How do Australian property cycles work?

Driver stack (in approximate order of effect): (1) RBA cash rate → mortgage rates → borrowing capacity → demand. (2) APRA macroprudential settings (DTI caps, IO restrictions) → marginal-buyer access. (3) Net overseas migration + state-internal migration → underlying housing demand. (4) Building approval → completion lag (~2-4 yrs) → supply addition. (5) Affordability gap relative to other AU cities → arbitrage flows. (6) Tax regime stability (negative gearing, CGT discount).

Phase pattern: (a) Recovery, rates falling, borrowing capacity rising, prices flat or just turning. Investor sentiment muted. (b) Upswing, credit expansion, FHB activation, prices rising. Construction lags by 2-4 yrs so supply doesn't keep up. (c) Peak, affordability stretched, RBA hikes start, FHB drops. (d) Cooling. IO loans rolling to P&I, vendor expectations slow to adjust, days-on-market lengthen, prices flatten or correct 5-15%. (e) Trough, rate cycle peaks, APRA loosens, recovery begins.

Sydney + Melbourne usually lead by 1-2 years; Brisbane + Perth lag; regional NSW + regional VIC depend on capital-city overflow + lifestyle migration. Adelaide + Hobart often run a different drumbeat (smaller markets, less capital-city dependence). Don't assume AU is one market.

What matters for buyers: (1) you can't time the bottom precisely; the bottom is only visible 6-12 months later. (2) Holding 7-15 years averages out the cycle, 'time in the market beats timing the market' is roughly correct for AU residential. (3) Within each cycle, location-specific drivers (rezoning, infrastructure, employment hub) often outweigh the macro phase. (4) Investors who buy at the top + sell at the trough lose; investors who hold through the cycle generally outperform inflation + most listed-equity benchmarks over decades.