Property entering 'new normal' as turbulent 2020s subside

For many of us, the idea of a return to normal has taken on new meaning over the past few years.

In fact, there’s even a playful reimagining of the historical acronyms BC and AD—traditionally marking eras before and after Christ. Now, these could stand for Before COVID and After Disease. Adding to the dictionary, there’s DC for During COVID, a period marked by unpredictability and upheaval.

As valuers, economists, and property professionals, we often rely on historical data to forecast market trends.

Yet, the pandemic turned these models upside down.

I vividly recall being part of a critical nationwide meeting during the early days of the pandemic.

Banking institutions predicted a grim scenario—a 30 per cent drop in property values, driven by widespread job losses, business closures, and economic uncertainty.

Lines outside Centrelink stretched for hundreds of metres, and a sense of fear gripped the nation. How would these individuals make their mortgage repayments? Surely, the market had no choice but to crash.

Fast forward six to nine months, and the market defied all predictions. Instead of falling, property prices soared by as much as 30 per cent. The resilience of the Australian property market during ‘DC’ was nothing short of extraordinary.

Each week seemed to bring a new record high, and it felt like anyone who purchased property during this period emerged as a savvy investor. However, this rapid and unexpected growth created a false sense of security for some.

As we transition to what we can now call ‘AD—After Disease’ we’re starting to see the tide return to normal. Just as floodwaters eventually flow back to the ocean, the property market is settling into familiar patterns. Stability is re-emerging across key indicators, offering hope for a more predictable real estate market in 2025.

Several signs point to this shift:

• property price growth: the trajectory of growth has slowed, with prices correcting to sustainable levels
• rental market: rental increases are moderating after years of rapid growth
• stock levels: supply is returning to pre-pandemic levels, easing some of the constraints faced during the boom
• inflation and interest rates: inflationary pressures are easing, and interest rates are stabilising, with anticipated rate cuts providing further relief
• construction costs: these are normalising, reverting to typical price growth parameters.

The recently released Q3 API Magazine Property Sentiment Report reflects these changes, with many investors cautiously stepping off the sidelines and re-entering the market. Stability brings confidence, enabling investors and homeowners to set goals and plan with greater certainty.

As human beings, we crave stability. We thrive in environments that minimise fear and uncertainty and the property market is no different.

While the chaos of DC created opportunities, it also taught us important lessons. Now, as we settle into a new normal, it’s vital to remember that this era is not a return to the past but a fresh chapter with its own unique challenges and opportunities.

Stability returning to property market

Drawing parallels to life AD, we must adapt to the “same same but different” reality. The property market’s new normal will reflect a more stabilised, mature environment.

It will also shape a more sophisticated investor—one who has learned from the volatility of the past, embraces adaptability, and plans for a future rooted in stability rather than speculation.

Treat the DC period as a great book you’ve read—filled with lessons, surprises, and challenges. But like any good book, it must come to an end. Close it, reflect on the journey, and turn the page to a new story in the property market’s evolving narrative.

The era of the “new normal” offers opportunities for those who embrace change with clarity and foresight.

Stability is returning, and with it comes the promise of a more balanced and predictable property market—one where informed decisions will once again lead to lasting success.