The property clock is a device that shows buyers, sellers and investors where the property market is at any time across Australia. As all towns and cities are at different points in the clock, it’s hard for one clock to cover the entire country. However, it can be used within a defined territory and remains a great guide to specific location’s current market conditions.
The main aim of a property clock is to identify areas/locations that have the potential for strong future growth. There are a number of variations on the Property Clock kicking around. We’ve selected two options, just as a reference point for you. (See featured image above)
How do you use the property clock?
The property clock is generally divided into 4 sections: peak, declining (or downswing), bottom, rising (or upswing).
Here is a general idea of how each tick works on the clock, with thanks to Grant Muddle from Property Investor Magazine:
- 12:00— The top of the market; prices are increasing. The market is undersupplied
- 1:00 – Rental returns are lower
- 2:00 – There is a surplus of properties for sale
- 3:00 – Increasing interest rates; the market is evenly supplied
- 4:00 – The rate of property sales is declining
- 5:00 – The rate of construction for new dwellings is declining
- 6:00 – The bottom of the market, prices are declining; the market is oversupplied
- 7:00 – Rental returns are improving
- 8:00 – Demands outpace the properties that are available
- 9:00 – Interest rates are declining; supply is tight
- 10:00 – Rate of property sales are improving
- 11:00 – Construction of new dwellings increases
Based on data from the last 100 years or so, it seems real estate investors can still expect to double their money within 12 to 14 years. This is still an awesome result, and worst-case scenario, doubling your money in 14 years is still better than being stuck in the exact same financial position.
It appears that recent cycles have averaged between 7 & 8 years in duration. They have largely been smooth affairs – only on rare occasions have they rapidly peaked & troughed.
Like any prediction, it’s hard to say if future cycles will be of similar length [remember there are a number of variables that come into play – interest rates, employment and a range of other economic and social factors will continue to have an unpredictable effect on Australian property cycles].
Property Friends is a specialist Property Investment Advocacy that has been operating for the last 13 years on the basis of 3 principles: Trust, Community & Progress. www.propertyfriends.com.au (03) 9758 5331