The Property Clock

The property clock is often used to follow the property cycle, which circulates over a seven to ten year period, and is based on the relationship between interest rates, supply and demand, affordability/finance availability, and the cost of renting.  

It is seen as a useful tool by the experienced investors to aid them in determining the best time to strategically enter and exit the property market.

 

A property Boom, indicative of peak prices, is shown at the top of the clock at 12 o'clock, while a property Bust, is indicative of when property is at its lowest price, at 6 o'clock. The best time to invest in property, just after 6 o'clock, is during a rising market where it can dramatically lower the risk of investment.

An important point to remember is that the "time span" between a boom and bust market is on average three to four years, but due to the deep recession the world has gone through after the Sub-Prime Crises the time span between our bust and boom looks like it will last seven to eight years.

I do believe we are now safely in the Recovery Phase and at around 10 o’clock on the property clock which makes it the ideal time to invest in property before the sharp increase in prices start.

Characteristics of Recovery (9 o'clock to 12 o'clock)

Who sells and why?

* Rental property owners - Landlords getting dividends

* Investors - miscalculating market peak

Who buys and why?

* Experienced investors - Still predicting rising prices

* General public - Increasing credit availability

* Tenants - Afraid price increases will make later purchases impossible

What moves the clock?

* Employment increases 

* Market stabilizes 
* Increased disposable income
* Improving personal debt to income ratio
* Property becomes an attractive investment
* House prices still low
* Increasing construction 
* Increasing demand for property 
* Renewed business confidence 
* Interest rates and inflation declining 

The situation in the South African Economy:

   Currently Negative;

   Currently Positive;                
   Currently Neutral;