We may well be living in very uncertain times, but while there is a lot of uncertainty at the moment it’s always good to remember, property values rise, remain steady and even decline. But ultimately, investing in property stands the test of time.

Peter Koulizos chairman of the Property Investment Professionals of Australia (PIPA) recently analysed data for seven consecutive years including the start of each recession or economic downturn from 1973 to the global financial crisis.

Over the three most recent economic downturns, while there were periods of annual house price falls in many capital cities, the price reductions were never sustained nor prolonged.

Peter says in 2011, every capital city recorded a fall in its house price index, which was simply when the GFC stimulus money ran out.

“This could well become a statistical reality this time around, too, but it’s important to recognise that within either one year or two years of that period, the house price index was showing solid growth once more,” he points out.

“The research shows that talk of impending property ‘doom’ has never happened in recent history – and these recessions or downturns lasted multiple years rather than a few months.”

Peter’s research found five years after the recession of 1973 to 1975, Sydney median house prices had increased 100.7%, followed by Perth and then Brisbane.

Following the downturn of 1982 and 1983, the research showed many capital cities showed growth in the 50% to 64% range, with Melbourne leading the way with median house price growth of 67.7%.

“When it came to the ‘recession we had to have’, Darwin produced median house price growth of 47.3% in the following five years, with Perth in second-place again,” adds Peter. “Following the GFC, as we all know, Sydney was again the front-runner within five years as the start of its property boom started to take shape.”

This is good news for Newcastle, which is now considered by many to be within commuting distance to Sydney.

Peter says the moral of the story is don’t panic. “Property has shown its resilience through economic shocks before and we have no reason to expect it won’t do so again.”

Although the full impact of Covid-19 is yet to hit the Australian property market, once the economy gains momentum, the property market recovery should be swift, according to Peter.

We’re inclined to agree with him.

In the Newcastle area including Lake Macquarie, we generally see a small but consistent market. Where Sydney may see a 20%  rise in a year or two, it then has a major correction where the price can also drop by just as much.

In our 40 years of business, we have seen our way through oodles of ups and a few downs, and a lot of hollow predictions, but we’re still here, which we think says it all!

If you are thinking of investing in property, our knowledgeable and experienced team can talk you through the process and point out what to look for, and give you some indication of current market trends. We are one of Newcastle’s longest established real estate offices. We know the area and we know the market, so give us a call on 02 4954 8833 or send us an email to mail@apnewcastle.com.au

House prices following a financial crisis

^Source: PIPA