Timing the Cycle

Phil Anderson (Catherine Cashmore) 

Written for Cycles Trends & Forecasts

A reality not just a dream’, I reported on the UK government’s budget that was handed down back in November 2017.

You can read that update here.

Chancellor of the Exchequer Phillip Hammond put the housing market right in the middle of his budget. As he outlined in a speech to parliament, young people are being priced out of the housing market.

Commenting on the crisis just the day before, The Financial Times put it this way:

‘The cost and availability of housing has become a potent political issue [sic] in the UK, where younger people especially are being priced out of the market while their parents and grandparents benefit from decades of above-inflation rises in home values.

‘The ruling Conservatives, traditionally the party of home ownership, now finds itself shunned by millennial voters frustrated by spiralling housing cost.

‘So far, the response has been to provide subsidy to renters and buyers, and to exhort the construction industry to build more.’

So it’s more of the same, in other words.

The problem is NOT a shortage of housing. It’s a misnomer.

Figures from the UK Office for National Statistics tell us there were 27.2 million households in the UK in 2016. There were 28 million dwellings available in the UK in 2014, the last year for which UK-wide figures are available.

Even allowing for second homes and those homes that are temporarily empty, there are more dwellings in the UK than there are households.

Australia is similar.

Catherine Cashmore reported on this for you in her Speculative Vacancies report a couple of years ago.

This is an important study that I urge you to take the time to read. I wrote this up for you in your Cycles, Trends and Forecasts Special Report: ‘The Cashmore Files’. You can read that here.

So the chancellor believes British house prices are high because the country has not built enough houses. The solution, then, appears obvious — build more homes.

The 1951 UK Macmillan government said the same thing.

Harold MacMillan was also the housing minister in the 1951 to 1955 conservative government. It came to power back then promising to give housing a priority second only to national defense.

A construction boom (frenzy really) followed after credit and mortgage laws were liberalised to get even more houses built.

Credit rules were relaxed even further in the 1980s. This was when Margaret Thatcher attempted to get all British people into their own homes — again after the alleged shortage of houses in Britain was brought to her attention.

The result back then was the same as it will be going forward: An almighty land boom, followed by an almighty bust.  

Here at Anderson Cashmore we can teach you how to time the cycle to reap the rewards of the boom and avoid the bust.



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