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Australian Business Cycles and Commercial Property Markets: Some Empirical Evidence Over Four Decades

Author/s: David M. Higgins, Gerard de Valence

Date Published: 1/01/2000

Published in: Volume 6 - 2000 Issue 1 (pages 57 - 66)

Abstract

The commercial real estate market in Australia exhibits periods of boom and slump A feature of the cycles across different commercial real estate sectors is the timing of the base turning points; they are all generally grouped within a two-year period. The relationship between the business cycle and the turning points for these real estate cycles has changed over the 40 years of the data used in the analysis. The paper takes a macro approach to explaining construction supply cycles. A literature review of property cycles and the links to business activity is followed by analysis of the data. Finally, the results are discussed before concluding that links between the commercial property market and the broader economy have weakened and now operate differently compared to historical links. Commercial real estate cycles appear to now relate more strongly to property demand and supply disequilibrium.

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Keywords

Business Cycle - Data Decomposition - Economic Indicators - Property Cycles - Time Series Analysis

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