property cycle durations

Further to an earlier post, does anyone have any stats on the duration property cycles depending on place ( eg tier 1 like Sydney = x yrs, tier 2 like Melbourne is yrs,...tier 155 like Brisbane is ?? years.)

I doubt that the duration of cycles in property is approximately the same duration independent of place size and risk.

 

I have been wondering about this too. I have been trying to find graphs of house prices to analyse but I have found this very difficult. What metric do you use to measure a cycle? Unstratified median house price? stratified median house price? some kind of price index? I have found a graph for NSW but it used a different metric to an equivalent I found for WA, so it was not possible to compare. I have found some that use an index but I'm not sure what the index means.

We all know that housing markets boom and correct, so you expect a nice neat graph of prices going up and prices coming down again. In real life, markets aren't that simple. At the same time in Sydney, some areas are going up, some are going down and some are going sideways. This makes it very hard to understand the cycle. Here is a graph to demonstrate that property cycles are not that straightforward to read. I wish they were

 

I think @Shadow is very good with stats, hopefully he can come back with something on this.

I am going to keep it very simple as I am not good with graphs etc. not my thing.

My observation from my experience is that Boom markets are much shorter timeframe than bust markets. Generally 2-3 years. We have recently seen evidence of this in Perth, Sydney and Melbourne. We have also seen bust cycles go for 7+ years.

However I have seen one boom cycle in Australia go for 6 years that was in Perth but that was driven by the mining boom.

Sometimes its not worth looking at past history because there is no guarantee it will repeat itself, for example last Sydney boom cycle started in Syds West due to immigration and entry level. In the past it always started with inner city blue chip areas.

In Perth what fuelled last rise/boom was FHB market, buying at sub $500K, generally it would be blue chip properties.

Also towards the later part of the boom cycle is generally when you see the fastest growth, this is danger zone as market is coming close to peak, the frenzy buying pushes prices up.

The million $ question is how do to you determine the market is about to peak? Prices have already increased significantly, it cant keep going that is one of my indicators.

MTR

 

I agree with @MTR. Booms are short, corrections are long and recovery is even longer. Although in Perth, cycles seem to last about 10 years, I'm sure they are irregular and each one is different. Someone did an analysis of peaks and troughs and there doesn't seem to be any pattern to it. It's driven by the prevailing economic conditions at the time and those are highly variable.

 

Thanks for posting the graphs.

Though I must admit I don't take too much notice of these because my experience tells me that they don't tell you the full picture, that is the problem. Not saying they are bad, just know that you can not rely on these alone to work out what is actually happening on the ground, in fact they can be very confusing, but then again I get confused very easily.



MTR

 

They don't make much sense to me either @MTR.

They also don't tell us what is happening on the ground. If I want to know what it happening on the ground, I go to home opens.

The purpose the graphs is to explore the statement made by @JDP1 that "I doubt that the duration of cycles in property is approximately the same duration". Going to home opens won't tell us that!

From my limited understanding I agree with the premis that property cycles don't last the same amount of time. It depends on external factors. Each one is different.

 

They are.

..... and on another note, I don't understand the QLD property market at all, that is why I am staying out?

Its just not a typical boom cycle IMO, not sure whether it will fizz out due to buyers/investors mainly from interstate???

MTR

 

and that's why the analysts/banks/consultants etc get paid so much...they have to make a call.

 

Fair call.