What is a property boom?

Any thoughts on what actually consititutes a boom in the property market?

Do you have a % increase over a period of time before calling boom.
 
Twobobs,

Intuitively I'd call it above average capital price growth and you can measure this as a fixed percent if you like, but 10-15%pa would fit the bill.

For me though, its a stage in the property cycle so I look for lead indicators of this stage not the lag indicators of actual price performance. The sort of lead indicators can be gleaned from any good property clock. Some things to watch for are the demand/supply situation, interest rates and market participants. Typically FHBs lead the recovery when rates fall to stimulate the market. Investors move in second, and once the boom is well under way, upgraders return and compete with investors to top out the boom. Market participation is a good lead indicator.

FWIW, we're in early boom stages in Sydney now with FHBers leading and now being replaced by investors. As soon as upgraders feel secure in re-entering the market it will take off and become self-fulfilling for a while. 2011/2012 looks like the next peak sort of timeframe at this stage.

Cheers,
Michael
 
I guess a boom in prices should be defined as >X% pa above inflation.

I'd put the X at around 10.

X = 0 is holding value

X = 1-3 is small rise

X = 4-6 is "expected average" growth

X = 7-9 is strong growth

X > 10 is boom

Maybe the other way to put it is "even idiots can make a lot of money during a boom".
 
The only other things I'd add is that auction clearance rates of 65% or above are an indicator of what you see in a boom. We've been having many months of 80+% and despite the somewhat dodgy collection of stats / reporting processes to get this figure, the process has always been the same - so it is a reasonable comparison to make I think.

Another indicator is "time to sell" with most good stock selling within a few days of listing.

Another indicator is demand exceeding supply, charactised by REAs having waiting lists on property.....with the consequent price rises that leads to.
 
and Downturn

and conversely, what are the indicators for a sustained downturn (apart from the bubble bursting lol)?

For instance, what precursors, if any, were evident in the spread from the GFC to the property markets in 2008?
 
Perhaps 20% in a year!?

Though increases in purchasing power could be a better way to adjust for inflation.

Using the 20% Benchmark I had two calendar years (Till end of June) of boom conditions for a unit I owned that I had researched from it's construction date in 1985, though plenty of years of solid growth and only a few negative years. Contrast that with the share market (Silver bars measuring the XJO) for volatility! These growth figures are a bit fuzzy though as comparables are hard to track down sometimes and can easily distort the real value.

aa03.jpg


Link to complete blog post on this data
 
I'd say a boom is when:

1. the market is going up at a rate above the historical yearly average,
2. the Home Reno shows are back on the teev in force,
3. they are interviewing Enzo Raimundo every day in The Sun,
4. people stop talking about their shares as being the best investment.
 
A boom by my definition occurs when:

Advertised properties for sale are on the market for an extremely short period of time...therefore...listing prices increase for smaller amount of stock and... subsequently... this continues for an extended period of time, lets say a minimum of 3-6 months. What contributes to this occurring is a different, often mysterious question. :D
 
Top