Leah Kelvin
Active member
In the industry, it is important to understand real estate market cycles. Some of the phases that markets experience include recovery, expansion, peak, contraction and trough. During recovery phase there is slow progress, increase in property prices, more buyers demand and favorable economic indicators. The expansion stage involves rapid growth where property prices continue to rise higher than before; this leads to high demand levels that are characterized by increased building activities as well as investors’ confidence being restored back into the system. When all these factors work together then we can say that we have reached what could be termed as ‘the peak’ of any given cycle because at this point prices should start coming down again since they are no longer sustainable thus causing balance supply situation coupled with affordability challenges plus reduced speculative investments among other things too many to mention.The next phase is called contraction which comes after peak; during contraction period there will be falling off values followed closely by weakened sales volumes among other adjustments within marketplace .
