Opinion
Why property price falls are just the tip of the iceberg
Soaring construction costs, plunging borrowing capacity and a growing divergence in listed and unlisted valuations means the pain from this cycle is yet to fully play out
James WrightContributorWith property forming a key plank in wealth creation strategies, the recent market fluctuations are driving deep concerns across the investment industry. The rising cost of debt and supply chain issues have led to construction costs rising, corporate collapses and valuations coming under pressure.
The Reserve Bank of Australia began its inevitable tightening cycle a little less than a year ago. In that time, the cash rate has risen by 3.5 percentage points, the cost of borrowing has increased sharply – and, importantly, the supply of liquidity to the property sector has dried up.
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