I can't be sure about the time durations, can only guess at that but the general sequence of events is this:
1) Money moves to safe haven of cash. 2) Interest rates keep dropping. 3) Cash returns are woeful, negative infact, thanks to inflation and bank fees and charges. 4) People look for alternatives, shares or houses? 5) Property looks safer, low cost thanks to low interest rates and high rents. 6) As buyers move back to property cap growth attracts others.
It all flattens when the cap growth rates outstrip rent rises and eventually returns don't look so good anymore.
Overheating in the sector forces RBA to raise rates making the slow down even sharper and property investment flattens for a few years.
It is an age old cycle we have always seen and probably will always see.
Generally speaking the cycle is about 10 years in length. 2-3 years of boom with 7-8 years of relative flat.
Last take-off point was 1999 (Melbourne) which lasted until 2003 generally speaking city-wide. I see the next take-off point being 2009 with the surge lasting 2 years, at stretch, three years.
It is all guess work on my behalf, we'll see how close I am.
