In this series, I will cover 4 phases of the
Property Market Cycle. The 4 phases are:
- Recovery
- Growth
- Bubble
- Bust
There is no specific length of time the cycle can
stay at each phase. Therefore it is meaningless to make a forecast of how much
and when. Governments also frequently intervene in different phases of the
cycle causing the phase to shorten of lengthen.
Each phase of the cycle has it’s own unique
identification features. Recognizing the various phase of the cycle allows an
investor to maximize their investment returns by taking the right action.
In this article, I will be covering the
characteristics of the Recovery phase.
During this phase, the property price index has
been stable for a few quarters or fluctuates within a small narrow range. The
general public sentiment is to stay out of the property market. The public
having been burnt by the correction phase is extra cautious and rather stay on
the sidelines. They doubt that the stability is sustainable and believe that
this period of stability is rather short lived.
Transaction prices and rental prices show
stability.
There are likely very few news reports and
reviews on the topic of property. Property developers are also reluctant to
launch developments, as the market sentiment is weak. There is limited demand
and new sales and sub-sales volumes are low. However, a keen eyed property
investor may notice that resale volumes slowly and quietly creeping up over
pass few quarters.
Stock markets are likely to show stable and
sustainable growth during this period. Analysts frequently recommend placing
money into equities for better gains. Property investment is hardly the talk of
the town, again the sensible property investor knows that stock markets are
leading indicators for property price increases.
Banks may still be reluctant to extent credit,
being very careful to screen all potential loan applications. There may still
be lingering news reports of banks rejecting hosing loans.
Governments may choose to eliminate all or the
last of any property cooling measures implemented. Potentially, they may even
introduce property-spurring measures to stimulate economic activity.
The patient property investor having waited out
the bust phase is now searching through classified ads, talking to a few
property agents, looking up property sales online and attending property
auctions and sales viewings. They take their time to sieve through the
information to pick only the highest investment grade properties. They take
their time to negotiate to get the best value taking advantage of the low
demand.
This is a buyer’s market!
The main advantage of investing in real estate is cash flow. If you are looking for Property Auctions Florida, visit ewinvestments.net.
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