Difference between "Correction & Bust"

Doesn't matter which newspaper you grab these days, one thing you'll be sure to find is "Article talking about property "Boom to Bust"...

And Australian media surely does damn good job at that.

Australian house prices have seen significant growth over the last four to five years and to be more specific "Sydney & Melbourne"..

Below is price growth chart state by state -

With significant growth that Melbourne and Sydney have seen over the last few years and tightening of lending policies by banks, what we seeing now is normal pullback in the market..

Now we can either call this pullback as normal "Correction cycle" or "Bust". 

Below is another chart that shows house price index result as at April 30, 2018.

So far Sydney market has seen the biggest drop which on annual basis is only -(3.4)% and when compared with the housing growth chart (figure 1), fair to say it's correction that was waiting to happen..

Got the crystal ball?

No one's got crystal ball but some of things to look at are -

• Liquidity
• Rents
• Interest Rates
• Job Market
• Consumer Sentiment
• Regulators (APRA/ASIC)
• Aussie dollar

We will try and touch on some of these points in the next blog post especially the banking environment... 

Cheers,

Jazz Sidana

FinanceBoutique

www.financeboutique.com.au