The podcast dives deep into the reliability of the 18-year property cycle, challenging its predictive power amidst changing housing policies. The hosts discuss the new mandatory building targets for councils and the difficulties builders face in meeting them. They explore how the cycle's historical patterns may not hold up in today’s market, influenced by recent disruptions like COVID-19. Additionally, a handy tool for tracking Amazon prices is introduced, perfect for savvy shoppers.
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Quick takeaways
The introduction of mandatory housing targets in the UK aims to address a significant housing shortage but faces implementation challenges.
Skepticism around the 18-year property cycle's relevance grows as recent market trends fail to show the expected boom and growth patterns.
Deep dives
The Mandatory House Building Targets
New mandatory house building targets have been introduced in the UK, requiring councils to construct a specific number of homes each year. The total target has been set at 370,000 new homes annually, a significant increase from the previous year's target of 230,000. This shift from optional to mandatory targets is designed to address the nation's housing shortage and ensure that areas are held accountable for meeting their construction goals. However, there are concerns about whether councils can realistically meet these ambitious targets, especially facing challenges from private builders, who have shown little appetite for new projects.
The 18-Year Property Cycle: An Overview
The 18-year property cycle suggests that property prices move through a predictable pattern of booms and crashes, lasting an average of 18 years. Following the cycle, there is an initial four-year decline leading to a bottom, followed by seven years of recovery and growth, a mid-cycle wobble, and then a final seven years of aggressive price increase. This cycle, first popularized by economist Fred Harrison, has historically offered insights into property market trends and investment strategies. However, doubts arise regarding its relevance in the current market due to the absence of a notable boom in recent years.
Questioning the Relevance of the Property Cycle
Despite the historical accuracy of the 18-year property cycle, recent events, including the COVID-19 pandemic and economic interventions, have raised questions about its current applicability. Observers note that the property market has not experienced significant growth commensurate with previous cycles, with only one standout year of 10% growth over the last five years. Many believe that for the cycle to hold true, a notable boom must precede a crash, which is not evident based on recent market activity. The skepticism among investors has led to a reconsideration of reliance on the cycle for future investment decisions.
Since the early days of the podcast, Rob & Rob have been guided by a little something you may have heard of called the 18-Year Property Cycle. This has been a compass for many, designed to make property investment more predictable and help you make informed decisions.
But predictability sparks curiosity: where are we in the cycle? Is it on track... has it failed us this time around? Join us as The Robs share their views and provide answers to your questions. Will they continue to rely on the cycle, or are they finally done with it?
(0:45) News story of the week
(5:02) 18-year property cycle update…
(6:04) Lets recap on what the cycle actually is
(10:06) Why are we questioning it?
(16:27) What’s the reason it may not be playing out?