Cycles? As if there is some rhythm or natural law which requires things to go around in circles. Who or what created property cycles? Are we talking about seasons? Planetary motion and the distance from the Sun determine the seasons. The property market has limited exposure to seasons. When the experts talk about cycles, they use a circle or a wave. What causes the shift or movement from one place in the cycle to the next? Or, are they just fitting a story to the data?

Now you see it, now you don’t?
Assume cycles exist. We will call this big assumption ‘number 1’.  Next, we have to assume that if there are cycles, someone will be able to spot them. Many market experts will engage in ‘market cycle’ story telling. Big assumption ‘number 2’ is that they can be spotted. What causes some people to be able to spot a shift in the cycle while others are unaware that the shift has happened? Can we gain insight from when Trump makes things up and he calls the other version of reality ‘fake news’? Say it enough times and the people might believe it.

Are property cycles real? Assume yes for a minute. Do the cycles matter? That is harder to answer. The answer might depend on where you are playing in the property ecosystem. If you are a developer with stock coming on the market, you may find sales stall in a down market. The buyers pull back and wait to see if the fall is over. Rental demand will change, and the change for residential is different from office or retail. Skyscrapers often tend to be approved and built in the late stages of a bull market and are completed after a crash.

If cycles are the ‘traditional rise and fall’ over some time horizon, a process which will repeat, the predictive power comes from the repetition. What good is monitoring cycles if they do not happen again or do so entirely randomly?

Let's dig a bit deeper into the retail niche of the commercial property sector? Retail property landlords in the UK are suffering because of a fundamental change in the market rather than the position in a cycle.