Where Are We In The Property Cycle? | Impression Real Estate
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Where Are We In The Property Cycle?

Posted by Impression on 04, Jul 2018

Auckland house prices will double by 2026 or 2027, according to Ashley Church, chief executive of the Property Institute – less than 10 years from now.

Why does he think that will happen when right now prices are flat? He’s thinking about the property cycle, which tends to peak roughly every 10 years.

Property experts often talk about the property cycle, which is a pattern we see repeating in the housing market, usually every eight to 12 years. It’s often represented as a clock, where 12 o’clock is a peak of high house prices and 6 o’clock is a flat point before they start to rise again. It looks something like this:

Where are we right now on the clock? It’s worth remembering that the market is complex and it doesn’t always follow a simple model – it tends to jump around in the short term. Overall, though, we can take a guess. Property values peaked in late 2016 in Auckland and have been flat ever since, which is why Church is predicting the next peak in around 2026.

If we take into account rising incomes and a tiny bit of inflation, prices are effectively ‘starting to decline’. We’re arguably at about 2:00. Will this head into ‘declining market’ territory soon or are we already there? It’s impossible to know – and equally impossible to pick when it will bottom out or start rising again. There’s a saying in property: “It’s not timing the market, it’s time in the market.” In other words, whenever you buy, the longer you spend in the market the better your outcomes will be. We do like the sound of Church’s prediction, though: bring on 2026.

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