The most recent downturn in Sydney and Melbourne was never going to be the worst downturn ever recorded, despite all the hype.

And prices in premium suburbs are now rising  – so it’s clear that we’re at the beginning of the next property price cycle.

So how did we get here and why is the market recovering now?

Not every city experienced the downturn

Not every city in Australia has experienced tough conditions in the property market over the last two years.

Tasmania and regional Victoria continued to do well over that time while Adelaide remained steady while other markets oscillated.

Tasmania saw a substantial structural change to its economy over this time period and saw a strong increase in population growth.

For regional Victoria, the drivers have been similar – more infrastructure spending in places like Geelong, jobs growth and more buyers looking beyond Melbourne for affordable housing.

Prices in Perth and Darwin did tumble, but mostly for other reasons.

Brisbane remained stable, despite overblown fears of too many apartments.

So, when we talk about the housing downturn, driven by finance restrictions, we are really only talking about Sydney and Melbourne.

What caused the property downturn?

The recent downturn in the property market was driven largely by regulation and domestic factors.

Access to finance was squeezed because of the Financial Services Royal Commission, as well as regulators putting a dampener by increasing restrictions to lending.

It is now two years since Sydney’s prices began to fall and over this time period, we can see that some areas were hit harder than others.

Sydney suburbs still dominate the top five biggest declines in prices, with areas containing a large amount of apartment construction featuring strongly.

Melbourne fared better over the downturn, but Melbourne’s inner east was the worst hit – partly apartment driven but also because it was one market that also saw the biggest jumps in prices when conditions were strong.

The recovery has begun

And although Sydney and Melbourne prices are yet to show recovery on a capital-city wide basis, all signs suggest Spring 2019 will be much better than 2018.

The latest auction clearance results come on the back of last weekend’s NRL Grand Final and subsequent long weekend. Sydney hit a 77% clearance rate from 198 auctions, while Melbourne hit a 75% clearance rate from 495 auctions.

As an indication as to how different auction activity is this year compared to last, a summary for August 2019 shows in Sydney auction numbers were down 27% while in Melbourne they were down 15%.

This, along with increased search activity on realestate.com.au, has led to a big jump in clearance rates.

We continue to see solid signs of recovery in price growth in premium suburbs such as Vaucluse, Collaroy and Summer Hill.

A strong imbalance between search and listings suggests that these price rises are going to spread to other parts of the market.

Search figures on realestate.com.au in Melbourne and Sydney are well and truly up, heavily influenced by the stimulus in the market.

Interestingly, buyers in Brisbane, where search numbers are down, are not as active as those looking on Gold Coast and Sunshine Coast at the moment.

While buyers are back in Sydney and Melbourne, it isn’t being matched by seller activity. This is well down.

If you have a property and you want to sell – now is the time to list and make the most of the increase in buyer activity.