In my many years involved in property investment, there is one question I have been asked repeatedly. Irrespective of whether property prices are increasing, decreasing, or remaining stable.
No its not “what is the property cycle”.
This question seems to be the one everyone interested in property investment wants answered.
“Is now the right time to invest in property?”
It probably comes as no surprise to you because you too have always wanted to know the answer.
I have long held the opinion that it is always the right time to buy, if you buy right! However, the persistence of those enquiries led me to question whether there was an optimum time to buy property. Or optimum times to use specific property investment strategies.
This led to my initial research throughout much of the 1990s to discover whether a property cycle existed. When I first began studying the concept of a property cycle, I almost did not want to believe that it existed. Or, if it did, I doubted it could be predictable. I thought if a property cycle existed and could be predicted, then surely more people would have already used it to their financial advantage and the secret would be out!
THE EVIDENCE
To my pleasant surprise I found enough evidence to eventually conclude in 2001 that the property cycle clearly does exist. It has some immutable aspects, is measurable and is quite predictable. I also gained some insight into why more people do not use it to their advantage. I observed that timing mistakes can easily be made. Especially without the context of what point the property cycle is, in relation to its traditional long-term cycle.
The timing of my discovery could not have been better. My my research revealed that Auckland, the city I lived in, was in the recovery phase. On the cusp of a property boom. I made a press release in January 2002, announcing what I considered to be the looming property boom.
Mine was a voice in the wilderness. The call was not taken seriously. Seven years later a media article finally recognised my early call. A call of what turned out to be deemed as “the epic property boom of 2002 to 2007”.
THE BENEFIT
This research gave me the ability in 2001 to glimpse beyond the property market event horizon. To see the boom coming before it arrived.
In early 2008 the same research revealed the looming slump.
The property cycle is the term used to describe a succession of similar events that affect the property market on a cyclical basis. By understanding it you can gain insights into why the property market reacts the way it does. You can learn how you can use the property cycle to your financial advantage. Which investment strategies are likely to produce better results during specific phases of the cycle.
Many intelligent investors have failed to use the property cycle to their advantage. This appears to be due to the powerful emotions of fear and greed. Emotions that are evident throughout the cycle. Causing investors to react emotionally without even realising it. It pays to remain vigilant and aware of the emotions underlying our property decision making.
Now you understand what the property cycle is here’s where you can find out why it is predictable.
