Synchronisation and commonalities in metropolitan housing market cycles

This paper examines the degree of commonalities present in the cyclical behaviour of the eight largest metropolitan housing markets in Australia. Using two techniques originally proposed in the business cycle literature we firstly consider the degree of synchronisation present and secondly decompose the series into their permanent and cyclical components. Both empirical approaches reveal similar results. Sydney and Melbourne are closely related to each other and are relatively segmented from the smaller metropolitan areas. In contrast, there is substantial evidence of commonalities in the cyclical behaviour of the remaining cities, especially those on the eastern and southern coasts of Australia.