The Property Cycle Is A Myth. Here’s How Top Investors Pick The Market

Have you heard about the 7 year property cycle?

It’s the idea that every 7 years or so, the real estate market moves through a peak, a downturn, a trough at the bottom and starts turning up again. 

Others talk about a 14 year property cycle.

And for those who want to sound really clever … There’s the 18 year property cycle. 

All rubbish. 

Property does move in cycles of course. 

But the notion that they move in these predictable 7 year cycles is nonsense. 

Here, take a look at this index of Australian house prices since 1880.

There are peaks and troughs as you’d expect. 

But it’s very rare for them to be 7 years apart. 

Or evenly spaced. 

And even then, the Australian market doesn’t really exist as a whole. 

I mean, if it did then you wouldn’t have Perth increasing last year by an insane 19.1%, while Melbourne dropped 3%.

So if the market’s not dictated to by a mythical 7 year cycle, how do investors get in at the right time?

How Top Investors Pick Where To Invest Next

Top investors don’t look for imaginary cycles. 

They don’t look at historical charts to try and predict what’s coming. 

They know how the market will react to certain factors, and look for where those factors are. 

For example, at the start of 2024 we urged our clients to invest in Wanneroo in Western Australia. 

And those who did were ecstatic as house prices surged 27.6%.

We knew the economy in WA was building up, thanks to mining. 

And there was a chronic undersupply of houses. 

We also knew wages in Perth were among the highest in Australia, and this meant plenty of money to go around. 

And that house prices were comparatively low compared to the huge salaries many people were on. 

For us, it was a home run. 

We look for areas which are supported by a number of key economic factors. 

These include:

High Population Growth

High population growth drives house prices higher because the more people there are looking for somewhere to live, the more they have to pay. 

They have to ‘outbid’ everyone else. 

It also pushes rents higher for the same reason. 

Good Infrastructure And Lifestyle

Nobody wants to live in an urban wasteland, miles from the infrastructure and amenities they need. 

This is why the local infrastructure is so important. 

Good schools, good doctors and hospitals close by all make an area more popular. 

Same with shops, roads and public transport. 

Lifestyle also makes an area popular, so restaurants, cafes and fun things to do have a big impact, as do parks and gardens and other things to do outdoors. 

Local Jobs

Another factor which drives house prices is having jobs close by. 

Nobody likes a long commute, so the closer people can live to where they work, the better. 

This is why we look for areas with industrial parks and commercial centres, as well as excellent transport links for local businesses to thrive. 

And because jobs bring employees into the area, local service businesses grow and provide even more jobs. 

More jobs means more wages to spend on housing too. 

Low Supply

Low supply is another important factor. 

When there’s a lot of demand for houses, but there aren’t enough of them to begin with, prices go even higher. 

And this is why the best markets to invest in are markets where the gap between demand and supply is very high. 

It’s also very hard to close this gap in the short to medium term by building more houses. 

Increasing supply takes a long time. And often there’s not enough land to build on anyway. 

This makes low supply an excellent predictor of strong, long term growth.

Where Are We Investing Now?

One area which our research indicates is sure to grow strongly for years to come is the City Of Wyndham in Melbourne. 

It’s the fastest growing housing market in Australia. 

It’s very affordable for first home buyers and investors. 

And there is $60 billion worth of infrastructure projects planned or underway in the area. 

It’s also part of Greater Melbourne which we believe is significantly undervalued, given its population and economic strength. 

We have identified 9 other suburbs which meet our criteria. 

And I’d love to share them with you, along with the research which shows you why top investors are already buying there.

All you have to do is fill out the form below to request a free consultation. It’s that easy.