Monday 16 February 2015

The Wilson Curve housing market model


The Wilson Curve – a model of housing market dynamics

House prices typically rise and fall in an underlying cyclical pattern.

The house price cycle also typically follows the business cycle with local supply and demand factors determining its characteristics

The house price cycle, as with the business cycle, consists of growth and decline phases.

The Wilson Curve describes the growth and decline phases of the house price cycle in relation to its price peaks and price troughs.

The Correction Phase  
House prices are below the previous price peak of the cycle but above the previous price trough of the cycle.

The Contraction Phase
House prices are below the previous price trough of the cycle

The Recovery Phase
House prices are above the previous price trough of the cycle but below the previous price peak of the cycle

The Expansion Phase
House prices are above the previous price peak of the cycle