The objective in writing this Report was primarily to address the theory of market cycles, and their relevance and application to Australia's business activity generally, and property market specifically.
Firstly, the theoretical aspects of economic time series and market cycles are discussed. Real Gross Domestic Product as a measure of Australia's business activity is charted from Federation to the present. By utilising the 'Least Squares Method' the underlying secular trend is identified, and the detrended residual or cyclical component explained by business cycle theory is then exposed and discussed.
Secondly, the theoretical aspects of the business cycle are discussed, and in particular the issues of causation and forecasting are addressed. From this theoretical perspective the salient features of Australia's economic history are reviewed, with similarities to the peaks and troughs of the Kondratieff long wave theory identified.
Thirdly, as an introduction into the dynamics of Australia's property cycle, the market characteristics and economics of property are addressed. Disturbing parallels between the Melbourne land boom of the 1890's and the present state of the market are also discussed. The issue as to whether a national property cycle exists is discussed, and the supply and demand components and forces affecting property are identified.
Finally, to achieve the objective of this Report, the cyclical nature and relationship between general business activity and the property market is analysed empirically . National Gross Fixed Capital Expenditure in the private and public sector are utilised as a measure of Australia's property cycle. Again utilising the "Least Squares Method' the existence of a national property cycle in the time period analysed is confirmed.
As a conclusion to the Report strategies to capitalise on the cyclical nature of business and property are discussed.