The Australian property market regularly cycles through periods of upswings and downturns, however with the Government changes to residential property investment, the market has officially entered its 9th downturn period since 1995, so what happens next and should investors be concerned?
What the past 30 years tells us about property cycles
Property has always been a smart investment tool and it’s important to look at the data to make informed decisions whether you’re an experienced property investor or new to the market and concerned about a potential downturn period.
From 2020 – 2023, there was a recorded upswing duration period of 1.75 years with 34.3% growth. For the same period, there was a downturn duration period of 1 year with a decline of -4.7% meaning the upswing period has been both longer and larger equating to an upswing period occurring for 63.64% of the 2020-2023 period.
If we go back 30 years and assess the 1995-2000 period, the recorded upswing duration period was 4.75 years with 41.5% growth and a downturn period of 0.25 years with a decline of -0.2%. This upswing period occurred for 95% of the 1995-2000 period with the downturn period only being relegated to a measly few months.
These periods of time are vastly different so it’s crucial to look at the averages in upswing duration, growth, downturn duration and decline to make a fair and balanced assessment.
The below table outlines the full 30-year+ property cycle
| Property Cycle Period |
Upswing Duration |
Upswing Growth |
Downturn Duration |
Downturn Decline |
Upswing Longer? |
Upswing Larger? |
|---|---|---|---|---|---|---|
| 1995 – 2000 | 4.75 years | 41.5% | 0.25 year | -0.2% | ✔ | ✔ |
| 2000 – 2004 | 3.5 years | 79.7% | 0.25 year | -0.3% | ✔ | ✔ |
| 2004 – 2008 | 3.75 years | 30.2% | 0.75 year | -4.1% | ✔ | ✔ |
| 2008 – 2011 | 2 years | 18.2% | 1 year | -3.6% | ✔ | ✔ |
| 2011 – 2016 | 4 years | 34.9% | 0.25 year | -0.3% | ✔ | ✔ |
| 2016 – 2019 | 1.75 years | 14.5% | 1.5 years | -8.5% | ✔ | ✔ |
| 2019 – 2020 | 0.75 year | 8.2% | 0.25 year | -1.7% | ✔ | ✔ |
| 2020 – 2023 | 1.75 years | 34.3% | 1 year | -4.7% | ✔ | ✔ |
| 2023 – 2026 | 3 years | 29.6% | TBC | TBC | ✔ | ✔ |
| Average | 2.8 years | 32.3% | 0.7 year | -2.9% | ✔ | ✔ |
Source: Domain
The best news about this data is that on average, the upswing growth period accounted for 80% of the cycles (2.8 years upswing compared to 0.7 downturn years) and had an average of 32.3% growth. The question then becomes raised as to why these downturn events occurred and what were the factors for these peaks and valleys in the housing market.
The below timeline illustrates factors for how upswing and downturn periods commenced and ceased. The Banking Royal Commission into Financial Services for instance led to a 12-month downturn period between May 2018 – May 2019. If we jump ahead a few years, we see that border restrictions being eased post-COVID in May 2022 kickstarted an upward trajectory, leading to a 1% growth upswing in the following 12-months, a welcome relief from the 1.5% decline period for the 3-month period prior.
We see the past 12 months has experienced growth month-on-month for May 2025 – May 2026 and the growth itself has slowly declined for the past five months dropping from 1% to 0.1%. This downturn is expected given the recent interest rate hikes and the Iran war which saw fuel prices surge and investor confidence plummet.
Source: Cotality
From downturn to a new high
A trough period can seem daunting for investors, experienced or new, thankfully data and history is on the side of smart investors who look at property from a long-term view.
Take the figures below showing how each previous downturn period has been followed immediately by recovery and growth, pushing prices to double digit percentage new highs.
An investor would miss out on significant growth had they chosen not to invest in property, compared to a savvy investor who would benefit immensely regardless of which year they began their investment journey.
Source: Domain
The forecast for 2026-27
With growing returns quarter-to-quarter, there must come the inevitable downturn period, in line with the previous eight periods of downturn. Domain has forecast five consecutive quarters of decline for 2026-27. This is in line with the changes by the Government to CGT and the abolishment of negative gearing for new residential investment property however there is a possibility that we may see changes in these declines if the Labor Government chooses to reverse their decisions on abolishing negative gearing (Which it famously backflipped on in 1987), and if there are further pushbacks against their changes to CGT and using LRBA’s for SMSFs. The downturn period will always result in a successive upswing growth period that will last longer and have better change from trough to price peak.
Source: Domain
Don’t play it too safe
The opportunity cost is high for investors who choose to not invest in property over the next 12 months. Mid-sized cities and regional areas are still experiencing growth quarter-on-quarter and month-on-month. The majority of Melbourne, Sydney and Canberra unfortunately are not desirable markets for the next 12 months, but limited opportunities remain in select areas in these capital cities. Investors are wise to investigate high growth opportunities in all capitals and regional areas due to low vacancy rates and consistent migration which are pushing further need for rentals.
The below capitals show the changes in dwelling values by previous month, quarter and annual periods.
Source: Cotality
Regional Tasmania, Western Australia, South Australia and Queensland are still growing month-on-month and have has impressive results for the annual period. Likewise select capital cities including Darwin, Hobart, Perth, Adelaide and Brisbane saw booming periods above 9% growth for the previous 12-months.
Australia recorded a -0.4% decline overall with Combined capitals underperforming for both the past month and the previous 3 months. It’s no surprise that investors remain weary of the property market in 2026.
The silver lining lies in identifying key capital and regional areas that are continuing to perform consistently. This difference is crucial in understanding the fragmented property market.
When is the right time to start investing?
The short answer is now. The long answer is after enquiring with our team of property wealth planning experts and acquisition specialists to get clear, transparent data and information on what investment opportunities fit your circumstances and long-term goals.
We encourage you to book your 60-minute complimentary session to be better informed on the property investment market and how you can take your first steps to a future of financial freedom.