ASK525: Has the market just crashed? PLUS: Should I make these upgrades now or wait?

0:02Rob B:Hi, I'm Rob. And I'm Rob. And this is Ask Rob and Rob. Hey everyone, it's Ask Rob and Rob, the show where you get your questions in, predominantly property related. Sometimes you go a little off piece, but we don't mind that. And we do our very, very best to give you a good answer in return. We've done this over 500 times now, so we're well versed. But luckily, you always have a lot of questions and we'll guide you now to the place you can go to ask some more.

0:29Rob D:Yep, it's just one destination, propertyhub.net slash ask. If you go there, you can leave us a question in written form for our Sunday Times column, or you can get yourself on the show and be the envy of all your friends by leaving us a voice note.

0:42Rob B:Okay, let's listen to our first question in from Phil. Hi, Rob and Rob. This is Phil from Liverpool, long time listener. My question is regarding the 18-year property cycle. You released a podcast where you sort of alluded to how perhaps you don't believe so much in the 18-year property cycle. And then literally a week or so later, the war in Iran started. And obviously now oil prices are going up and up and up. And I keep hearing in the news about how this could be devastating for the global economy. and I'm just thinking and wondering what your take is now on the 18-year property cycle. I can't help but think that this could be the trigger point for the end of this current cycle and the start of the next.

1:36Rob B:At some point over the next few months or indeed the next year, something happening that's going to cause a major global financial crash, obviously triggering then the four years of property crash as dictated by the cycle obviously fred harrison said that it would be later in 2026 and of course the crash hasn't happened yet so it could be later in 2026 but i fear that it could even be happening right now and we just don't know it yet it could of course be something a bit more obvious that happens later in the year but i'm just wondering what your thoughts are now on the 18-year property cycle given everything that's happening in the world okay thanks and keep up the good work phil being from liverpool i had to answer your question okay great question love this question because you have thought about this and there's probably others as well they've been listening to podcasts for a long time now and heard us talk about the 18-year property cycle.

2:39Rob B:So I think it's clear to say that from at least my point of view, and I think Rob's in a similar place, that the 18-year property cycle is null and void this time around. Now, that is absolutely in a very different place and position to what Fred Harrison, the person who popularised the 18-year property cycle, says. And as you've quite rightly pointed out he believes that there'll be a crash in 2026. We're five months into the year and that has not happened so far but could the Iran war be the trigger? Well first of all if it went absolutely crazy and we go to extremes here and I do not think this will happen I don't think anyone else would happen I don't think anybody in charge of the world would say this would happen but let's say it just went to nuclear war, things like that, then yes, I could see a crash happening.

3:33Rob B:But if that happens, you've got bigger things to worry about than the UK property market. So unless the extremes happen, I do not believe that we will see a crash this year. And for the main reason being that we haven't really had a cycle. You talk about the current cycle, but we've had the worst property cycle in terms of growth on record. If you look back through all the data and the best set of data that we have for the UK is nationwide. It goes all the way back to the 50s. If you look at that data, we are in the worst ever property cycle for growth. It has taken the longest for property to double in price.

4:11Rob B:In fact, we're still waiting for it to double after the 08 crash. That's the longest it's ever been and every day that passes that it still hasn't happened. A new record is set. So we haven't had a boom. Booms normally proceed a crash. So you have a boom, you have speculation, you have loose and irresponsible lending, and then a crash happens off the back of it. We haven't had any of that. We don't have people being forced to sell. We don't have high interest rates. We just don't have anything to be triggered unless we had a catastrophic worldwide event. But we didn't even have property crash in COVID.

4:49Rob B:And in fact, we saw property prices go through a tiny mini boom at one point when we went through COVID. It was very short-lived. But my point being that that's a much bigger trigger, a potential trigger in terms of world events than what's currently happened in Iran. But yet, nothing happened to the property market other than some growth because we haven't had all the things I've talked about. Lending is responsible at the moment. It won't be at some point in the future because we forget the lessons, but it is. It is right now. Interest rates are historically low. Affordability is really good.

5:23Rob B:We haven't had a boom, and this is the longest it's ever taken for property to double. There are so many reasons stacked in the camp of that we will not see a crash this year that I feel really confident, confident enough to go out on record. And I would look very silly if it does crash. So I have to have complete conviction to be able to be so strongly viewed on this. But I am. I just cannot see a normal world. So all things being equal, as economists like to say, with all things being equal, where a property crash comes from. So I can't see it happening, Phil. But Fred Harrison's a pretty smart guy.

6:01Rob B:So I may be very wrong. But we've only got seven more months to find out. So let's see.

6:06Rob D:Okay, let's have our next question now from Pete. Hi, Rob. I'm Rob. My name is Pete. I'm a property investor based in South Wales. I've been an avid listener of the Property Podcast since around 2017 and since that time have built up a portfolio of six properties. My question today is regarding the EPC changes both in terms of the new modelling that's going to come out and also the legislation that's proposed for all tenancies to have an EPC of C or above by 2030. A couple of our houses have a current rating of D and one has an E. All our properties are currently tenanted. So would you be looking to do the upgrades required to get to a C now or wait until further details are released from the government as to exactly when the changes will be enforced?

6:59Rob D:Keep it the good work and look forward to your answer. Thank you. Pete, thank you for your question. We've actually covered this recently in our Sunday Times column and we'll be covering this on a YouTube video which if that hasn't gone live yet it will be very soon so you may want to check those out for a longer version of this answer and as part of that we've actually crunched all the data for every EPC that exists 20 million of them and pulled out some really interesting stats but what matters for your purpose is what should you do. The conclusion that I've come to having gone through all of this is that the best to do is wait.

7:32Rob D:And the reason for that is that the methodology is changing. So the government, being the government, is doing two contradictory things at the same time. Hey, you've got to get up to a C by 2030. But we're not going to tell you until late 2027 what you need to do to achieve a C because they're changing how EPCs are measured, which makes sense because the way they work now is insane. So there'll be a change for the better, but it's pretty mad that they're doing this at the same time as having this deadline in place. As a result, I think the best thing to do is to wait, because when the methodology changes, it might be that as a result of that, your D's will go up to C's anyway, and you won't need to do anything.

8:10Rob D:Or it may be that there are cheaper fixes available to get up to a C. Or it might be that you do something really expensive to get up to a C now, you get your EPC, that'll be valid for 10 years, so that's fine. Even if the methodology changes, you're still okay but it wouldn't have been needed under the new system anyway so i don't see what's to lose from waiting what i personally do is wait for things to get clearer to know what the new rules are going to be how it's going to be measured and then you've got at least two years to get it done you'll then use breaks in tenancy to get the work done without it being disruptive i say at least two years because the deadline is supposedly 2030 by the way this is not a deadline in law yet they'll be very easy for that deadline to be pushed back i think something's got to give either the deadline gets pushed back or it gets made easier to pass because as it stands like hundreds of thousands if not a million plus rental homes are suddenly going to become illegal to rent out that's not going to happen we know that's not an option so something else has got to give so i'd say pete don't ignore the situation have a look at your epcs now see what it recommends get a sense of what it is that you're looking at as things stand.

9:15Rob D:Stay engaged with the news as changes are announced. You can use our newsletter to do that, propertyhub.net slash pulse. And of course, we'll be talking about it here on the podcast as well. And use that to act when the time is right. But I would say this is certainly not something you need to be rushing to do anything about right now.

9:32Rob B:So that's just done for another week. Thank you for listening. We'll be back with the main event, the Property Podcast on Thursday. Until then, take care, have fun. Bye-bye.

9:40Rob D:Bye-bye. Thank you.