Property cycle

A property cycle is a sequence of recurrent events reflected in demographic, economic and emotional factors that affect supply and demand for property subsequently influencing the property market.

The first recorded pioneer of studying property cycles was Homer Hoyt (1895–1984) in 100 Years of Real Estate Values in Chicago (1933, reissued by Beard Books, 2000, ISBN 1-58798-016-9). It is widely recognised that property (along with other forms of investment) follows a predictable cycle. The property cycle has three recognised recurring phases of boom, slump, and recovery. The cycle follows a consistent pattern which can be accurately assessed by following the trends of a collective basket of Key Drivers (as outlined below).

Property cycle phases

The property cycle follows a predictable pattern as sure as night follows day. This pattern reveals three distinct phases being Boom followed by Slump followed by Recovery before the next Boom commences etc. The property cycle (unimpeded) will always follows this pattern so a Boom cannot precede another Boom without first experiencing a Slump followed by a Recovery before the next Boom can arrive. The property cycle must have a 'free market' where property ownership is attainable by citizens without, significant government restrictions on ownership or, any form of monopoly.