Previously known as “The Property Planner, Buyer and Professor”
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Show Notes – How Long Does It Take to Double Your Property’s Value?
On this week’s episode, the Property Trio discuss whether the traditional property cycle is still a reliable model for understanding market behaviour or if it’s time to rethink everything.
Hosts Dave Johnston, Cate Bakos, and Mike Mortlock take a three-part look at the conventional wisdom around property trends and property values, challenging decades-old assumptions with fresh insights and data.
What Is the Property Cycle and Does It Still Apply?
The Trio kick things off by breaking down the classic four-phase cycle property values follow: boom, downturn, stabilisation and recovery.
Cate points out that while the model used to help clients understand fluctuations in property values, today’s markets are far less predictable.
Local conditions, such as suburb-level supply and demand, now play a bigger role than national trends in property values.
Mike suggests humans naturally seek patterns, sometimes even when they don’t exist, which may explain why people still cling to cyclical models.
What’s Changed and Why It Matters
The team tackles the economic levers that have disrupted market expectations, focusing particularly on the recent interest rate cycle.
Despite rapid hikes by the RBA, property values in many areas remained resilient or even grew.
Mike highlights that conventional thinking predicted a crash, but actual market behaviour and growth in property values defied those forecasts.
Cate adds that Melbourne, for example, saw brief pauses in buyer activity, but tight supply and recalibrated buyer expectations supported property values.
The Myth of the 18.6-Year Cycle in Property Values
The Trio take a critical look at the increasingly popular 18.6-year property cycle theory.
Mike explains its origins and phases, from recovery to mid-cycle slowdown, boom years, “winner’s curse,” and correction, but questions its relevance in today’s nuanced markets.
Cate and Dave agree that while such cycles may apply to international or historical data, they don’t map neatly onto modern Australia’s property value movements, especially when cities and regions behave so differently.
The consensus? Oversimplified formulas can’t replace detailed, localised strategies.
Gold Nuggets
Cate Bakos’s gold nugget: Cate references the rule of 72, but she also reminds listeners that ‘property values doubling every ten years’ is not a good rule of thumb.
Mike Mortlock’s gold nugget: After a discussion with Pete Koulizos was memorable for Mike. “Time in the market, as opposed to timing the market” is important for investors to consider.
David Johnston’s gold nugget: Dave smiles as he references “The Hitchhiker’s Guide to the Galaxy” and the magic number, 42. It’s a parallel for those who look for guidance with a basic, generalised growth rate. “If life was that simple, everyone would be doing it.”
Resources:
- Ep. 56 The great debate! Capital Growth V Cash Flow – Which investment strategy is superior?
- Ep. 60 Why established properties outperform
- Ep. 71 Property Myths – part 1: property prices, capital growth, housing affordability & land size
- Ep. 89 Capital growth – what increases property value?
- Ep. 125 Does size matter? Should you buy a small block of land in a great location or a bigger block further out?
