There is no doubting that the property market is cyclical. The causes for each cycle are often different but sure as night and day there will always be peaks and troughs. Good times to buy and bad times to sell.

As house prices in Sydney and Melbourne increase owners are able use their new found equity to buy all manner of investment style properties to have their own “slice of paradise”. Inevitably, the good times end to varying degrees and the market suffers. The changes in owner sentiment in the Far North are often even more pronounced than the southern markets due to our high proportion of lifestyle investment property. These assets are the first to go when the market declines.

The investment property that needed the owner to contribute to the mortgage every month which seemed reasonable whilst times were rosier becomes a burden and, en masse, owners look to offload.

Do investors learn from any of their past mistakes..?

I recently watched a mid-1980’s TV Commercial spruiking a new Surfers Paradise high rise development with 17.75 per cent interest rates fixed for 2 years as a selling point being offered at a 40 per cent discount! (http://www.youtube.com/watch?v=nfV8M0cZV60)

During the period 2002 – 2007 our region experienced an unprecedented wave of managed, resort style apartment development. Sea Temple Palm Cove and Port Douglas, Peppers Palm Cove and Port Douglas, Angsana Palm Cove and dozens of smaller boutique style apartment hotels designed for short term stays.

In general, these properties have decreased in value by 20 – 50% from the peak of the market and are now selling pretty readily at prices which make more financial sense (often below what they would cost to replace).

As we sit on the cusp of the next wave of development and growth where will we see demand from the buying market..? What will developers look to build..? Will the glamour of new resort style developments once again be difficult to ignore..?