Property Market

Forecasting what’s next for the economy is usually considered nearly impossible. But here at Money Morning we don’t let that stop us from trying.

Understanding the underlying forces which drive the economy will go a long way to accessing the insight that few will ever attain.

It is often thought that forecasting the economy includes factors such as the movement of central banks or the stock market. Or even the movement in interest rates and inflation. But while they may play a small part, their impact doesn’t hold weight.

So what’s it based on? The real estate market.

Here at Money Morning, we believe the economic cycle is largely underlined by what happens in the real estate market. And the cycle simply continues to repeat.

Property Markets History

Homer Hoyt’s book published in 1933, One Hundred Years of Land Values in Chicago, identified the repetition of Chicago’s real estate cycle.

Hoyt’s study of history, which focused on land values, makes a strong case that the economy moves in a clear sequence of around 18–20 year cycles.

As Hoyt notes, real estate cycles are directly related to land price. The cycle repeats regardless of the government in power and their policies.

Since Hoyt’s book was published in 1933, little has changed in the real estate cycle. The cycle just continues to repeat itself.

The Global Financial Crisis wasn’t financial in nature, and so it appears that the reforms initiated after the GFC have only set in motion another real estate cycle.

Instead, we’ve seen a land crisis.

The underlying cause of the crisis may have been ignored, but the real estate cycle looks set to repeat.

Mirvac Share Price Rises 4.05%

With the construction boom taking place across Australia, substantial share growth in one day is not out of the ordinary. Mirvac Group is no exception, growing in share value by 4.05% today.

REA’s Share Price Up by 5.26% Today

REA Group Ltd [ASX:REA] is a multinational digital advertising business specialising in property. Founded in 1995, REA operates the residential and commercial property websites, and REA’s share price is up 5.26% for the day.

Why The Aussie Property Market Won’t Crash

Is Aussie property really in a price bubble? Well, yes and no. I say yes and no because property has some unique characteristics that make it hard to compare to stock or cryptocurrency bubbles. Let’s have a look at a few of them now.

Aussie Property: Generational Crunch Time Approaches

The divide between the generations is real. And although starting off has never been easy — and it’s not meant to be easy — it’s still fair to say no generation has had to start off at such a disadvantage when it comes to buying a roof over your head.

Australia Has Everything Riding on One Bad Bet

Australians, individually and collectively, have bet everything on housing. And every year, we double down on that bet. There’s no certainty that 2018 will be the year our housing gamble goes bust. But it would be madness to be certain that it can’t. Aussie property investors in Australia could be in for a rough year.

Get Ready for Even Lower Interest Rates

Just because rates have been at records lows doesn’t mean they can’t go any lower. For one, there’s the Aussie property market to think about. However, by looking at what the big banks are doing, we can glean what the RBA is likely to do in the future.

Watch These Charts to Read the US Economy

There’s plenty of momentum to come from the US housing market. This is important because it will drive the US economy. And yet this process is widely underappreciated in the mainstream media. Hence why there’s a persistent sense that the US is close to a recession. I don’t see that happening in the immediate future. The charts aren’t suggesting it.
Money Morning Australia