Sydney and Brisbane property market cycles

Analysing different property cycles for different cities could potentially give us a view into when the next growth phase in property market starts. Sydney property has boomed and went through a super growth cycle, yet Brisbane was left behind. Our question remains if Brisbane was left behind or if Brisbane cycle is expected to start after Sydney cycle correct.

We look at a number of historical data points to analyse property growth, correction and stabilisation cycles. In this instance we are looking at the possible relationship between Sydney property cycles and Brisbane cycles.

A chart showing Sydney and Brisbane property cycles. Brisbane follows Sydney in its property journey?
A chart showing Sydney and Brisbane property cycles.

Relationship between Sydney property prices and Brisbane property prices

When looking at the chart above we are seeing a possible relationship between Sydney property prices and Brisbane house prices. For example, we are seeing that Sydney tends to “move” before Brisbane. That is, we understand that Sydney prices start to increase before Brisbane property increases. As Sydney property increases the gap between house prices of the two capitals increases. At certain stage, Sydney property corrects.

In the above chart, when Sydney property correction crosses the median line we are starting to see that Brisbane prices begin to move. We are not entirely sure why this is happening. It could be because investors cash in on gains in Sydney and move money to Brisbane, in anticipation for property boom in Queensland.

Once the ratio of prices between Sydney and Brisbane crosses Brisbane average trend we are seeing Brisbane prices take off. This growth in Brisbane property continues until Brisbane mirrors Sydney property performance.

When the ration between Sydney and Brisbane crosses the Brisbane property trend line we are seeing Brisbane peaking up. And the cycle repeats itself.

What is happening to Sydney property now?

According to the chart, the ratio of Sydney to Brisbane property has just touched Sydney property trend line. This means that Sydney prices might flat line for a while and Brisbane property prices are expected to start their growth cycle. Last time this happened it took almost a year for the ratio to cross Brisbane property trend line. So we are expecting to see gradual recovery in Brisbane property prices. Towards early 2020, when property ratio crosses Brisbane property trend line, we are expecting to see a more pronounced growth in Brisbane property prices.

The rapid growth, if repeated, should see the property trend line dropping significantly where Brisbane prices catch-up in their index to Sydney property prices. This is where we are expecting to see Sydney property to start its recovery and next run.

What are our guesstimate property forecasts?

Very roughly we are seeing as follows:

2019 – Sydney moderate decline, Brisbane stable

2020 – Sydney stable, Brisbane moderate growth

2021 – Sydney stable, Brisbane strong growth

2022 – Sydney stable, Brisbane moderate growth

2023 – Sydney stable, Brisbane stable

2024 – Sydney moderate growth, Brisbane moderate decline

We cannot predict the future but we think this is what it would look like. We will revisit this article in the future to see how right (or wrong) we were. For now, do your own research and happy property investing.

Reference: 6416.0 – Residential Property Price Indexes: Eight Capital Cities, Sep 2018

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