Property Cycles

hey peoples!

Does anyone know where I can find some data about property cycles of individual states? I'm looking for something like a line graph or chart which shows the historical prices of house/ unit prices for each state for say, the past 20 years.

I know 'property cycles' area thing but don't know where to gather the info. realestate.com only provides a year to date graph. Apologies if there is already a thread on this.

Thanks

 

I would start at CoreLogic. They are the titans of property data in australia. May have to pay for it.

 

This report has the property cycle clock you are after. https://static.htw.com.au/HTW-month-in-review-November-2020-Residential.pdf
However, please be aware that it is subjective. You still need to make your own assessment based on the information you have.

 

If you will indulge me, this is a short excerpt of a webinar I did in April about real estate cycles. A bit Sydney centric, but it seems to be panning out. It gives dates.

 

Interesting, but I note the 2018 mid cycle correction was 'manufactured' in the aftermath of the Banking RC, rather than being a consequence of sentiment or economy.

Historic cycles have seen interest rates move up and down by widely varying degrees (pre and post GFC, for example ...or early '90s recession).

This time, it seems hard to foresee rates rising materially in a high debt-to-income environment without smashing consumer sentiment and spending power..which in turn feeds into the "real" economy and jobs (everyone's spending is someone else's wage). Income growth hasn't been there for the past decade as Western economies mature and productivity stagnates, so what will drive inflation and job/income growth (in turn, interest rate rises)?

I pose these questions as it's hard to see what will drive the next phase of the cycle. I can see the upswing petering out, but what will cause it to go down? Only factor I can think of is APRA intervention in credit supply.

 

What impact do you think corona virus has had on this cycle? How would the curve/dates shift? You mentioned that this 18 year cycle has stayed throughout history except during the wars- what did it look during these periods?

 

Thanks Shazz,

I think the Coronavirus has served only to confirm and magnify the gains that will be made from 2020 to 2026 (as the catalyst for the extreme response of significantly lower interest rates). It might have prolonged the mid cycle correction for 6-9 months, but I don't want to frame this hypothesis as accurate to the specific month.

I would add that if you do a google image search on the 18 year cycle, some people show the mid cycle correction as a "W" shape rather than a "V", which may account for the second shallower Covid dip in 2020.

Again, it is a hypothesis, not advice. But something to watch closely over the coming years.

 

True, but if it wasn't higher regulation, it would have been higher interest rates at that stage of the cycle. Whether it was regulation or higher interest rates, some sort of monetary tightening would have caused the mid-cycle correction. I see no significant distinction here.

 

Hi mate is there a link to the full discussion? Anywhere to subscribe or is youtube the best place?

 

I will PM you with the Youtube link.

 

There is a lot of commentary that wage growth will be depressed over the next 4-5 years. The federal government is actively trying to suppress public sector wage growth which will impact wage growth in the private sector.

Is an 8+ multiple of median property price to median wages realistic?

 

It's not the price, it's the repayments. The repayments as a % of income hasn't changed in decades. In fact, we are well off the highs when compared to this measure.

 

Winners curse 2024-2026

 

I thought 18 year cycle was US cycle not Australian

For example Syd property market crashed in 2006/2007? and boomed in 2013, this is 7 year cycle

 

Nope, it applies across AU, US, CA, UK etc markets. The question is, when is the starting point. The author says that the US and Australia are on the same cycle, and the UK is a bit different. I actually agree, that we are 1 year or so different from the US. But immaterial in the scheme of things.

 

"The Secret Life of Real Estate and Banking" by Phillip J Anderson is a little like the Sports Almanack that Biff stole in Back to The Future 2
I wish I had his book 35 years ago when I first started investing. It would have been like cheating

Seriously, to those who haven't had a read, it's actually a really good book. A little dry in the first section as it is the history of land and the boom and busts that ensued in the US. The latter section is where the mechanics and discussion of the full cycle and mid cycle slow downs occur. Give or take a year or two here and there, but we seem to be following the cycle at present. Tallest buildings in the world are likely to be sprouting from the ground and finishing middle of the decade and that also seems to coincide with pullbacks and corrections.

 

Care to share your copy? Amazon has it at $65 haha

 

Cheapest book you will ever buy. Use the info and tailor to your circumstances and portfolio goals and outcomes. Another cheap book every investor must own is" Poor Charlie's Almanac " Charlie Munger is Warren Buffets wing man. Its also cheap. I think I paid $125 several years ago. Pricele$$