The 18 year property cycle!
If you are a property investor, then you should be aware of the 18-year property cycle.
There is a clear pattern within western economies that has been analyzed over the last 200 years. This includes the U.S, and other markets follow such as Australia and the United Kingdom.
Phil Anderson wrote the book ‘The secret life of Real Estate and Banking’. In this book he breaks down the history of the U.S economy over the last 200 years. In summary, Phil’s findings were that history does repeat itself and the average property cycle is 18.6 years. Within this 18-year cycle, there is 14 years of up and 4 years of down.
Understanding what stage of the property cycle we are currently in is extremely powerful. If you can forecast correctly, you can make more educated investment decisions which will subsequently help you make more money and mitigate risk.
Source: Ascendant Strategy and Money Week magazine 2014
Buckle your seat belts for the biggest boom yet!
Covid-19 has been a worldwide event and we have seen Governments worldwide throw whatever they can at it to reduce the impact on economies.
The Covid-19 event is extremely similar to the Spanish Flu of 1919-1921 where 50 million people died. What was followed by this event 100 years ago, had come to be known as the roaring 20s, which was the biggest bull market at the time.
Knowing where we are in the 18-year property cycle is extremely important and we have just gone through the mid cycle slow down. What comes after the mid cycle slow down? Based on what we have seen in history, a huge growth cycle occurs known as the ‘Explosive Phase’.
Based on the Australian property market, Sydney and Melbourne typically perform better in the first half of the property cycle, whereas capital cities such as Brisbane and Adelaide perform better in the second half of the property cycle.
We have seen Sydney and Melbourne property prices increase since 2012, with a high level of performance in the Australian Property Market. We are now seeing Brisbane and Adelaide performing strongly, as we have just moved through the mid cycle slow down and enter the second half of the 18-year property cycle.
It’s important to note that we are currently at approximately 1:30 on the property clock. Experiencing the land boom and lavish government spending for works. See below:
Based on historical data, this shows there are markets in Australia currently that are only at the start of their growth cycle. This is where it is crucial to ensure you are investing in the right markets at the right time of the cycle.
If you have found the 18-year property cycle information insightful and interesting, check out Phil Anderson’s work further. This will help you to further educate yourself on the property market and instill confidence in property investing.
The more you educate yourself and have an understanding of the property cycle the easier it becomes to create a mindsight where you are not filled with fear and can be ready to take action and take advantage of the market. If you would like help securing a high quality investment property please reach out at info@tayloredpropertywealth.com.au and we would love the opportunity to get to know you, your goals and how we can help you moving forward.
Further Reading:
➡️Australian Property Market Predictions 2024
➡️Talk to Me – Australian Property Podcast
