property cycle The property cycle: Is the explosive phase just round the corner?

[Lee Courtman]

I think were in the middle of the explosive phase. I think the crash will occur in 2025/26.

 

The market has increased slightly but not as wild as the summer of 2013.

[Mike Wood]

Hi Phil - Bit of a newbie here looking at flips or BTL. Would you be suggesting buy now but then to hold till when?

[David Graham]

I think he's suggesting buy and hold for now in line with your BTL strategy. Flipping might turn a quick profit but you'd potentially miss out on the predicted "explosive" phase where values increase rapidly.

 

[Chloe Williams]

very interesting thoughts, definitely agree its worth buying and holding now.

[Alex West]

Personally I also believe that we’re in the mid cycle wobble.

My strategy, being right at the very start of property investing (aka just starting saving for deposits), is to bank as much cash as possible between now and the crash so I’m cash rich and can maximise the number of properties I can get.

Assuming 8 years until purchasing that will be around £445,000 saved. 

If I get around £60k in the next 2 years I may buy one property to run as an HMO whilst waiting for the crash to happen.

[Guest Lozdel]

I believe we are tipping into the depression phase, or certainly will be after October.

There is a multitude of factors and issues which are causing this, Lenders have begun  pulling mortgages offers or requesting a higher deposit. Barclays have just announced that they are pulling all mortgages to Limited Companies, in addition there are tax changes due to be implemented to the Air bnb market on top of the 4-5 month lockdown which has seen that market been unable to rent to tourists.

Commercial Landlords are going to be faced with no rent payments soon and loss of tenants, Help to buy is going to be pulled in 2021 to only first time buyers only which will have a huge knock on effect on the new build market which has relied on that for the past 5 years. 

Redundancies are expected to be 25% of the workforce on top, the Bank of England have stated that we are going to face the worse financial crisis ever in 300 years. That is one big STARK warning, so no I do not think we are in the explosive phase we are entering a depression meet hyper inflation stage to come even Ray Dalio agrees with that outcome. 

 

 

 

[Dino V]

8 hours ago, Guest Lozdel said:

I believe we are tipping into the depression phase, or certainly will be after October.

There is a multitude of factors and issues which are causing this, Lenders have begun  pulling mortgages offers or requesting a higher deposit. Barclays have just announced that they are pulling all mortgages to Limited Companies, in addition there are tax changes due to be implemented to the Air bnb market on top of the 4-5 month lockdown which has seen that market been unable to rent to tourists.

Commercial Landlords are going to be faced with no rent payments soon and loss of tenants, Help to buy is going to be pulled in 2021 to only first time buyers only which will have a huge knock on effect on the new build market which has relied on that for the past 5 years. 

Redundancies are expected to be 25% of the workforce on top, the Bank of England have stated that we are going to face the worse financial crisis ever in 300 years. That is one big STARK warning, so no I do not think we are in the explosive phase we are entering a depression meet hyper inflation stage to come even Ray Dalio agrees with that outcome. 

 

 

 

So if it's a depression, don't buy, but if it's hyper inflation, do buy. And 25% redundancies, so assumably, 25% unemployment rate. If that's what you think, I'd suggest you invest in a shotgun and head to the hills.

As the Robs mentioned on the podcast, does anyone with a ltd company have a mortgage with Barclays? Suspect they've pulled the product as it was costing more to keep the website updated than they were making from it.

Inflation will be good news if you already own property. Unemployment means more tenants rather than buyers, so good news. A crash means cheaper properties. Or you can just look for the bad news in everything

[amasonestates]

i think we are in the mid cycle wobble, but the explosive stage will be shorter that the usual 6-7 years, i think more like 2-3. If we follow other cycles the the drop will only be back to the mid cycle dip prices at worst.

Personally i am buying if a deal stacks up for the cashflow, i am at the point where the cashflow means more to me than the capital growth, I am seeing houses sell that are ready to go, the refurb properties seem to be the ones sticking sround a little longer, but i expect that to change once the trades have cleared their backlogs and you can turn around a refurb more quickly  

[Guest Barry Chuckle]

I also agree that there is an imminent property slump, I hold BTL property so it's not particularly a great thing for me!  

I think there is a perfect storm and I predict house prices may drop by 15-20% over the next 18 months and probably higher in London.  We are in absolutely unique times so the cyclical model of house prices I don't feel applies.

Most people agree unemployment levels will be as bad as the 80's and many lenders are losing their appetite to lend due to risks of negative equity.  I certainly would not be buying BTL property at the moment!  I know a lot of landlords who may disagree with me, but often that's down to it being an inconvenient truth!

[davidkob]

very intersting thought

[LewisRest]

On 7/5/2020 at 12:53 PM, Guest Barry Chuckle said:

I also agree that there is an imminent property slump, I hold BTL property so it's not particularly a great thing for me!  

I think there is a perfect storm and I predict house prices may drop by 15-20% over the next 18 months and probably higher in London.  We are in absolutely unique times so the cyclical model of house prices I don't feel applies.

Most people agree unemployment levels will be as bad as the 80's and many lenders are losing their appetite to lend due to risks of negative equity.  I certainly would not be buying BTL property at the moment!  I know a lot of landlords who may disagree with me, but often that's down to it being an inconvenient truth!

I think this is overly negative. So if I’m currently buying a 85-90k house for 72k what will I lose if prices drop? If I add 7 k worth of value to that what have I lost? Likewise, I’m intending on banking the cash flow for now. So that’s 4800 pre tax a year over your three years. So some 15k. So if the worst does happen what have I lost...
that to one side I personally think this will massively effect different areas of the U.K. if it does happen. I invest in an area that’s not even recovered from the last crash. When house prices are 7 times the local average wage and not 18 and employment looks like it’ll be less effected through this I think I’ll continue buying just slower than normal.