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  • Buy-to-Let

    The Property Cycle

    Hello fellow tribers,

    In his book 'The Complete Guide to Property Investment' Rob Dix devotes a chapter to the Property Cycle.

    He explains that this is a roughly 18 year cycle and describes the various phases (recovery/mid-cycle dip/explosive/recession) giving advice on how/when best to invest to maximise returns.

    To those familiar with this theory whereabouts in the property cycle do you think we are currently?

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    Yes agreed

    I see layers upon layers of different cycles going on simultaneously.

    London is not the NE

    a 20 yr old is not a 60 yr old

    a flipper  is not a BTL`er

    Suss out your own bespoke cycle as we all have different ones but many areas will also overlap

    When the sea waves crash to the shore at high tide its always low tide somewhere else

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    Jonathan Clarke. http://www.buytoletmk.com


    I'm certainly no expert, but from listening to Rob & Rob and putting things together, I think we are in the "Mid-term wobble".

    Of course, the whole thing is being distorted by Brexit, but originally, the next recessive period was due to be somewhere around 2025ish, so the slight down-turn would make sense for the wobble, as the "crash" is usually accompanied by the banks making major changes and clamping down on any lending.

    Money is not (yet) being given away like candy on the loans side, which is normally what leads to the final explosion, followed by the implosion of the so-called "crash", so I think we are still on course for the usual timings.

    Like I said though - I have no insight to this other than what I see, based on Rob's ramblings.  Big Grin

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    Thank you both for your replies. This is very useful.

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    I see ot more as the property market responding to wider issues in the economy, basically economy doing well people feel better,have more cash, more confident prices race ahead. Remove confidence and money from the equation prices collapse. Throw in political meddling for good measure. Over the years i’ve seen

    The stock market collapses 1987, 1992, 2008. Collapsed the market

    Removal of double miras relief, btl, mass migration , help to buy, monetary policy ( low interest rates / QE) Have either given the market a bump up or at least supported it.

    The economy when its unbalanced either creates bubbles in asset prices or pops them.

    Currently we’re still in a phase where the bubble is still with us ( growth pretty much stalled though) , national and global policy has pumped up property prices. The market will either stagnate, grow or shrink, property itself won’t cause it, policy will.

    High prices are needed by developers to build, high prices are unaffordable on most salaries without low interest rates, towrds bottom end of market this affordability needs to be further tweaked with help to buy, still not any really cheap property so squeeze buy to let to release property from what will eventually become distressed sellers.

    Get the balance right and you don’t get a sudden shock, get it wrong you do.

    Easy to see plenty of risk in the current system, but governments will keep fiddling to sustain things, common sense says that sooner or later something will give and we’ll have another financial shock, if so prices will readjust. Get it right you’ll make a fortune get it wrong you could lose one, be in a position to ride it out and you’ll follow the long term trends which is upward , along the way your worth on paper will no doubt fluctuate greatly. Property is a long term bet the longer the better.

    Those thatbought around ‘93 and sold in 2007 will have done exceptionally well, and vice versa. Won’t be a surprise to know which group are those that run “wealth classes” become “mentors” etc. You just have to work out if they managed it by chance and are selling you hindsight or really did see it coming. Remember those that sold in 2007 had lots of cash to buy back in around 2011 and have done well since.

    Me i started in 1996, have’nt aquired/ disposed of anything since 2004, i’m riding the long view, but that suits my view on risk and where i’m happy to be.

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    Cycles are seen in hindsight... once a pattern is found everyone manipulates it that little bit earlier and it exists no more

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    If you want to really learn about this then seek out “cycles, trends and forecasts”


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    Hiya, I've listened to the property hub podcasts that Rob and his colleague, another rob, put out. They're good, I'd recommend them to all.

    In my opinion I'd say we are in the mid cycle wobble which is being extended by brexit, of course, and the changes in legislation. Although I feel the pent up demand that will be released post brexit, whatever the outcome will possibly accelerate the end of the cycle.

    Hindsight is an exact science so it will be very interesting to see whether it still equates to 18 years.

    Cycles aside there are still plenty of places to invest sensibly where changes in the 'fundamentals' are changing the market. Towns and cities where significant amounts of investment are going on change the local situation.

    Just my opinion of course, good luck whatever happens!

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    I interviewed Paul Mahoney, MD of Nova Financial, yesterday at the Olympia Landlord Show.  He said something very profound .... he said "It's not timing the market, it's time IN the market".

    That, I think, is a great answer to anyone trying to analyse property cycles or when to start investing.

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