The 18 Year Property Cycle UK Explained | Saj Hussain

You may have heard about people talking about property cycles, house prices are doubling every so often. There are so many factors that affect house prices and one theory is the 18 Year Property Cycle. In this video, I talk about property cycles and why it matters to you as a property investor or landlord.
#propertymarket #propertyprices #propertycycle

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Thank you for watching my name is Saj Hussain Your Partner for Wealth Creation Through Property.

you’ve probably heard people talk about property cycles and things like house prices double every 7 or 12 years there are so many factors that affect house prices one strong theory is the 18-year property cycle [Music] if you’re watching my videos for the first time my name is saj hussein and on this channel i share with you my 15 years of property investing experience to ultimately help you get further faster in your own property investing journey that 18-year property cycle why is that i hear you ask well this is from the works of fred harrison this chap over here who’s an economist and in his infamous book boom bust in 2005 he predicted the 2007 property crash fred harrison in his research studied the last 200 years at the property market and he concluded the issue was not actually house prices but the land that those particular buildings sit on and as the economy grows it expands and the population grows as well what that does that puts pressure on housing in terms of the need for more and more office space and business space and this then ultimately makes house prices go up so effectively it’s the amount of land that’s available is what’s what pushes up these prices and because we’re in an environment where new development is strictly controlled when you look at the the map of the uk there’s only tiny amounts of that’s actually built on the vast majority of the land is green spaces but we can’t build anywhere whatever we want so the land that is restricted means that there’s um there’s a limited supply plus there’s a high demand for property when you put those two things together that’s what then pushes or prices in effect this then encourages speculation and bank lending increases as well which then creates an awkward spiral in terms of house prices the book is an absolute fascinating read it’s about 300 pages almost long so i’d encourage you if you’re if you want to learn more about this definitely have a read at the book fred concludes that the only control for these is when we get a slump in the market and repossessions start to increase and unemployment starts to rise as well and then we get this vicious cycle of boom and bust here is an example of what the 18-year property cycle graph looks like this is one i borrowed from landlord vision in order to explain this to you make sure you go and check out their youtube channel as well give them a little bit of love they have property management software that they specialize in so when we look at this graph the first stage of the graph is the crash and when we think about the economy that we’re doing right now we go back to the last crash that we had which is really towards the end of 2007 when it started and it went until about 2009 and this is was uh the early stages my property investing journey when i was trying to get involved in property and learning about property trying to do lots of different strategies and at that time when the market crashed people have been involved in property will certainly remember that even if you weren’t involved in property you may remember what happened at that time they were essentially in recession repossessions were up unemployment was high and overall the economy was in quite a low when we look at the first phase of the graph this is the stage of the crash and this runs for a few years when we look at the economy that we’re in right now we roll the clock back to say 2007 late 2007 when we started entering into a property crash at that time we saw the property market probably run till about 2009 where prices were really slowing down and falling in some cases quite quickly this was a time when i was fairly early in my property investing journey and i saw a lot of chaos around me there was a huge amount of fear where people were scared to be investing in property although i was just getting into it there were a number of people that were doing this for a long time that really leaving the market and running in their droves because there was panic because prices were falling so quickly and i remember property deals that were probably about 25 below market value at that time is what the or what we were picking up and when we said below market value is really difficult what is market value because the prices are falling so quickly so properties typically that were selling uh for about 150 000 in 2006 those properties were quite easily picking up for around 100 110 000 um and being able to sell those on to other people effectively sourcing those property deals on but in a market like that there are very few buyers and there are lots more sellers so it flips around maybe what we face seeing today in the current market and what that does that drives the prices right down also as a result of that what you see is banks will restrict lending and sometimes it might still be an appetite to be able to go out and buy and there’s some people are more adventurous but of course if the funding isn’t available that means you can’t buy and this then creates that downward spiral the market’s just falling and that’s really what we saw between about 2007 and 2009 and this was a great time for me to be learning about property when i look back now because i remember going into lots of estate agents talking to them about property market because i was looking at different areas at the time i was still trying to find out which may be the best place for me to get involved in and spending time in stock on trent and in birmingham and a few other places in dudley as well and i’ll go and i’ll see some estate agents and i’d be there literally for hours i’d sit in their office chatting to them you know we’d get through lots of cups of teas and definitely get through a packet of biscuits talking about property and the property market and the reality was no phones were ringing nobody’s walking through the door so they’re quite happy spending time with me in that way during the crash i also remember selling deals to a number of cash rich people who were very cautious in terms of what they would buy and looking back now i can see that they were the cautious buyers that would buy one property and then sit and wait but they were waiting for the dead certs what i mean by that they were waiting for the absolute bargaining properties to come along they just sit on their cash patiently and wait and as one of those deals come along they put their cash in that and that’s it they were done they were not looking to buy any more and that was a great deal for them because they were the kind of people who knew that if they buy a good deal now over time the market will change it’ll evolve and they’ll do significantly better and which i’m sure when i look back now some of those properties are you know sold for 60 70 grand they’re probably worth about 220 230 000 pound today because the market has changed so much the next phase as the change happens is the recovery phase now i believe for us in birmingham the recovery phase was probably late 2009 early 2010 that’s when we started seeing the market changing slightly and the recovery phase on the graph runs for about seven years now remember these aren’t exact time stamps these are just kind of broad indications of what’s going on and on the kind of signals that we should be looking for now this recovery phase i remember at that time what we started to see was that uh properties are now starting to sell again and they weren’t taking so long in terms of sitting around on the market uh during the crash time i remember it was not unusual for a property to be sitting for three months for sale with very little or no interest in that particular property but when you started seeing a few more sold signs uh coming up that people were starting to look at property and when the key drivers were lenders were starting to slowly come back to the market and this wasn’t an overnight change in the market it was just a gradual thing we started to see from about 2010 onwards and what that meant was that the buy to let mortgages and bridging lenders they were coming back to the market with more and more uh products whereas during the crash most people were buying property and sitting on it and holding it for the long term during the recovery phase you start seeing an opportunity to be able to flip property as well and this is something i was then looking at doing at the time to get involved more of and i started dabbling a little bit in that and started partnering with other people and also started doing some assisted sales as well if you want to learn more about assisted sales we’ll link up a video up here for you so you can watch that afterwards it really meant partnering with the owners of the property to add some value and sell it on for a profit so maybe it’s a hundred thousand pound house you might be doing it like twenty thousand pound uh to medium refurb and selling it on for fifteen twenty thousand pounds profit so hey nothing to be uh writing home about but these were the kind of transaction that was quite easy to do because they were relatively easy to find and pick up add a little bit of value and sell on as well because there was starting to be a little bit more demand for those properties it was still taking a little bit of time to sell them they weren’t literally selling overnight but they were starting to move and you start seeing more of this in the recovery phase where there’s more confidence more people start coming to the market in terms of selling property who are a little bit unsure before in terms of where they should sell now or where they should wait one of the things i started seeing during the correction phase was the interest in hmos and this is where i got interested in hmo property as well and the primary reason being that this was the one strategy was going to continue to give you a high cash flow per property i.e a high yield versus anything else that was going on that time because most of the other buy to let properties the mortgage levels were quite high the interest rates are still quite high at the time and people were trying to find ways how to create more income and there was this kind of gradual shift towards hmos and i said this is where my journey in hml started as well as the market start to build momentum we then get to the point where we see a correction and this is the next phase on the graph where we start seeing property prices then slowing down and even dropping as well and this is really about 2017 to 2019 that we saw this going on and what that meant was because there was a lot of uncertainty and sometimes certain things that trigger it and i remember at that time there’s a lot of talk around brexit that was slowing the property market down because people were indecisive or they were unsure and whether they now be the right time to commit to a purchase or even put a property up to sell and property prices really start to slow down we noticed a little bit of difference in birmingham but i remember speaking to friends in london who really felt the pinch when houses prices have started to start to retract and they took much much longer in terms of selling those properties this correction phase runs for a shorter period of time but effectively it’s when the recovery is happening very quickly and people starting to lose confidence that things are moving too quickly then we start seeing this correction phase before we talk about the boom phase of the property market if you’re enjoying this content then it would really help me out if you just massage that like button just to let me know that you find this content useful and also helps youtube understand that you like this type of content so it shows to more people just like you this last phase of the graph the boom phase is this is where i think we probably are right now in the early stages of that boom and this is primarily driven by lending becoming much much easier if you look right now it’s there’s 95 mortgages for first-time buyers are out there 75 85 sort of range for buy-to-investment you can get as well but then what that shows is there’s confidence from the lenders to be able to lend money for these type of uh projects if you’re doing developments or you’re bridging there’s plenty of money around to do that but when we look at uh for example the before the last crash i the last big boom that we had um sort of 2006 and at that time mortgages were available 120 so all the money you needed plus some because the market was absolutely crazy it was heated now i’m not saying we’re at that stage right now but i feel in the early stages of that boom and because the amount of money available and also the way the prices are rising quite quickly and what you’ll see is a lot of confidence so that means people are not afraid to pay the higher asking prices or in some case even overpay on those prices so if you try to purchase a property recently if you’ve tried you’ve been out to have a look at properties first of all you probably end up with some block viewings or back-to-back viewings but there’s a number of other people let’s see if you can even get in to get a viewing and let’s say you get a view and you’re interested in the property you make an offer then you find there’s already five other offers there and it might go to best and finals so you’re now a bidding war to try and get that property when you finally realize what it’s actually sold for it’s probably significantly more than what the initial asking price was and these are all the signs that you start seeing in a boom a boom market where the price is moving very quickly people are overpaying transactions are happening very very quickly and the banks are supporting it by providing the lending during these times what we also see is a lot more spending people are spending a lot more money than they are ordinarily especially on higher value transactions like cars and also holidays although we’ve been in lockdown there hasn’t been much of that happening there’s certainly the the confidence there is a lot of cash out there and people are going to be starting to spend in this way and we’ve always already started seeing not only has prices going up but values of certain cars are shooting up as well that people are spending money on luxury cars this time also means that we see very low numbers of repossessions happening bankruptcies business card and administration these numbers tend to be very low during a boom time because lending becomes easier as the banks have more confidence you start seeing more and more development start happening and especially new builds in the city centers a great example of being able to kind of assess the level of interest in the market is if you look at a city center skyline look at the number of cranes that are up compared to maybe last year or the year before and if we look across birmingham skyline you’ll see so many cranes are up so many big developments that are happening all indicators that within this boom stay so what happens after the boom well unfortunately the inevitable crash happens and we go back through the cycle and it all starts again so how can we tell where we are in the property cycle so i’ve talked about where i think where we are in the cycle right now and you know i really believe that we’re in the early to mid stages of a boom at the moment but really nobody knows for sure all we do is use our experience our knowledge our understanding of the market we look at the indicators and we make our interpretation of what’s going on where we think we are and you know you speak to several different people that have several different views and what i’m sharing with you is my knowledge and experience of what i think is happening and i don’t know for sure and i’d love to know your thoughts make sure you pop in the comment section below in terms of where you think we are in this marketplace right now in this 18-year cycle or even if you believe the 18-year cycle exists so if you look at this graph now this one shows the last three 18-year cycles in terms of where they are and you know i think it’s a good representation of what’s going on and hence why i think we you know in the early to mid stages of a boom with everything that’s going on but things can change just like that in the property market and it’s really difficult to say we could still be at the back end of a correction for example where things are just starting to um or we’re getting onto a correction because things have been heated remember the early signs we all start seeing is that people start losing confidence uh in the market because the the price is so high some people retract and they start buying and there’s so many things that are happening in the market that’s been driving the market right now and i’ve done a number of videos on the property market we’ll link another one up over here for you which is the one i did a few weeks ago about where we are in the property market where i think we’re going often people will say to me hey look i’m just going to wait with the bottom the property market so that way i’m going to get the best possible deal like those chaps i talked about earlier on where they wait and they surround their cash waiting for those best deals but how do we know when we’re going to find those best deals how do we know when we find an amazing deal that the prices are not going to continue to fall well the reality is we don’t know at that moment in time the only way we know is when we can look back after the event after it’s happened and on the graphs it starts to show that the price is starting to increase again that’s the way we know we’ve hit the bottom of the market and now we’re starting to head up again at that moment in time you can’t tell exactly where we are just like right now we can’t say exactly where we are in the boom market all we can see is the prices that are rising around us now when all this chaos is going on around us it’s really important to keep a level head and be clear about what it is that you were doing what your strategies and what type of model that you’re following for your property investing because that’s what’s going to help you and keep you focused when everyone else is losing their mind over paying for things as well and they’re taking things into context for example you’ll have extremes of the market for for instance what’s happening in central london prime locations like mayfair you know you’ll have crazy prices still happening in that location and demand which is not representative of the rest of the market because it’s a very unique place and also on the other end for example we might look at middlesbrough um where prices are very very low but again that’s not really a representative of what happens the rest of the market if the market’s active day or slow there you’ve got a look at the mainstream market what’s going on look at those clues and look at those indicators and make sure you watch my videos if you haven’t already make sure you subscribe to channel that way you get to see these videos and as i said i’m sharing with you my knowledge and experience of 15 years in this business property strategy is absolutely key using the right strategy in the right marketplace at the right point in the property cycle if you’re trying to figure out what your strategy is then make sure you watch this video over here next where i go to into this in a lot more detail in terms of finding the right strategy for you and if you want to see what strategies i’m using in 2021 then make sure you click on this video over here and i’ll see you over there on the video