News

Melbourne property cycles vary across suburbs

Media Release, Thursday 3 July 2003

Melbourne’s residential property cycles differ depending on suburbs –shattering the long-held belief of a seven- year cycle - according to results from a University of Melbourne study.

Property lecturer Dr Richard Reed has analysed house prices for Melbourne suburbs over a 30-year period, searching for evidence of the commonly held belief about seven-year cycles.

The results of the study forms part of a paper titled Residential Property Cycles that is due to be released at The Annual University of Melbourne Property Conference on July 11.

The paper has identified clear property cycles in a range of Melbourne’s suburbs, however the timing of cycles varied between individual suburbs.

“Cycles are a product of many factors in the housing market – although these factors are almost impossible to define, it is commonly agreed that house prices in property markets will continue to rise and fall over time” he said.

“If investors and owner-occupiers were able to understand the nature of the cycles in a suburb, it may offer an advantage regarding when to buy or sell.”

Dr Reed said every capital city residential property market in Australia was unique and produced different cycles, due to factors such as the location of transport routes and each city’s history.

“As expected, not all suburbs in Melbourne confirmed the existence of property cycles” he said.

“However, the majority of Melbourne suburbs could be linked with cycles.”

He said the results of the study, which analysed all Melbourne suburbs over a 30-year period, showed that few suburbs actually supported the commonly held belief of a seven-year cycle.

“The results presented to be presented at the conference confirmed that cycles varied from between three and 10 years in length, although there were no standard approaches to identifying suburbs with cycles.”

He said that in comparison to other property markets, relatively little research is conducted into the finer detail of residential property markets.

“Although tracking property cycles is a common practice in retail and office markets, unfortunately residential property receives little attention,” Dr Reed said.

The full results of the paper will be examined at the The Annual University of Melbourne Property Conference on July 11.

The conference will feature nine national speakers from a variety of industries including, real estate, valuers and legal.

For more information on the conference, log onto: http://www.arbld.unimelb.edu.au/events/conferences/

*Results for individual suburbs are available from Dr Reed on request.