BOOM-SLUMP-RECOVER - is there something else.

[cube]

Hi,

With due respect to Kieran and the Property Clock, looking at properties now, we seem to be between BOOM and SLUMP - there is a moderate amount of activity, and vendors still have high expectations but investment buyers are looking for bargain basement properties with do-up potential (generalisations, I know, but its not far off).

It seems to me that there is quite a long time between the end of the boom times and the real slump, when tales of properties sitting around for 6-months + are common, and rents have a chance to catch up.

Maybe the problem was finding a catchy name for this phase of the Property Cycle - how about CONFUSION.

cube

[kieran]

Hi Cube,

looking at properties now, we seem to be between BOOM and SLUMP - there is a moderate amount of activity, and vendors still have high expectations but investment buyers are looking for bargain basement properties with do-up potential (generalisations, I know, but its not far off).

Great observation and in my book on the property cycle I outline that each of the 3 phases of the cycle actually have 3 stages within them i.e. a beginning, a middle and an end stage. Yes it is sometimes hard to distinguish EXACTLY what time it is on the property clock which is also why I give a range of time (i.e. 1-2pm) instead of an exact time (i.e. 2pm).

There is also often confusion when the cycle moves from 1 phase to the next (i.e. Boom to Slump , Slump to Recovery and Recovery to Boom). It is also possible to be 'straddling' 2 phases which is what is happening in parts of NZ right now. (i.e. one foot in the end of boom and the other in beginning of slump).

It seems to me that there is quite a long time between the end of the boom times and the real slump, when tales of properties sitting around for 6-months + are common, and rents have a chance to catch up.

Yes there can be a long time between the end of the boom times and when the slump really bites (my research indicates up to 4 years).

[McDuck]

ok...I want to coin the word SLOOM.

Used like this...

Q: So do you expect to pay a high price for that property?

A: Well you know, in a SLOOM, it can go either way.

[SuperDad]

Or how about a "BLUMP"?

Used like this...

Q: Why am I finding it so hard to find good yields and massive discounts?

A: Well, you realise that were currently in the BLUMP phase of the cycle. Wait until the BLUMP is over and we're in the SLUMP - then you'll pick up some bargains. But you'll have to be quick to act, as the SLUMPOVERY will be sure to follow, and then it'll be hard going again.

[cube]

The three phases of the SLUMP
SLOOM - SLUMP - SLUMOVERY

The three phases of RECOVERY
RECLUMP - RECOVERY - RECOOM

The three phases of BOOM
BOOMOVERY - BOOM - BUMP

So, are we in BUMP or SLOOM!

[David_W]

Sloom?

I think we are in a SLOOM in most places. BUMP in a couple of places too. Very area specific. I like those new phases created - lol.

[kickingbird]

So what do we think then...buy now in the Bump and hold for 4 years?..I was hoping for more like 2 years of slump with the interest rates dropping out after 18months or so and encouraging more interest in the property market... any thoughts there? I'm thinkin of buying an $825,000 development that will be ready for sale in 18 months....thoughts fellow wheelers and dealers?

Whats the time frame you are putting your money on?