In January, 2012 we published an article specifically on the Czech property cycle and where it we were at that point in time.

Since then the market and conditions have changed greatly and I thought it would be a great time to revisit this topic and redo the analysis.

Importance of understanding the property cycle

The real estate cycle is a important topic for serious property investors because it can make the difference between timing the market horribly and losing tons of hard-earned money or doing exactly the opposite and making the cycle work for you.

Personally I have property investments in both Czech Republic and Canada (specifically around Calgary, Alberta) so am keenly interested in where each market is at and what the best investment approach would be.

Recently I read a fantastic book called: “Secrets of the Canadian Real Estate Cycle: An Investor’s Guide” (yes, we will get a small commission if you click that link and buy the book). It’s a great read even if you will never invest in Canada because all of the cycle principles hold true in other unregulated property markets. The book also discusses more advanced tactics than buy-and-hold which can be used at various points in a real estate cycle.

Analysis of the key drivers in the Czech property cycle

In the book it talks about the key drivers of the real estate cycle and how to analyze where you are at in the cycle at any given time. They published a handy chart that helps you to this end. I have run the calculations for the Czech Republic as a whole right now in March 2016 and the results are below:

(You can also download a PDF version)

The object of the exercise is basically to analyze each of the key drivers at a given point and then highlight what point in the cycle they are at. By looking at a number of key drivers a person can reliably estimate where they are in the cycle. At this point we can see that in terms of the Czech property cycle we are most likely at the end of the recovery and beginning of the boom (see the ‘Total’ row at the bottom of the chart).

Don’t be fooled by the media about where we are in the cycle

Remember, many will discredit the recovery. In fact, the media headlines will be as below (“Dead cat bounce: Don’t trust the rally”).

How can we capitalize on this property cycle knowledge?

Unfortunately we are past the part of the cycle where the best gains can be had for a buy-and-hold strategy. This is during the middle of the property recovery part of the cycle. However, we are not far past and we can expect property prices to continue to climb for years as the cycle moves through the boom phase.

For those of you who commendably held tight through the down part of the cycle may be now tired of the investment and eager to sell because you can recoup all your costs. To do so would be bad timing because you would miss out on the boom which gives the greatest pay back for all your efforts and expense.

Are you looking at the Czech property cycle right now and are interested in profiting? We have fantastic opportunities available. Just drop me an email at: [email protected] and I will give you our latest options.