The property market doesn’t move randomly – it follows a pattern which, once understood, can help you time your decisions with confidence. Understanding the 18-year property cycle can give you a serious edge, whether you’re buying, selling or stepping into property investment for the first time.
From rising property prices driven by population growth and economic factors (such as employment levels and consumer spending) to inevitable market corrections, the cycle offers a clear way to track where we are and what might come next.
While many investors act on instinct, those who understand the cycle can avoid common pitfalls and seize opportunities others might overlook.
In this blog, we’ll explore what the property cycle is, why it matters and where we are in the current cycle.
What is the 18-year property cycle?
The 18-year property cycle is a pattern that predicts the rise and fall of property prices over time. It’s divided into three key phases: recovery, boom and crash.
- Recovery phase: This begins after a market low. Property prices start to stabilise and gradually climb as confidence returns. Investors cautiously re-enter the market, creating a foundation for steady growth.
- Boom phase: This is the period of rapid growth. Prices soar as increased lending, construction and speculation fuel the market. Investor activity peaks, but so do risks as the market overheats.
- Crash phase: Eventually, the bubble bursts. Overinflated prices trigger a sharp correction, investment grinds to a halt and lenders tighten credit. The market slows, resetting the stage for the next recovery.
Why does the property cycle exist?
The property cycle is driven by the push and pull of supply and demand, but property markets have unique factors that set them apart:
- Finite land supply: Land of course is limited and its scarcity pushes prices higher over time.
- Constant housing demand: Housing is a constant basic need and availability is often strained during economic fluctuations.
- Investor psychology: During economic booms, optimism fuels property investments and pushes prices up. When prices outpace most peoples wages, the bubble bursts, causing a market correction.
Understanding this cycle is essential for anyone looking to buy and sell, including seasoned investors, helping them predict market trends and make better-informed decisions.
Where are we in the cycle right now?
The last significant crash phase began in 2008 which, according to the 18-year property cycle framework, would place the next expected crash phase around 2026.
However, this is just a guide, not a crystal ball. Major economic events like Brexit and COVID have disrupted the typical cycle, making it harder to pinpoint exactly where we are.
Some signs suggest the boom phase may have ended in late 2022, potentially marking the start of a crash phase. If that’s the case, we could already be a year into it.
The property cycle is complex and understanding it fully requires expert insight. Having the right property professionals in your corner can help you make informed decisions, no matter where we are in the cycle.
At Landwood, we specialise in selling a wide range of property across the UK, regularly dealing with all types of commercial sectors, land and large residential investor portfolios. As property experts, we’re ahead of the shift, adapting our strategies to target the right buyers and capitalise on the evolving market.
What does this mean for investors?
Understanding the property cycle allows investors to adapt their strategies to market conditions.
Recovery phase
- Buy undervalued properties in emerging areas – properties priced significantly lower than comparable properties in the same area
- Focus on long-term investments as the market stabilises such as commercial real estate (purchasing retail spaces, office buildings, or warehouses in recovering markets, anticipating future business growth)
Boom phase
- Sell or refinance properties to capitalise on peak values
- Leverage demand by flipping or renting at premium prices
Crash phase
- Look for bargains: distressed properties often sell at discounted prices
- Hold off on large-scale investments until the market shows signs of recovery
Final thoughts
Understanding the property cycle is a practical tool for building wealth. By recognising the patterns of recovery, boom and crash, you can position yourself for success no matter the market conditions.
The signs suggest we’re navigating the crash phase currently, with distressed sales on the rise and borrowing costs still a concern. But remember, downturns often lay the groundwork for the next recovery – bringing fresh opportunities for those ready to act strategically.
Taking your first steps in investing or considering selling your assets?
With professional insight and a clear strategy, Landwood Group is here to help you navigate the market and make confident decisions.
Get in touch with Amy Selfe, Associate Director, and the team on:
Email: agency@landwood.com
Phone: 01619670122
For more information on property markets read our latest Commercial Market & Auction Outlook HERE
