Practice Briefing: Property valuation and market cycles

Abstract

Purpose

The intent of this practice briefing is to provide clarity on the role of market cycles in influencing property valuations at specific points in time. Market cycles are important to the valuation function as real estate cycles have been a critical underlying reason for the financial successes and failures of real estate investments throughout history.

Design/methodology/approach

This practice briefing is an overview of the role of the valuer/appraiser in decanting out market information and expectations from market comparables.

Findings

This briefing is a review of property valuation and proffers that connecting market cycles to valuation will capture a more expansive and inclusive world view that explicitly incorporates consideration of multiple factors that are reflected in market value.

Research limitations/implications

Important implication of this research is that valuers be aware of how profoundly market cycles concepts and circumstances influence property values – and implement that knowledge in property valuation assignments.

Practical implications

This briefing considers the implications of using market cycles knowledge as a core resource for the property valuer. All involved in the property discipline must recognise that market cycles dramatically influence property values at any one point in time.

Social implications

Societies, cultures, governments, business and places depend upon and have major stake in competent, responsible, informed decisions about properties and property interest. This research contributes to superior property practice – and therefore supports the interests of societies, cultures, governments, business and places.

Originality/value

This briefing provides guidance on how to interpret markets, market cycles and market information that feed into property pricing and market value.

Citation

Roulac, S.E. (2024), "Practice Briefing: Property valuation and market cycles", Journal of Property Investment & Finance, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JPIF-03-2024-0043