The Property Cycle

7 + 1 + 7 + 3.5 =

Phil Anderson's 18.5 year property clock
Phil Anderson’s 18.5 year property clock

These numbers used to mean 18.5 to me. Now thanks to a bloke named Phillip J Anderson, it is the number of years in a full property cycle.

After GFC I went on the hunt for information. I am a bit of an information junkie and wanted to know about the financial downturn and what caused it.

Everybody had an opinion and none of them were really based on anything other than the experiences they were exposed to in their job or life situation. A financial analyst wrote that the GFC was about the market confidence being low, a property broker said it was the lack of credit supply, a trader said it was packaged loans sold to institutions.

None of this was really pieced all together for me until the middle of 2013 when I discovered Phillip J Anderson’s work on real estate cycles.

Phil is an Aussie economist who is definitely a non-conformer. He does things differently and one of the big differences is that Phil reckons that all markets are driven by the Real Estate market.

Hang on, an economist saying that property is the driver?

I had to read more.

I had to see if this was the key to understanding the property markets and being able to guide clients through the cycles.

Suffice to say I have spent the last 3 years gathering as much information about Phil and his work including becoming a subscriber to his services. I needed to know this was the real deal before I exposed my clients to a totally new way of thinking.

I am now a sold out convert…

Now all our information at Real Property Advice comes through the PJA filter first. We line up any news to see where that sits on the 24 hour Property Clock as designed by Phil J Anderson.
Any development sites we work on, or property purchased, all has to fit within the correct position on the property cycle timing.

We now help clients gather information and act in total confidence of the macro environment in which we are operating.
It needs to be noted, this system is not date specific but rather time specific. There is a big difference. If you try to run by a specific date you will get caught…

Here is Phil’s cycle in overview:

7 good years
1 negative year
7 good years
3.5 negative years

Phil found that this 18 year cycle has been happening since the 1700’s!

Yep he has tracked it back all the way till the land booms of the U.S. property market in the very early years.
On the dot, 18 years from low to low, high to high, 18 years every time.

If you want to know what is going to happen in Real Estate you just need to do some simple math.

Negative years (3.5 down)                             2008 (GFC) + 3.5 = late 2011
Growth years (7 up or sideways)                  2011 + 7 = 2018
Negative Year (1 down)                                  2018 +1 = 2019
Growth years (7 up or sideways)                  2019 + 7 = 2026
Next big crash (3.5 down)                           2026 + 3.5 = 2030

As you can see, if this is right, you now have a road map of when to invest and when to exit.

I will leave that with you to consider and to check out Phil’s website at www.phillipjanderson.com to make your own mind up about his claims.
We will explore more of Phil’s concepts in future articles.

If you would like to know more about what we can do for your property portfolio or how we apply Phil’s work to the local property market, contact us via email or phone the office on 1300 66 77 89.Scott Northcott Australian Property Advisor

Since 2004 Scott Northcott has been helping people buy the best properties for their needs at prices that simply speak for themselves.
Scott has been instrumental in bridging the gap between financial planning and traditional real estate transactions through his property advice model. By carefully considering his clients’ goals and planning for market changes via demographics and trends, Scott designs a future proof outcome not only specific to the client’s needs but dynamic in its execution with performance indicators and exit strategies built in.

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