On the Essence of Property Cycles

Property cycles are of two kinds: one is the physical cycle of demand for and supply of property (i.e. real estate; land and buildings with right to build, including renewal areas); the other is the financial cycle that triggers investment and development activity. To a varying extent, these phenomena are considered global with international repercussions, and with increased economic and financial globalisation, the cyclic element in property markets has increased too. However, despite the massive economic significance of property cycles, it appears as if the body of knowledge surrounding and underpinning the academic debates that also inform practice has been relatively fragmented so far. Today, at the dawn of big data, this might indicate ignorance or disagreement about specific methods of analysis rather than lack of access to statistical time-series records. At any rate, much of this literature tends to be highly technical and therefore not completely accessible for every observer, even on the academic side of research programmes. Because of this shortcoming, this chapter comprises a summarising and non-technical account on the topic. Additionally, the discussion is framed in a valuation-cyclicality context.