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The 18-Year Property Cycle

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Another view of Cycles in the Philippines

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Feng shui expert: Property boom nearing end of cycle

By Ehda M. Dagooc (The Freeman) | Updated February 8, 2016

CEBU, Philippines - While industry players are seeing sustained vitality in the property market, a feng shui expert is sensing otherwise.

Renowned geomancer and feng shui master Francis Gaw said that the real estate industry always follow a 10-15 year cycle, and in the Philippines, the industry only has two to three more years to experience growth.

He said the cycle will soon hit bottom again, which means that sales will relax or get lesser everyday.

In practical sense, he said, those who have money and have been buying properties will have to save again. And in another 10 years the sector is seen to slow down.

Gaw's extra sensory gift has gained for him the trust of businessmen around the country and abroad. He has been sought out for annual consultations and psychic advise by, among others, high-ranking politicians, big conglomerates, major real estate developers and hotel chains.

Over the weekend, Gaw was in Cebu to give unit owners of Sundance Residences his views on good feng shui alignment and psychic vibrations under the year of the Fire Monkey.

==

> more: http://www.philstar.com/business/2016/02/08/1550915/feng-shui-expert-property-boom-nearing-end-cycle

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An economist talks about Land Value Tax

 

 

xx

 

Their talk about how a guaranteed income sounds like pure fantasy ("people will take their kids fishing")

 

If people are handed enough money to live well without working:

+ Where does it come from?

+ Who will have any incentive to do the dirty or dangerous jobs?

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Charted: Hong Kong’s housing market suddenly has echoes of the SARS era

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Prices are plummeting too. Centaline Property’s Centa-city Leading (CCL) Index, which tracks used-home prices in Hong Kong, has dropped 13% from September’s historical peak to its lowest level since 2014.

 

atlas_r1kD2Io.png

 

That’s not to say things are cheap—Hong Kong remains the world’s least affordable housing market, when based on income of local residents, thanks to buyers from mainland China, who continue to see Hong Kong property as a safer bet than stock markets, yuan, and property at home.

But this flow of money has been slowing, following Beijing’s crackdown on corruption and overseas investment—and it may never come back. Analysts at CLSA predict Hong Kong’s housing prices will drop another one-fifth in 2017.

 

There is no sign of a recovery in Hong Kong’s home prices this year, and the “best expectation” is that the CCL Index will fall to 120 points in the second quarter, down another 6% from the current position, said Wong Leung Sing, senior associate research director at Centaline.

The Hong Kong government—despite a weak economy both locally and in mainland China—appears to have no intention of relaxing certain policies to boost sales, Wong said. One example is the transaction tax, implemented at the end of 2012 in order to curb speculation. Under it, home buyers must pay up to 8.5% of a home’s value if they’re Hong Kong residents, and up to 15% if they’re not.

 

Sales of small and medium units are worse than those for luxury homes, because the economic slowdown hit the middle class harder than the super rich, Wong added.

==

> more: http://qz.com/656772/hong-kongs-home-market-wont-recover-anytime-soon-charted/

 

 

This chart was also in the article, but I have added some notes

 

xx

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FRED HARRISON (of 18-year cycle fame) calls into the show - at 25 minutes in:

NEW - The Nigel Farage Show From Washington DC - Trump Inauguration Special - LBC 19-01-2017

"Donald Trump will be a very rich man in 8 years time, thanks to the Trillion in infrastructure investments...

Then, there will be a very serious financial crisis...many people will lose their homes"

INFRASTRUCTURE - a thesis by Fred Harrison

> The Art of Political Rip-offs

Thesis Number: #6 (Page 1 of 8)

The world is on the cusp of the greatest redistribution of income in history. Infrastructure, which originated as a life-force, sent its value flowing through the ages to endow people with richer lives. When that social value was diverted into private pockets, people were cheated and their civilisations imploded. That catastrophe is once again unfolding in our midst.

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WHERE in the Property Cycles are we?

so Fred Harrison predicting boom in USA and bust in UK over next two years,

wouldn't that be unusual, I thought the two economies were very closely correlated?

 

Yeah. That's what he says - I haven't had an update from him in awhile, so it was interesting to hear this.

Obviously, he thinks they are at different points in the long cycle.

 

For me, the 18 year cycles bottomed in:

 

+ for the US : 2011, and so + 14 yrs = 2025 - Next peak? ... and 2016+ 8yrs = 2024 - so his comment makes sense

+ for the UK : ... I need to do more research...

 

There's normally a dip, lasting a year or so in the middle of the 14 year upswing, and that is due now for the US.

Here's PHM - my US homebuilder benchmark stock:

 

PHM / Pulte Homes chart : All data

 

A dip to $15, perhaps in 2017 looks possible, unless it came "early"

 

For the UK, I look at

 

BDEV / Barratt Developments chart : All data

 

I also see a major Low in 2011 - so Harrison must be looking at something else, in predicting a serious recession in two year.

Hence the need for more research into Harrison's present cyclical assessment

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I found links to these two articles (which I cannot read at the moment)

 

/ 1 /

Economists Explain Why Our Economy Crashes Every 18 Years

www.theepochtimes.com/.../2000510-economists-explain-why-our-economy-crashes-...

Mar 25, 2016 - ... economist and director of the Land Research Trust, Fred Harrison. ... Harrison predicts the midcycle recession will hit in 2019, and the current ...

 

/ 2 /

Are we heading for a crash? | Albert Edwards, Aditya Chakrabortty ...

https://www.theguardian.com › Opinion › Global economy

Jan 29, 2016 - Fred Harrison: A British recession will happen in 2019. Fred Harrison ... Fred Harrison is an economics commentator and author of Boom Bust ...

 

 

Fred Harrison: A British recession will happen in 2019

FredHarrison.png?w=300&q=55&auto=format&

Britain is on course for a recession in 2019, a year before the general election. The crash will not happen before then because politicians and central bankers will appear not to lose their nerves.

The QE (quantitative easing) solution to the 2008 crash has rendered monetary policy useless as a fine-tuning instrument. Policymakers failed to adopt fiscal reforms that could have rescued the UK, so politicians have no tools to guide Britain out of the current turbulence.

Worldwide, central bankers will talk up any good news, hoping to persuade consumers to spend, even as wages continue to be battered. In the US the Fed will not take any chances in the run-up to November’s presidential election. Oil producers will finally do a deal to drive up petrol prices, which will be sold as a step towards normality. Debts will continue to grow, until a peak in house prices in 2019. Then the game will be up.

 

There is also this:

When's the Next Property Crash? - Share The Rents

www.sharetherents.org/whens-the-next-property-crash/

By Fred Harrison on 13 July 2010 in Global Downturn, UK Economy. Finally ... It is ultimately, as Mr Harrison argues, a ruinous way of running our affairs.”.

 

relevant analysis of what caused the Depression of 2010. ...

 

... the new realism began when Martin Wolf analysed my book 2010: The Inquest in the Financial Times (July 8). He summarised the mechanism that drives the economy to distraction in these terms:

 

“Buyers rent property from bankers, in return for a gamble on the upside. A host of agents gain fees from arranging, packaging and distributing the fruits of such highly speculative transactions. In the long upswing (the most recent one lasted 11 years in the UK), they all become rich together, as credit and debt explode upwards. Then, when the collapse comes, recent borrowers, the financial institutions and taxpayers suffer huge losses. This is no more than a giant pyramid selling scheme and one whose dire consequences we have seen again and again. It is ultimately, as Mr Harrison argues, a ruinous way of running our affairs.”

 

That message has to sink into the heads of economists if they want to guide the western economy out of the depression...

. . .

Unless the Wolf realism infects mainstream analysts, expect the disarray to continue and for the next property cycle to terminate in 2025. Wolf has just been appointed as one of 5 experts to the new Financial Policy Committee within the Bank of England, which will operate “in parallel with its existing Monetary Policy Committee”.

Will Wolf be able to influence the Bank of England? Not likely. So a lot of traps await the unwary between now and the Crash of ’25.

 

So perhaps he means: a mid-cycle recession in 2019, followed by a bigger peak, and larger Crash in 2025.

That means the UK would be 1-2 years behind the US cycle.

I do note however that London never had much of a correction in 2008-9, so this 2019 drop could be something more serious for London.

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Length of downturns - this was first posted on the Singapore thread

=

 

Haha. Yeah:

"The best time to buy a property is always 5 years ago"

 

Anyone who says something like that is unaware of cycles - which are real and observable - just look at prices over a long enough period.

 

Idiot estate agents will show you a graph going back 10-15 years, showing prices rising over the whole period, and think that this makes a case that prices will go on rising. When I see that, I have a model in my mind: "14 years up, 4 years down... the last 2-3 years of the up-phase are the most dangerous."

 

So if I see 10-12 years of rising market - worse yet: 14 years! - I will be very wary, and want to wait for the drop. That is my attitude towards Hong Kong and Manila right now. I would rather buy in a place like Singapore, after a 3-4 year drop. Even in Singapore, I am somewhat cautious, for reasons that I have described above.

 

"The best time to buy a property is always 5 years ago"

- was definitely not true in Detroit, where in 4-5 years, nearly a decade of gains were wiped out

 

slide05-624x468.jpg

And some houses went down to $100-$1000 in value.

Instead:

"The housing price index in Michigan hit its all time low in 2011. The housing index in Michigan is currently at 139.66, 40 percent higher than its value in 1991. This current index is approximately the same as that from 1997."

> source: http://www.drawingdetroit.com/michigans-housing-price-index-compared/

 

The US House price drop was widespread, and even San Francisco saw a drop of 72 months (= 6 years)

peak-prices-san-francisco-detroit-2.jpg

- so we cannot expect that the entire drop will always be confined to 3-5 years

=

Once the lows were in place, prices improved dramatically, even in Detroit

 

fredgraph.png?id=DEXRNSA&nsh=1

 

But they are still below the price levels of 10 years earlier

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If you believe in Elliott waves, the cycles are not uniform

 

After a long up-phase, you will get a stunted cycle (or two)

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Economists Explain Why Our Economy Crashes Every 18 Years

By Joshua Philipp, Epoch Times |

 

March 25, 2016

The U.S. economy has moved according to a set cycle for close to 200 years, and experts warn that if this pattern continues, we can expect another financial crisis starting this year, which will peak in 2019.

One of the first warnings of the last financial crisis came from U.K.-based economist and director of the Land Research Trust, Fred Harrison. He began warning of the trends in 1997, and in April 2005 warned that the property boom would only last for another three years before it would crash in 2008.

He went on record and told then-U.K Prime Minister Tony Blair about the looming crash. He also turned to the press and presented his data showing the trends. But he, like many others who came to similar conclusions, was ignored until the crisis came to pass.

Now, Harrison is again warning of a coming crash, and his predictions are again proving true. Just last year, he warned of the economic woes that have started rearing their heads in 2016.

The problem, he said, is the economy rises and falls like clockwork.

“We know that for centuries, the land value cycle has operated on an 18-year basis,” Harrison said in a phone interview. “The fact is, there is a very clear 18-year pattern, which is always intersected with a mid-term recession.”

 

Amar Manzoor, author of “The Art of Industrial Warfare” and creator of the 7Tao training system for manufacturing standards, has come to the same conclusion. He said in a phone interview, “This 18-year cycle has resulted in the massive decline of industry and has been the Achilles heel in the performance of Western economies.”

Steve Hanke of the Cato Institute, a think tank, noted the same pattern in a February 2010 report. He said the problem rests in the land-value cycle, which has a domino effect on the construction cycle, the business cycle, and then the overall economy.

 

“With the exception of World War II, the peak of most real estate cycles is roughly every 18 years,” Hanke wrote. He shows this has remained mostly consistent over the last 200 years with land value peaks in 1818, 1836, 1854, 1872, 1890, 1907, 1925, 1973, 1979, 1989, and 2006.

RealEstateCyclePeaks_Infographic-580x478
The 18-year financial cycle is shown in an infographic. Experts note the cycle was disrupted by the First and Second World War, but returned to its former state in 2006. (Epoch Times)

While the world wars disrupted the cycles, Hanke noted statistics from “The Depression of 2008,” by Fred E. Foldvary, which show the land-value cycle, construction cycle, and business cycle returned to their pre-world war intervals in 2006, just ahead of the last crash.

“This, of course, doesn’t imply that all recessions are preceded by a real estate cycle. It only says that all real estate cycles have spawned economic downturns,” he wrote.

If this pattern continues, the next recession may be just around the corner. Harrison predicts the midcycle recession will hit in 2019, and the current property market will peak in 2026 with a severe financial crisis on its heels.

Wealth in Land

One of the key factors often overlooked is that a good chunk of the U.S. economy is based on real estate. According to the National Association of Home Builders, residential investment and housing services constitute about 17 percent of the GDP.

The problem is that about 70 percent of the GDP comes from consumer spending and government health care spending, and these are impacted by changes in the business cycle.

The GDP still reflects what was shown in Adam Smith’s 1776 book “The Wealth of Nations,” that the three ingredients to a functioning economy are wages, profit, and rent. The book is regarded as a definitive text in classical economics.

According to Harrison, however, the neo-classical school “eliminated land from the radar.” “They view the world as a two-factor model, labor and capital, and they’ve buried the concept of land as a part of capital,” Harrison said.

GettyImages-82838978-632x4501-580x413.jp
People line up at a saving bank in Millbury, Mass., 1929. The Wall Street crash of Oct. 29, 1929, sparked a run on banks that spread across the country. (OFF/AFP/Getty Images)

Despite the pivotal role played by land and rent in the GDP, Harrison said, it is viewed merely as a subcategory of capital.

The problem with this view was shown clearly in the 2008 financial crisis. Harrison noted it was blamed on “bankers being foolish with their money,” when at a deeper level, it was “bankers engaged in the real estate market that caused the problem.”

“It was a real estate issue,” he said, noting that governments “haven’t done anything to prevent the next crash, because they’re watching the banks.”

“Economics today is the economics of a disembodied economy,” Harrison said, noting that economic projections need to consider land and natural resources.

Working Economies

The 18-year-cycle caused by land values was first pointed out by land economist Homer Hoyt in the 1930s, and a solution to the problem was first proposed by 19th-century journalist and political economist Henry George, who popularized the concept (fittingly known as “Georgism”) that the value of land and resources should be taxed, rather than income and investment.

He viewed the heavy taxing of wages, coupled with systems that lock people out from the value of natural resources, as being equivalent to slavery.

One of the key causes of the cycle is people getting priced out of the market.


A trader shouts orders as stocks were devastated during one of the most frantic days in the history of the New York Stock Exchange on Oct. 19, 1987. (Maria Bastone/AFP/Getty Images)

“The real estate cycle is determined by the interest rate,” Harrison said. “Today’s record low rates are provoking an extra-ordinary increase in house prices very early in the current cycle.”

“If governments want to control the cycle, they need to shift the incentives—that means rebalancing the tax regime by raising the rate of property taxation and reducing taxes on incomes and profits,” he said.

The tax on land proposed by George could theoretically break the 18-year cycle by disrupting the cycle of the real estate market pricing people out. Since the tax is based on value of land, including real estate value, owners would be less likely to continually inflate the values.

“We’ve been so brainwashed into just not recognizing the significance of land and rent, that the economic cycle acts as it does, creating havoc, and it repeats itself when it could be so easily corrected,” Harrison said.

Taiwan is an example of this system in action. After the split between Taiwan and mainland China, the communist mainland believed in seizing and controlling the land itself, while democratic Taiwan believed in allowing a free market while taxing land rather than individual wages.

“The reason why China is in deep-deep trouble was because they allowed the local bureaucrats to take the land, and the whole system is in chaos,” Harrison said. “And yet, right at their doorstep they have the example of Taiwan to learn from.”

He said Denmark is another example, which also adopted George’s system. Despite having few natural resources, they’re ranked as the happiest nation on earth, and they have the world’s best housing market.

“Here you have an advanced economy with very poor natural resources, and their per-capita income is higher than the U.K.’s,” Harrison said.

Of course, many governments aren’t showing signs of changing these systems, and the coming economic downturns are likely inevitable.

Harrison believes the coming financial crisis could be the worst we’ve ever seen for the simple reason that the global economy is now interconnected like never before. He warns it could lead to a situation where major powers are left to fight or fall.

“We either deal with this peacefully, or we end up in a hot bloody war,” he said. “All the signs are we’re going to end up with a bloody war because there’s no other way out of it.”

A Looming Conflict

Amar Manzoor has approached the looming financial crisis from the standpoint that governments aren’t likely to change the way taxes work. Instead of talking to governments about fixing it, he created the 7Tao system to allow businesses to weather it and fight back.

Manzoor has been running the 7Tao industrial warfare training method for U.K. businesses in cooperation with the British government education system. The system is run globally for all organizations as SPECTRE through BLACKOPS Partners Corporation.

“I don’t think personally that governments have the inclination to reform. They simply will not look in that direction,” he said. “So it’s down to the businessmen to learn how to survive the difficulties that lie ahead.”

==

> more: http://www.theepochtimes.com/n3/2000510-economists-explain-why-our-economy-crashes-every-18-years/

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THE CYCLE - Philly also shows an 18-year cycle

 

B91ztVk.jpg

 

Driven, in part, by Job losses, and then job creation

=

Philly's population stopped shrinking about 1998, and job growth has returned after the GFC

 

fredgraph.png?height=400&id=SMU423796400

> source: https://fred.stlouisfed.org/series/ATNHPIUS37964Q

 

New skyscapers are now changing the Philadelphia skyline:

"Of the top 20 tallest buildings in Philadelphia, only 7 were built before 1986, and of the top ten, ALL of them were built after 1986.
By contrast, in booming Houston, all but 3 of its 20 tallest buildings were built before 1986.
In Dallas, only 5 of the 20 tallest buildings were built in 1986 or after, with just one of them built after 1988.

... Philly re-invented itself. No longer a manufacturing city it is now a world class city for "Eds/Meds/Tourism/Culture"

> SSC-#1403: http://www.skyscrapercity.com/showthread.php?t=1659356&page=71

 

new-comcast-building-inline-1a.jpg

 

That's Comcast's new Technology Center, which has been said to be set to do* some "bird flipping" to those who once knocked the city.

The other new factor is how skyscrapers have crossed the river and are now going up on the West bank,

the area (of UPenn and Drexel) called University City

==

*Not quite finished yet: http://www.skyscrapercity.com/showthread.php?t=1659356&page=70

 

fmc_02.jpg

=

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The 18-year Cycle in the USA

The latest Low was 2012 (with Builders shares bottoming in 2011) ... old image-FabermzVVq5Q.gif

 

The real-estate cycle in the U.S. can be summarized with the following table:

Peaks in Interval Peaks in Interval Depressions
land value (yrs) Construction (yrs) interval
1818 -- ----- -- 1819 --
1836 18 1836 __ 1837 18
1854 18 1856 20 1857 20
1872 18 1871 15 1873 16
1890 18 1892 21 1893 20
1907 17 1909 17 1918 25
1925 18 1925 16 1929 11
1973 48 1972 47 1973 44
1979 6 1978 6 1980 7
1989 10 1986 8 1990 10
2006 17 2006 20 2008! 18 (2012 property Low)
2024? 18 2022-24? 16-18 2026-28 ??
====
Real-estate values and construction have peaked one to two years before a depression, and have stayed at peak levels until the onset of the downturn. The historical evidence is consistent with the theory that speculative booms in real-estate prices and construction act as an impetus for the downturn itself.

==

> more charts: http://www.nowandfutures.com/real_estate.html

 

US Property - Recovery nearing an end?

 

If the e-wave count on this chart is accurate. the rally in General Housing stocks since the 2008-9 Low maybe be nearly over

 

HGX / Housing General Index ... All-Data : 10-yrs : 5-yrs : 2-yrs: Last: $232.99 / PHM-10yrs / IYR-10yrs

 

k5CJlw7.png

 

US: in America, PHM / Pulte Homes is the main bellwether ...

Update : all data : 5-years : to 7/31/2017 : $24.42 / High for Year: $25.20

-------------------------------------------------- > MLhP04U.gif

 

 

Updated : chart : to 7/31/2017 : $283.46 / HGX : High for Year: $287.325

-------------------------------------------------- > BuhaCcI.gif

 

Update : CS- 20 Cities NSA

qbgmZl0.png

 

13-03-26-CS-HPI.jpg

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LOOKING at Long Term Property Cycles

Pretending the World Wars did not have a major impact (which is unlikely, still...)

 

Cycles suggest next major High, maybe 2025-6

 

But a 1-2 year dip could be due soon - "the mid-Cycle correction"

 

B91ztVk.jpg

 

Philadephia%2C_Pennsylvania.jpg

A Vintage postcard, showing the 1930's skyline. Note the prominence of City Hall.

 

NX5iTmh.jpg

Philly's skyline in 1989 at an 18-year Cycle Peak. The construction of new skyscrapers had begun - after a long pause.

 

JECC0k3.jpg

Philadelphia's night time Skyline, circa 2017. New skycraper growth is evident everywhere.

 

iqXDDbz.jpg

Philadelphia City Hall. Philly still has many classic buildings, reflecting its rich history. The William Penn statue had a special significance.

Designed to be the world's tallest building, it was surpassed during construction by the Washington Monument and the Eiffel Tower, though it was at completion the world's tallest habitable building. It was the first modern building (excluding the Eiffel Tower) to be the world's tallest and also was the first secular habitable building to have this record: all previous world's tallest buildings were religious structures...

 

XPW8Ge0.jpg

One Liberty Place towers over City Hall

City Hall was the tallest in Philadelphia from 1901 until 1987, when it was surpassed by One Liberty Place ending an unspoken, gentlemen's agreement that limited the height of buildings in the city to be no higher than William Penn's hat atop City Hall.

> https://en.wikipedia.org/wiki/Philadelphia_City_Hall

CYCLES ?? assuming fixed 18 year cycle (theoretical)

1901 : Phil City Hall completed
1919
1937
1955
1973
1991 / 1989 : see chart above, One Liberty Place was completed in 1987, two years prior to the cycle peal
2007 : US Property cycle peaks

==

A cycle identified long ago was the 18 1/3 Year property cycle

 

ADh32mm.gif

 

It shows up here too, possibly

1KXHAQA.jpg

201307164.png

Other data added

 

And maybe also here - but only two peaks line up

ARzgMPU.jpg

 

THIS one lines up better

mzVVq5Q.gif

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