I bought my property 5 years ago for 770k. Renovated it for 130k. Just sold it for 1.5 million. That’s a gain of 120k per year. For it to grow at the same rate, the property would have to be worth 2.2 million in 5 years which is pure insanity. It’s a 60 year old house in a sort of bad area in Toronto but it sits on a large piece of land near the subway and is nice renovated
Last crash was 2007/08 which means we are 12 years on and we still have 5/6 years of strong growth if the cycle is accurate, think the north will do better than south and commuter towns will do very well
Also need to take into account Construction/building phase. Lumber prices will soar again, elevating the cost of new construction homes and commercial buildings in 1-2tlyrs.. folks will stop building again, and force folks to look at existing homes. The old homes coming off the market are so rare...
Yes, there is always a crash. As Bryan Kavanagh notes in his comment, the reason for the cycle and its boom-to-bust character is a two-pronged failure of public policy. First, is the failure to recognize that housing units are assets that depreciate over time; they do not appreciate in resale value unless owners make significant upgrades as systems were out. A annual tax on the depreciated value of a housing unit is equivalent to requiring owners to pay a sales tax again and again and again. Thus, the optimum rate of taxation on the value of housing units is zero. On the other hand, the value of land (annually, its potential rental value) is a function of the locations aggregate advantages. Some of the advantages of any location come from nature (e.g., climate, topography, nearness to natural amenities -- a lake, river, or ocean, etc.). Other advantages comes directly from the quality of aggregate investment in public goods and services. None of these advantages comes from what any owner of a location does or does not do to construct improvements. Thus, the rental value of the location is justly public revenue. It is the failure of communities to establish a public revenue system consistent with these principles that results in credit-fueled, speculation-driven property market dynamics. Edward J. Dodson, M.L.A. Director School of Cooperative Individualism www.cooperative-individualism.org
Can anyone explain how the north east fits into this approximate 18 year cycle, prices have not recovered to pre 2008 prices in many areas; that's almost 12 years of almost no capital growth not even taking into account inflation?
So if people buy now would you say it’s a really poor time? I know it depends on each deal but according to your cycle we are at the peak of a long drop. But then brexit news had already made a small drop for the past 2 year. House prices now are definitely not as high as 2018
Yes, but a fundamental error in this discussion of the 18-year cycle is that land prices are a function of supply and demand. Not so. Population, zoning, size, shape, topography, location, supply and demand all affect a site’s RENT, but its PRICE is determined by (a) how little the government taxes its rent, (b) to what extent banks are prepared to advance credit against the site’s price, and (c) to what level interest rates are manipulated by central banks. It’s not widely understood that the PRICE of a piece of land represents the private capitalisation of its RENT, i.e., net of public charges - as with the valuation of any developed piece of real estate.
Not yet Chris, looks like that's still a couple of years away for now (we've written something that should give you some insight as to where we are for now propertyhub.net/where-are-we-in-the-18-year-property-cycle/)
If you dont refiance to the hilt it cant be that bad surely? Ok negative equity, get higher fix terms on better rates. Have cash reserves. Let inflation of rents and eventual regain on capital take its course. We are in the business of long term investment. It clearly works. And the contradiction to the cycle is that land available is finite. You wait even 5 years, you put yourself or your legacy at risk of eventually having nothing left to buy. Sensible investing is always key, not halting production because of fear of a marker drop on your properties, which if you hold property is inevitable anyway.if the numbers add up, then keep going
Hey Guys thanks for the great video! I’ve got a question that keep me up at night as an aspiring RE developer and your help would be extremely appreciated. I’ve recently heard that becoming a landlord in UK is becoming way too competitive due to people realizing that perhaps RE is one of the best ways for preserving and growing financial wealth, do you think such is true and further down the line the “supply” of real estate developers and landlords will surpass the demand for them in UK? In which case is it still worth perusing this career as a way of building financial wealth? (I am however very passionate about RE so giving in due to the competitiveness of the industry would be devastating.)
Patterns repeat, property almost always cycles about every 18 years. I was told by a school friend in the early 90's that property would crash around 2008, I didn't think about it much till after the event. It will crash again around 2026/7, you can't time the market perfectly but you can spot the pattern and come close enough not to get burned.
@@womenisonereasonbehindever2049 Stocks began to recover around 2009, but property was late 2011/12, the upswing is around 14 years so takes us to around 2026. The 14 year upswing is punctuated by a mid cycle dip around 7/8 years in so that was due for around 2019, and property prices did indeed start to dip or at least slow and yield curves inverted 2019, some countries even entered a technical recession. It looked like being a very mild mid cycle till covid, but covid has not broke the cycle as governments and central banks have lowered IR's and used unprecedented fiscal expansion, they can do this because land/house prices still have headroom for a boom. But as we approach 2026 and IR's rise, look out for a big oversupply and price bubble across large sections of the property market. My guess is bond yields will invert around 2025, that is a good early warning sign as recessions tend to follow 1-3 years later, but recessions driven by a speculative land bubble are more prolonged than ones driven by a stock bubble or even a pandemic (assuming vaccines do work against new variants and the economy returns to normal). I would still expect some stock market turbulence for this year, a deep correction is a buying opportunity for stock boom imo though I'm not a stock trader, property is generally much more simple!
@@womenisonereasonbehindever2049 EM's do not conform to the cycle as much, you cannot extrapolate to every region, country or even city, that is too simplistic -real estate always has a strong local component. In the 19thC the UK mid cycle tended to be around the time of the US full cycle for example but now they are synchronised. The cycle emanates from the US and is I think more synchronised than ever thanks to globalisation but still should not be over simplified. China boomed in particular post 08 with their huge credit expansion and I believe India was following a similar trajectory. However I can see India's property prices began to fall slightly in line with the mid cycle. Question is now if they, grow out of it along with the US boom or suffer a longer malaise. In 1997 a number of EM's hit a currency crisis and saw falling property prices outside of the Western cycle too. I cannot tell you much about India's or EM's prospects but my educated guess is there will be some real stock market volatility later this year due to currency pressures but a general recovery along with the US boom.
The world is facing a global population collapse. This will be the end of the 18 year cycle where prices are always higher than the previous low. Study 50 years of housing in the city of Detroit for reference. The US will get a 35 year preview of what is coming by watching Japan, Italy, and Germany. Their birth rates went below replacement 35 years earlier than ours. 1973 vs 2008.
This video does not explain why the cycle is consistantly18 years long, it does not explain the position taken by building contractors and how as the land becomes more expensive, they cease to be so active and consequently how their many suppliers get less business first--a situation which causes a more general slump in all kinds of other economics activities, too. Also there is no attempt about justifying the unethical behavior of the speculation in property values which is so clearly recommended! What do the presenters want? That we should all speculate like the bloody capitalists believe to be how to win in an unjust world?
pretty sure that's exactly what the presenters are advocating, yes, making money from property. also i don't know that anyone has figured out why it's always about 18 years, last i heard fred harrison thinks it's something to do with mortgages
Australian property was at all time highs around 2009. If you can see anything but up in the Australian property graph since 1996, you need your eyes checked. This cycle is BS. Good if you want to see something that’s not there though
I bought my property 5 years ago for 770k. Renovated it for 130k. Just sold it for 1.5 million. That’s a gain of 120k per year. For it to grow at the same rate, the property would have to be worth 2.2 million in 5 years which is pure insanity. It’s a 60 year old house in a sort of bad area in Toronto but it sits on a large piece of land near the subway and is nice renovated
I’m buying my first property in the coming month, It seems I have 3-4 years of growth before the peak! Thanks guys!
Lol this aged so poorly
@@ericchen9552why do you think so?
Last crash was 2007/08 which means we are 12 years on and we still have 5/6 years of strong growth if the cycle is accurate, think the north will do better than south and commuter towns will do very well
Also need to take into account Construction/building phase. Lumber prices will soar again, elevating the cost of new construction homes and commercial buildings in 1-2tlyrs.. folks will stop building again, and force folks to look at existing homes. The old homes coming off the market are so rare...
Definitely a good point, especially considering the impact on construction by the events of the last two years!
Lumber is already expensive and shortage of it
Yes, there is always a crash. As Bryan Kavanagh notes in his comment, the reason for the cycle and its boom-to-bust character is a two-pronged failure of public policy. First, is the failure to recognize that housing units are assets that depreciate over time; they do not appreciate in resale value unless owners make significant upgrades as systems were out. A annual tax on the depreciated value of a housing unit is equivalent to requiring owners to pay a sales tax again and again and again. Thus, the optimum rate of taxation on the value of housing units is zero. On the other hand, the value of land (annually, its potential rental value) is a function of the locations aggregate advantages. Some of the advantages of any location come from nature (e.g., climate, topography, nearness to natural amenities -- a lake, river, or ocean, etc.). Other advantages comes directly from the quality of aggregate investment in public goods and services. None of these advantages comes from what any owner of a location does or does not do to construct improvements. Thus, the rental value of the location is justly public revenue. It is the failure of communities to establish a public revenue system consistent with these principles that results in credit-fueled, speculation-driven property market dynamics.
Edward J. Dodson, M.L.A.
Director
School of Cooperative Individualism
www.cooperative-individualism.org
can someone tell me what phase we are in now My opinion is ressesion phase an i right if so from 2024 to 2028 is the time to buy
Exactly we should be there now, however...don't look like it's working
Real estate is still local. Florida and Arizona are at the top. NY/NJ will top next year.
Can anyone explain how the north east fits into this approximate 18 year cycle, prices have not recovered to pre 2008 prices in many areas; that's almost 12 years of almost no capital growth not even taking into account inflation?
I was eagerly waiting to find out where we are currently in the 18 year property cycle. 😔
At the point where you do not buy. When people start being greedy then be afraid. People are paying way over the top for property right now.
Right now it is the explosive phase.
@@zorrava Yup. I’m thinking 3-4 more years of a fools bull market before a crash
12yrs off the 2009 FINANCIAL market lows. 18yrs on the head 2027.. you're welcome..
@@The_Unintelligent_Speculator still feel the same?..
I like it, please can you show a real life example maybe a graph to show exactly how this looks
Not possible because that would completely shatter the idea of a simple cycle rule
How important is this cycle for quick flips? E.g buying, flipping & selling within 6 months. Thanks!
So if people buy now would you say it’s a really poor time? I know it depends on each deal but according to your cycle we are at the peak of a long drop. But then brexit news had already made a small drop for the past 2 year. House prices now are definitely not as high as 2018
Can you math? Cycle started in 2012
Yes, but a fundamental error in this discussion of the 18-year cycle is that land prices are a function of supply and demand. Not so. Population, zoning, size, shape, topography, location, supply and demand all affect a site’s RENT, but its PRICE is determined by (a) how little the government taxes its rent, (b) to what extent banks are prepared to advance credit against the site’s price, and (c) to what level interest rates are manipulated by central banks. It’s not widely understood that the PRICE of a piece of land represents the private capitalisation of its RENT, i.e., net of public charges - as with the valuation of any developed piece of real estate.
"Population, zoning, size, shape, topography, location" do these not all fall under factors that create demand?
The long term trend of upward price is money or at least currency losing purchasing power.
Great video!
Thank you, glad you enjoyed it!
Nice
Is the UK in the winners curse phase at the moment?
Not yet Chris, looks like that's still a couple of years away for now (we've written something that should give you some insight as to where we are for now propertyhub.net/where-are-we-in-the-18-year-property-cycle/)
@@PropertyHubUK said nearing the end of a long car journey, “are we nearly there yet!” Haha
Looks like it now
If you dont refiance to the hilt it cant be that bad surely? Ok negative equity, get higher fix terms on better rates. Have cash reserves. Let inflation of rents and eventual regain on capital take its course.
We are in the business of long term investment. It clearly works. And the contradiction to the cycle is that land available is finite. You wait even 5 years, you put yourself or your legacy at risk of eventually having nothing left to buy. Sensible investing is always key, not halting production because of fear of a marker drop on your properties, which if you hold property is inevitable anyway.if the numbers add up, then keep going
Why don't you credit Phillip J Anderson?
How do I find the quiz?
Hi there! You can find the quiz on our website: propertyhub.net/university/the-18-year-property-cycle-explained/ 🙂
I do think we are near the winners phase
Hey Guys thanks for the great video!
I’ve got a question that keep me up at night as an aspiring RE developer and your help would be extremely appreciated.
I’ve recently heard that becoming a landlord in UK is becoming way too competitive due to people realizing that perhaps RE is one of the best ways for preserving and growing financial wealth, do you think such is true and further down the line the “supply” of real estate developers and landlords will surpass the demand for them in UK? In which case is it still worth perusing this career as a way of building financial wealth? (I am however very passionate about RE so giving in due to the competitiveness of the industry would be devastating.)
This is a myth to think anyone can time any market .You Can only do your best educated guess
Patterns repeat, property almost always cycles about every 18 years. I was told by a school friend in the early 90's that property would crash around 2008, I didn't think about it much till after the event. It will crash again around 2026/7, you can't time the market perfectly but you can spot the pattern and come close enough not to get burned.
@@schumanhuman in which year boom came 2009 ?
@@womenisonereasonbehindever2049 Stocks began to recover around 2009, but property was late 2011/12, the upswing is around 14 years so takes us to around 2026. The 14 year upswing is punctuated by a mid cycle dip around 7/8 years in so that was due for around 2019, and property prices did indeed start to dip or at least slow and yield curves inverted 2019, some countries even entered a technical recession. It looked like being a very mild mid cycle till covid, but covid has not broke the cycle as governments and central banks have lowered IR's and used unprecedented fiscal expansion, they can do this because land/house prices still have headroom for a boom. But as we approach 2026 and IR's rise, look out for a big oversupply and price bubble across large sections of the property market. My guess is bond yields will invert around 2025, that is a good early warning sign as recessions tend to follow 1-3 years later, but recessions driven by a speculative land bubble are more prolonged than ones driven by a stock bubble or even a pandemic (assuming vaccines do work against new variants and the economy returns to normal). I would still expect some stock market turbulence for this year, a deep correction is a buying opportunity for stock boom imo though I'm not a stock trader, property is generally much more simple!
@@schumanhuman but in India 2012 was almost top for real estate price start rising in 2009
@@womenisonereasonbehindever2049 EM's do not conform to the cycle as much, you cannot extrapolate to every region, country or even city, that is too simplistic -real estate always has a strong local component. In the 19thC the UK mid cycle tended to be around the time of the US full cycle for example but now they are synchronised. The cycle emanates from the US and is I think more synchronised than ever thanks to globalisation but still should not be over simplified.
China boomed in particular post 08 with their huge credit expansion and I believe India was following a similar trajectory. However I can see India's property prices began to fall slightly in line with the mid cycle. Question is now if they, grow out of it along with the US boom or suffer a longer malaise.
In 1997 a number of EM's hit a currency crisis and saw falling property prices outside of the Western cycle too. I cannot tell you much about India's or EM's prospects but my educated guess is there will be some real stock market volatility later this year due to currency pressures but a general recovery along with the US boom.
The world is facing a global population collapse. This will be the end of the 18 year cycle where prices are always higher than the previous low. Study 50 years of housing in the city of Detroit for reference. The US will get a 35 year preview of what is coming by watching Japan, Italy, and Germany. Their birth rates went below replacement 35 years earlier than ours. 1973 vs 2008.
This video does not explain why the cycle is consistantly18 years long, it does not explain the position taken by building contractors and how as the land becomes more expensive, they cease to be so active and consequently how their many suppliers get less business first--a situation which causes a more general slump in all kinds of other economics activities, too. Also there is no attempt about justifying the unethical behavior of the speculation in property values which is so clearly recommended! What do the presenters want? That we should all speculate like the bloody capitalists believe to be how to win in an unjust world?
pretty sure that's exactly what the presenters are advocating, yes, making money from property. also i don't know that anyone has figured out why it's always about 18 years, last i heard fred harrison thinks it's something to do with mortgages
Pretty theoretical. Would be more convincing if you overlay some actual data with this cycle.
Looks like we hit the 18 year point in 2023 2024. So 2023 should be on fire. Kinda not.
@@paperclip6993 Nah, next crash due around 2026 (18 years after 2008). Next two years due to boom.
Australian property was at all time highs around 2009. If you can see anything but up in the Australian property graph since 1996, you need your eyes checked. This cycle is BS. Good if you want to see something that’s not there though
Australia is an anomaly. I don’t have a sense for the explanation why, but it is 🤷♂️
Different factors apply to different areas. Any areas that survive a downturn relatively unscathed are at more risk the next time around.