Brisbane, which has experienced four downturns since monitoring began in 1978, averages a length of nine quarters.
While the most significant real price decrease during a downturn was 20 per cent, the average reduction per downturn has been just under 11 per cent.
Brisbane house prices are expected to remain relatively flat over the next 12 months, although there is a risk house prices could also begin to weaken in nominal terms.
The average duration of Brisbane’s unit market downturns has been eight quarters, however the city is currently experiencing its longest downturn with real prices declining from a June 2015 peak.
Implications for the building industry
Analysts warned that declining prices will also weigh heavily on the building industry.
Price declines are typically accompanied by a reduction in turnover with upgraders tending to sit out of the market until conditions for them to sell their existing dwelling improve, which in turn reduces demand from those who would upgrade to a new house.
Further declines in median house and unit prices will adversely impact the feasibility of a variety of potential new projects, particularly in circumstances where the price paid for land has been high compared to the current market.
As a result, the next round of development may be delayed pending an uplift in house and unit prices.
Source Bis Oxford Economics
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