​The Four Phases of the Property Economic Clock

The property market moves through four distinct phases based on demand, supply, pricing trends, and economic conditions:

 Boom – "12 o’clock"

1. Characteristics:

• High property prices

• Strong buyer demand

• Low rental yields (prices rise faster than rents)

• Rising interest rates (to cool overheating)

• Developers aggressively build new projects

    2. Investment Strategy:

• Consider selling as prices are high

• Avoid buying unless it’s a long-term investment

• Watch for signs of overheating (e.g., too much speculation)

Economic Declaration – "3 o’clock"

1.  Characteristics:

• Prices stop increasing (or start falling)

• Fewer buyers, more properties on the market

• Rental vacancies rise

• Interest rates may stabilize or start to decrease

• Economic slowdown, job losses, reduced consumer confidence

2.  Investment Strategy:

• Hold if possible (don’t panic sell)

• Start looking for discounted deals from distressed sellers

• Secure long-term rental agreements to maintain cash flow

Economic Contraction – "6 o’clock"

1. Characteristics:

• Property prices hit their lowest

• Oversupply in the market (many unsold properties)

• Low transaction volumes (buyers hesitant)

• Low confidence in the economy

• Government intervention (e.g., lowering interest rates, incentives for buyers)

2. Investment Strategy:

• Best time to buy (lowest prices & highest rental yields)

• Acquire undervalued properties from struggling sellers

• Consider long-term investments before the next upturn

 Broad Economic Improvement – "9 o’clock"

1. Characteristics:

• Prices start rising again

• More buyers return to the market

• New construction picks up

• Rental demand increases

• Economy strengthens, employment grows

2. Investment Strategy:

• Smart time to buy before prices climb too high

• Lock in properties at low mortgage rates

• Start minor developments and renovations

Key Takeaways for Property Investors & Managers

1. Different markets are at different points in the cycle.

   • Auckland may be in a boom, while Christchurch may be in a slump. Always analyze local conditions.

2. Know when to buy or sell.

   • Buy in a slump, sell at a peak.

3. Understand rental yield & capital growth.

   • Rental demand can fluctuate throughout the cycle.

4. Interest rates & government policies affect timing.

   • Watch for rate hikes, tax policies, and housing incentives that influence buyer behaviour.