PROPERTY experts have claimed it’s “wise” to “pay attention” to predictions involving the 18-year property cycle after the theory’s creator forecasted a 2026 market crash.
The Property Podcast presenters Rob Dix and Rob Bence discussed the 18-year property cycle in their latest podcast. The property experts usually share the latest housing news and divulge their knowledge on a plethora of different topics on the popular podcast series. Some of their podcasts cover one specific topic while others see the two property experts answer listeners’ questions in the popular “Ask Rob & Rob” shows.
The Property Podcast is downloaded more than 180,000 times a month, and over the last six years has become a firm fixture in the week of aspiring and established property investors.
On the latest episode of the podcast, Rob and Rob received a question from London-based Ali.
At the beginning of June, Ali saw an article in This is Money where the 18-year property cycle’s creator Fred Harrison said it “wouldn’t be possible for this boom to continue”.
The story read that the property boom will continue for the rest of this year but there will be a “property crash” next year.
“Normally I ignore stories like that but they attribute it [the prediction] to the founder of the 18-year property cycle,” Ali asked.
“I was wondering what your thoughts are on this?”
However, Rob said Mr Harrison is not predicting a price crash next year.
Fred Harrison popularised the idea of the 18-year property cycle who, using the model, managed to predict the last few crashes years in advance with “spooky accuracy”.
The British author and economic commentator rose to fame after he predicted the 2007/08 financial crash as early as 1998.
His theory suggests that the UK property market follows an 18-year cycle, and has supported this argument by finding trends throughout the last 200 years of UK house price data.
His theory suggests that after a crash, the market will be in a recession for three to four years.
Demand for property plummets as lenders withdraw and house prices go down.
Then, the property market recovers with house prices creeping up for around six to seven years.
Just after the recovery phase, house prices pause for around one to two years before then booming.
Supply can’t keep up with demand and house prices, and rental rates shoot upwards for around five to six years.
This cycle is said to occur every 18 years and restarts when there is a peak and then a subsequent crash.
However, in the article by This is Money, the property market expert said he didn’t think the pandemic had “the power to stall the cycle”.
He said: “There might be a short-term easing off, as the post-pandemic world returns to something akin to normal, but the price trend will continue upwards.”
However, Mr Harrison said he believes there will be a crash that will take place in around five years time in 2026 which is when, the property expert predicts, the “music stops”.
“House prices will peak in 2026 followed by a recession that will eclipse what happened in 2008,” he added.
Rob said Mr Harrison “hasn’t predicted a crash next year” but has predicted one in 2026.
He also said Ali is wise to ignore predictions like this as most of them are “completely wrong” and will send you off in the wrong direction.
Rob added: “But I also think you are wise to be paying attention to Fred Harrison’s predictions involving the 18-year cycle because of course it’s not perfect, you can’t use it in isolation, it’s never going to be absolutely spot-on, but historically it has performed so well as a guide and Fred Harrison believes, and we believe, that it’s going to continue.”