Different phases of the real estate market!

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What are the different phases of the real estate market?

The real estate market is known for its cyclical nature, going through different phases over time. Understanding these various cycles is essential for anyone involved in the industry, from investors, estate agents, sellers, buyers, among others…

What phases are we going through at the moment?

These are the various phases of the property market and we need to understand each one a little. So there we have it:

Phase 1 – Peak: The peak phase is characterised by a hot market like the one we saw in the middle of 2021 and throughout all 2022, with high demand and property prices reaching their peak. In this phase, buyers are enthusiastic, investors are confident and properties are being snapped up quickly. Multiple bids are common and property valuations can be substantial in short periods. Also called “sellers market!

Phase 2 – Correction: After the peak comes the correction phase. This is a gradual transition, where demand starts to slow down and property prices tend to stabilise or even decrease. Buyers may become more cautious and the market begins to show signs of slowing down. Investors may realise that the opportunities for quick profits have diminished. We’ve been witnessing this correction since the middle of 2023 and it could last until the end of 2024 or more…

Phase 3 – Depression: In the depression phase, the property market experiences a significant drop in demand and property prices tend to fall. At this point, many sellers may struggle to find buyers willing to pay the asking prices. Confidence in the market may be shaken and some properties may remain on the market for long periods without being sold, somewhat similar to what happened between 2008 to 2013. Also called “buyers market”

Phase 4 – Recovery: After the depression phase comes the long-awaited recovery phase. This is a time of opportunity for buyers and investors. Property prices begin to stabilise and gradually rise again. Demand begins to increase as buyer confidence returns. At this stage, it is possible to find good offers on the market, as prices have not yet peaked again. In Portugal we went through this phase between 2015 and 2018 and again in 2020 and early 2021.

It’s important to stress that these phases are inevitable and are part of the natural cycle of the property market. The key to success is to understand which phase the market is in and adjust your strategies accordingly. Experienced investors know that it is essential to buy during correction or depression phases, when opportunities are more attractive, and to sell during peak and recovery phases, when prices are on the rise.

What’s more, for buyers of property for their own use, the phase of the market can influence their purchasing decisions. Buying during the correction or depression phases can mean significant savings, while buying during the peak can mean paying a higher price.

In conclusion, the various phases of the property market are a reality that participants must recognise and understand. By carefully analysing market trends and adapting strategies, it is possible to achieve success even in a cyclical scenario. Staying alert to opportunities and changing trends is key to thriving in this dynamic and ever-changing industry.

By Artur Cruz

Your local real estate expert with global exposition!

Author: Artur Cruz

I’m a real estate agent several times awarded in my career, “Centurion Producer”, “Hall of Fame”, real estate agent also awarded in Las Vegas, USA at one of the biggest and more important real estate conventions in the world. East Algarve “Top Producer” in real estate.

View all posts by Artur Cruz >

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