Australians have always had a fascination with residential property over the last century, especially the last 50 years when decimal currency was brought in, in 1970.

Most Australians have little knowledge and or interest in most asset classes; Shares, Managed Funds, Cash, Gold, Silver, Art and other exotic investments. They have little or no emotional investment whatsoever but when it comes to residential property everyone suddenly becomes emotionally involved, an expert and have an opinion, where and when to buy, where and when to sell and when to sit tight.

Unfortunately their advice is primarily based on personal thoughts and feelings rather then facts and figures. Data simply doesn’t lie, mislead or deceive anyone. Most are well intentioned but are either just ill-informed through lack of knowledge and expertise

In the property industry there are two terms that are used to map the values of residential property and they are

Median Price
Actual Price

In any given property cycle the two rarely cross over for one common value. The median value is often gauged over an extensive period, six months, one year a decade whereas the actual price is what the consumer is prepared to pay today. In times of a bullish market the median price is going to be well below the actual price of the market, similarly in a bust market the median price is generally going to be higher than actual price the market is prepared to pay.

Unknown by many, the equilibrium of both the median price and the actual price of property values rises and falls with the rate of inflation, somewhere between the price of inflation itself (reflecting building costs) and wages inflation (reflecting the capacity to pay and repay the costs of buildings and labour component of building costs).

There are additional considerations with the residential property market that effects the median and actual price of property. Primarily the supply and demand of the market and the scarcity of land in capital cities and its immediate surrounding area as well as major regional centers.

Most Australians primarily believe that property only rises in value which in effect is one hundred percent true over the medium to long term, however over short to medium term property can actually decrease in value depending on what part of the cycle you purchased it in.