a rise in prices in the peripheral areas that will become important in the coming months or years. 

The best cities in Australia to buy and invest in properties

As mentioned, the cities that have the most prominence in this sector without a doubt, but that does not mean that they necessarily coincide in being the best places to buy and then invest. 

If we think about investing in real estate, we will have to look for refuge value cities and in this case the best offer would focus on the peripheral areas, but also in areas with growth and future plans. 

This is where which has undergone major architectural changes at the city level and rearrangement, is gaining strength, which is a city that always has quite reasonable prices even though they have risen a bit lately.

The evolution of the real estate market

If we look back, we see how in 2007, 2008, or 2009, depending on the area, a strong crisis began in Australia that resonated in the real estate sector. 

The first outbreaks of joy began to appear in 2013-2014 and those daring, buyers or investors who saw 2013 as a good year and at a turning point, are those who today can be considered lucky in our sector for the amount of money they earned.

It also happened with the purchases made by groups of Americans or groups of investors, as they dared to do so when the crisis ended and now they have been able to see very generous revaluations. 

The years 2004 and 2005 were good and in 2017 those prices were recovered again , obtaining considerable benefits and good returns.

However, it must be borne in mind that investing in real estate will depend a lot on what first investment point we base ourselves on, but even so, in the long term, profitable investments will always be achieved. 

Those who invested in 2007, after 12 years, all or almost all have recovered their investment and, for example, those who invested in 2013, in two years could achieve very high returns. 

To this day, for the Australian sector to remain without the ups and downs that it has suffered for 20 years , the market should be better structured to resemble and their sustainable way of acting and working.

And if we talk about the future …

When talking about the future, we must bear in mind that not only this sector depends on Australia, but we depend on the world in general. With which, the future forecasts will depend a lot on what will happen, but not only in the real estate world but on a political, social, and economic level. 

It is said and rumored that a crisis is looming in the next 3 years, but there is still nothing that can assure it with certainty. What is known is that this sector lives in ups and downs and today we may be on the rise, but in the future, it is most likely that there will be general declines.

To get healthy, it is best to buy and invest in real estate always thinking in the long term and think that if the apartment you are going to buy you will not need to sell in the next 6, 7, or 8 years, it will mean that you will have made a good investment.