What is a Real Estate Housing Bubble ?

 Property Bubble

A real estate housing bubble is a notional rapid increase in property prices usually confined to a particular city or region. It is characterised by increased buyer activity, reducing property days on market, increased finance lending, high auction clearance rates and rising property sale prices.

In all reality, normal economic factors are in play. When demand is high and supply is low, prices will rise irrespective of the nature of the product. In real estate provided there is a stream of affordable funds to borrow property values will continue to rise.

However, like water will ultimately flow down from mountain rains through creeks streams and rivers in varying directions and speeds to the coast and the relative calm of expansive Oceans the property market will find its own equilibrium. When supply increases, demand is met and borrowing capacities against current income earnings are reached, the real estate market will slow down.

The Sydney property market has been in a phase of rapid expansion, but there are already signs of equilibrium approaching.

So, are property bubbles real or perceived.  Opinion is open to conjecture and heated dining table discussion. Either way the driving forces remain the same. 

The inference is that a property bubble will burst. There is invariably a period of slow down or price correction in any market, however, this too is part of a normal economic cycle.

The upshot is, only borrow what you can afford, live within your means, keep a balanced portfolio of investments and most importantly, enjoy the benefits of living in Port Macquarie the Hastings and Mid North Coast, in a rural peaceful environment.

 Drew Oliver 

Regional and Rural Realty