In the US and Australia, often the housing and economic cycles have gone together

The housing activity cycle is the fluctuations in the housing market activities, assessed by the shifts in the housing prices and the number of transactions undertaken in absolute terms. The rising and falling in housing prices are described as depreciation and appreciation, respectively.

Housing prices determine the housing activities; thus, a shift in the housing prices cause a fluctuation in the housing activity referred to as the housing activity cycle. The housing market is an element of economic systems, which get affected by business cycles, and similarly, the housing activities affect the business cycles. Housing prices appreciation is followed by increased consumption and entity investments that expand the economy. However, excessive prices destroy the efficiency of capital allocation, like crowding out, reducing economic growth.

Housing price depreciation relates to economic growth in a nonlinear manner. A moderately prolonged housing depreciation is attributed to a lower GDP; thus, a slower economic growth, and a huge depreciation, with sharp drops in prices.