After two years of skyrocketing house prices, the real estate market might finally be cooling off, according to industry experts. In a recent blog post, Aaron Scott, founder of property tech app bRight Agent, dropped a bombshell prediction: the “substantial growth” that has defined the housing market won’t last.
Property Investors Warned: “It’s Dangerous to Assume the Boom Will Continue”
Scott didn’t mince words when addressing property investors, urging them to consider alternatives to real estate. “The real estate market is definitely softening—especially from an investment point of view,” he cautioned. Citing signs of weakness in major capitals and slowing growth in smaller cities, he suggested the days of easy gains are behind us.
“It’s dangerous to think that just because property has been hot over the past year and a half, that it will continue to be so over the next year or two,” Scott warned.
National House Prices Dip for the First Time in Two Years
For the first time in two years, national house prices declined, with PropTrack data reporting a 0.17 percent drop in December. Leading the downturn were Melbourne, with a monthly decline of 0.53 percent, and regional Victoria, which saw a sharp 2.49 percent decrease.
Scott explained that the rapid rise in real estate prices over the last 18 months has been a classic case of “mean reversion,” where prices return to their long-term average. “Higher prices will weaken somewhat while at the same time cheaper places will increase in value,” he said.
Perth’s Real Estate Market: A Double-Edged Sword?
One standout market defying the national slowdown is Perth, where prices surged by 17 percent in 2024, with a 0.39 percent increase in December alone. Once stagnant for a decade, Perth’s affordability has made it an attractive destination for buyers, sending prices soaring.
However, Scott warned that mean reversion is a double-edged sword. “As Perth property values increase, they get less attractive at the same time, and prices will inevitably slow,” he explained. He also advised against assuming future growth will mirror the past two years.
What’s Next for Property Investors?
For those banking on real estate for quick returns, Scott’s message is clear: proceed with caution. As the market recalibrates, investors may find it harder to replicate the gains of recent years. The softening market dynamics might force them to explore other, less risky opportunities.
While the real estate party isn’t over just yet, the days of wild growth appear to be fading. Will investors heed the warning, or will they gamble on a market that’s losing its sizzle? Only time will tell.
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