A well-known theory is that of the property clock. 12 o clock is the top or peak of the market and 6 o clock is the bottom or trough of the market.
Most people understand that the property market is cyclical. i.e. prices rise and fall.
The Boom phase marks the zenith of the property cycle, where prices reach their highest point. Demand remains strong, but signs of overheating may emerge, such as speculative buying, excessive leverage, and inflated property prices relative to fundamentals. Investors need to exercise caution during this phase, as the market may be vulnerable to corrections or downturns.
The Slowdown phase sees demand beginning to wane, leading to a slowdown in price growth or even modest declines. Factors such as rising interest rates, economic uncertainty, and regulatory changes can contribute to a cooling market. Sellers may encounter longer listing times, while buyers may gain bargaining power as competition eases.
The Slump phase represents the bottom of the property cycle, characterized by stagnant or declining prices and subdued market activity. Economic challenges, such as high interest rates, recessions or job losses, may exacerbate the downturn. However, savvy investors view the Slump phase as an opportunity to acquire properties at discounted prices, positioning themselves for future capital appreciation when the market rebounds.
And then there’s the Recovery phase, the property market experiences robust growth driven by factors such as strong economic fundamentals, population growth, low-interest rates, and high consumer confidence. Property prices tend to rise steadily during this phase as demand outpaces supply. Investors often witness significant capital gains, making it an opportune time to buy and hold properties for long-term appreciation.
So, the questions are, where are we now of the property clock? And why does it matter?
We believe we are at or just past the bottom of the market, so somewhere between 6 and 7 o’clock. So we are just at the start of the Recovery Phase.
So what? That means that now is a great time to buy a property, it’s a buyers’ market. Now is a great time to get into the market and enjoy the recovery of prices towards a raising market.
If you are a buyer and, in the market, to purchase yourself, please either reach out to your mortgage adviser and get your lending sorted so you can purchase as soon as you are able or reach out to the team at equiti directly and we can show you some properties that meet your requirements. If you are an equiti Affiliate Adviser you should share this article with your clients, make sure they have their lending approved and refer them over so we can help them find the perfect property to buy.