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How long do market cycles last?

buying
1 minute read

How long do market cycles last?

by Cameron Micallef 03 June 2020 1 minute read

While most properties will double in a decade, most of the gains will happen in two to four years with six to eight years of stagnation in between.

market cycles
June 03, 2020

Research into 150 suburbs by InvestorKit director Arjun Paliwal highlighted the importance of buyers understanding these trends to make more informed decisions.

“As a result of that people buy in locations that may not be best for them, and end up twiddling their thumbs for a long time before anything like that happens... or they sell early and get frustrated,” Mr Paliwal said.

While highlighting the importance of time in the market, the buyer’s agent believes timing the market can be a game changer for investors.

‘Timing’ the market is never ‘perfect’, but by getting the right timing (or as close to it as possible) as you can see from this image... can be life-changing,” Mr Paliwal said.

He also explained that unlike other asset classes, property growth is not linear. 

“Property over a 10 or 20 or a 30-year cycle can grow at 5-7 per cent p.a. (after breaking down the overall growth during that period).... however, too many seminars... spruikers... and many new investors believe that property gives 5-7 per cent p.a. chuck it in a compound calculator... and it spits out where you will be... property simply does not grow at that rate each and every year... it’s spread across booms/gradual increase/decline/flat phases of cycles,” Mr Paliwal noted.

Mr Paliwal explained that an investor who owns a property for 10 years is likely to have the following cycle: “What you will notice is that in a 10-year ownership window when a boom has occurred (not all) typically the below will occur:

Boom period: 2.5-four years

Flat/declining: two to three years

Gradual increases: three to five years.”

How long do market cycles last?
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About the author

Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your... Read more

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