There has been SO much talk around 18 year property cycles recently, which has resulted in a number of people asking me for my 2 cents. Here goes nothing…
YES the property market is cyclical, property prices rise and then they fall and then they rise and then they fall… however usually the impact of inflation means that prices never fall as far as the bottom of the last cycle, instead they bottom out slightly higher, and then the peak prices are higher than the last peak.
Why? Well because of the impact of supply and demand. As demand rises, supply falls, so prices escalate. As demand falls, supply increases, therefore property prices drop.
So simple…
But these cycles… they are caused by changes on the impact on supply and demand. Government changes, economic changes, changes to inflation, the way people spend money, the developments that are happening in an area, basically any chaotic behaviour which causes change…
So you get where I’m going… technically 18 year cycles are a thing, but not specific enough to define the future of what could happen in the property market.
To do that you have to have a close look at the micro-economics. Yu-huh, the nationwide trends cause effect, yet more local circumstance makes clearer changes and to notice that you have to get out on foot. Analyse transactions. Notice the change. Get involved with the progress.
Last week I wrote about the reason house prices had ‘fallen’ in my local area. Speculation and high level trends cause massive figures. To get to the grass roots of what’s going to happen you have to get on foot, see the new developments shifting the market and the lack of large scale housing being sold.
If you want to see the technicalities of why this happens check out a study:
…that I conducted in 2013 about the influences on supply and demand which cause property cycles (plus some freaking awesome diagrams that I mapped myself) which show actually what happens to prompt changes in supply and demand and how this shifts the market.
Truth be told, I’m not one for the 18 year cycles, but I get why people see that.
It’s not specific enough to actually dictate what’s going on in the market, but general enough that someone could be right… because of course ‘circa 18 years’ gives some sort of perspective.
If you want to see what’s really happening, survey your local area, look beyond the press and get a feeling… you will know what’s about to happen!
{Again, check my study here!!}
Now over to you, comment below! What is the property market looking like in your local area… and from getting on foot, what can you tell me about what you think is going to happen?
Remember: If you are ready to take action, expand your property portfolio, build assets that are risk adverse so that they can cope with the highs and lows of property cycles, then jump on into the Members Club, where I work with you to buy awesome properties that can 100% cope with the fluctuations of property cycles.
NC
