Supply and demand the key metric to watch when reading the property market

PHOTO: Competition is very high at auctions. Picture: News Corp: Daily Telegraph / Gaye Gerard

Property prices do fall, despite whatever your mates, aunty or best friend have told you.

It doesn’t even have to be the property bubble bursting as seen during the Global Financial Crisis, or as was feared to happen when coronavirus first hit.

How could Australia’s property bubble burst?

The property news headlines can’t always be a barometer of where the market is heading, especially as different suburbs and property types are their own micro-markets, which may see prices rise and fall quite independently.

One of the best ways to detect when the property market you are interested, or invested in, is likely to be cooling is to watch one key metric.

The most obvious barometer of a market slowdown, pause or reversal, is one which rules all of economics, supply and demand. Supply’s effect on property prices was seen in the pandemic lockdowns as there were fewer fresh house listings on the market, in part because of regulations surrounding their accessibility, and also because of vendor hesitation around Covid-19 safety; and whether they thought it was the best time to move, and if they’d even find a home.