Everything in life revolves around cycles. The weather, the seasons and the natural world at large has a beginning, middle and end before the whole system comes back around and starts again. So is it that surprising that the property market also seems to be built around a fairly rigid system?
Over the decades if you look at the property market you begin to notice a very distinct cycle. The basic premise is that prices grow quickly, level off and stagnate as the market reaches its peak. Then a crash or other event sees a swift reduction in price. This is followed by a period of caution, then tentative investment which grows into quickly rising prices once again as the cycle goes round once more.
So, where are we now and how long does the cycle take to complete its revolution? Well, those are the big questions and the truth is there are no definite answers otherwise we’d all be rich beyond our wildest dreams. But what we can do is evaluate carefully the information and data, and establish roughly where we might be in the cycle. It also pays to take into account external factors which influence the cycle, as it does not exist in a vacuum. The cycle is slowed or sped up according to a complex series of factors such as interest rates, political changes, societal shifts, events such as economic depressions, and many more. So it can be very difficult to know where we are.
However, with recent rises in interest rates, stamp duty and some economic uncertainty the market does appear to be slowing. The government’s housing policy also appears to be putting the brakes on the market to some degree. But this could all change with the new budget. The thinking is that house prices will remain relatively flat throughout 2018.
So does this mean that a crash is coming as the market peaks? Not necessarily. The stabilising prices are very much a reaction to stamp duty and the other factors mentioned above, and soaring demand for property means that these drag factors could wear off and prices begin to rise once again. The signs are that this is most likely the case. As 2018 progresses, the market will once again pick up with peak market still a way off. So it could be a good year to invest.
If you’d like to know more about how the property cycle works at both a local and national level, then get in touch with our experts here at Agile.
To find out more about the local and national property market, or if you would like to chat about anything to do with property investment, give us a ring on Norwich 01603 567804 or send us a message.
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