How to Spot Boom and Bust Property Cycles!

Having lived through two recessions now (as an adult!) and having spent a lot of my academic life studying economics, it is clear to me that you can spot when a market is going to go bust, or is in a boom stage.

A new book: When Bubbles Burst, by John Calverley gives a fantastic explanation of what to watch and covers the housing market in particular detail.*

John believes that you can spot a bubble when it happens and has produced an excellent checklist to help you spot it too and when you apply this to the clear housing bubble we’ve seen since the millennium, then it's handy information to make sure you can spot the next boom and bust!

Some of the key things that John suggests you look for are rapidly rising prices, and with the UK housing market going up by 25% per year, versus it’s long run average of 9% (this is NOT net of inflation) then you can clearly see a bubble forming.

One of the most critical spots though is ‘high expectations for continuing rapid rises’ and this was certainly the case with the media and especially the newspapers commenting daily on the rise of property prices and how this was likely to continue. This is probably with the exception of The Guardian who seemed to regularly warn against property investors buying up property as an investment to fund their future pension.

For more information on how to spot a boom and bust, visit Kate at the Property Investor Show Stand 245 or attend one of her four seminars at the show.

*Please note this information is copyrighted to John P. Calverley 2004, 2009.

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