Property Cycle - Research Paper Example

Recent studies have shown that fluctuations in property cycle produces economic adversity to certain areas such as property, finance, socio-economic performance and have profound international impacts (Cedic Pugh and Alireza, 2001). The recent economic and financial crisis developed in ASEAN countries on the overheated property investments is suspected to be the main cause for this. Though valuation theorists traditionally ignored cycles arising from the predictability of this area of study in their valuation frameworks and models, similar to that of many social sciences (Born and Pyhrr, 1994; Pyhrr, Born, Robinson and Lusac, 1996), many studies support the relevancy of these cycles, for instance Institution of Charted Quantity Surveyor of United kingdom prepared a printed document for its members specifically addressing the practical implication of Britain's property cycles. Stepen A. Pyhrr, Stephen E.

Roulac and Waldo L. Born (1999) tracing back to the happenings of early 1930s, provided a fairy exhaustive review and laid a good foundation for the body of knowledge of development of property cycles. Figure 2 represents a briefed summary of their work. Nikolai Kondratiett in 1928 noticed severe economic depressions in Russian economy that occurred regularly at 45 to 60 year span. These depressions followed by another long surge of business activities resulted in new peaks of economic outputs and prosperities (Stoken, 1993, cited in Stephen et al 1999).

Depressions of this nature often referred to as recessions seemed to occur during 25 to 35 year up cycle period. Similarly in the west, Mitchell (1927, cited in Stephen et al 1999) suggested theoretical foundation and provided an empirical evidence for cyclical economic activities in U.S. Further works of many writers such as Schumpeter, Forrester and Rostow added more potency to this idea. Other highly noticeable studies on cycles came from Roy Wenzlick who studied the long cycles of