"A downturn in the property market, especially in turnover (sales) of properties, is a leading indicator of recession, with a lead time of up to 9 quarters for turnover, or up to 8 quarters for values. Of all the countries in which a conspicuous fall in turnover was documented, there was no case in which the onset of recession preceded the fall in turnover...
In the property market, a fall in turnover is a leading indicator of a fall in prices, and the lead time is usually one to two quarters. In no case is there persuasive evidence of the fall in prices coming first...
Recessions are mostly home-grown... in most countries the recession was preceded by a downturn in the domestic property market."
Nice post. Iv'e mentioned LVRG research on this forum before. According to them property turnover in 2010 was 25% of GDP (LVRG contends a bubble exists when turnover > 18%. Drop in turnover = recession.
The argument is that a drop in turnover in an overheated market and then the inevitable disleveraging and subsequent fall in prices actually causes a recession and not the other way around.
