He called two property crashes: Is 2026 really next?

0:00Rob Dix:If you already own a property or two and it felt like a lot more work than it should have been, then you are not alone. We've seen a lot of portfolios over the years and what we've noticed is what separates the ones that work from the ones that don't isn't the amount of effort that someone puts in. It's the core approach that they take. The people who end up doing best in property have just got a few things right from the start and they've stuck with them. We've written all of this up into a free guide. It's basically our complete investment philosophy. And you can grab it for free at propertyhub.net slash strategy.

0:31Rob Dix:That's propertyhub.net slash strategy.

0:36Fred Harrison:Hey everyone, Robby here with Robby and you are listening to the Property Podcast. An expert has predicted that the property market will crash in 2026. This is an expert who predicted the last crash. Not only did he predict it, he predicted it down to the quarter. so we dig into exactly what he has to say and what it means for the UK property market.

1:03Rob Dix:Welcome to the property podcast. Thank you for joining us. In case you don't know, we run a company that buys more than£100 million worth of property for our clients every year. You can find out more about that at propertyhub.net slash invest. And all of our clients, all investors, everyone always wants to know, is a crash coming? So when someone with a very impressive track record says yes you're probably going to want to understand more well don't worry that is exactly what we're going to do in this episode but we'll start as ever with our news story and this one is taken from the BBC we've put a really interesting article out the other day where the title is could Manchester be a model for the UK to kickstart growth and it's basically pointing out that Manchester has grown economically at double the speed of the rest of the UK over the last decade and really telling the story that we've been talking about on the podcast for a long time.

1:50Rob Dix:So it's talking about how there are now more people moving from London to Manchester than vice versa. It's talking about how, get this, the city centre population is currently 100 ,000, is projected to reach a quarter of a million. And in 1990, it was 500. 500 people, not 500 ,000. In 1990, there were 500 people living in the city centre of Manchester. And now it's 100 ,000.

2:10Fred Harrison:That is mental.

2:12Rob Dix:Absolutely crazy. And it's just a really good article explaining like how this has happened and whether the rest of the country can learn something for it well worth a read even though we've been talking about this kind of thing for

2:22Fred Harrison:a long time it's really nice to see it all in one place it is and manchester doing so well it will

2:27Rob Bence:be no surprise to listeners of this podcast because we talked about it for years it's been a consistent hotspot pick for us over the years it's just an incredible market that goes from strength to strength we've been doing some incredible deals in manchester over the last six months we have again on the podcast talked about how the strength of the deals you can

2:45Fred Harrison:deliver right now are exceptional i'm not sure how much long that will last because there's definitely a lot more positivity in the market right now but we've locked in another deal this is not an advert but those people who work with property hub invest are seeing a deal right now exclusive to them not anywhere else on the internet but delivering yields over seven percent

3:03Rob Bence:over seven percent in manchester city center we're not talking about some random town in the middle of nowhere where you'd expect maybe a high yield as compensation for the area you've picked we're talking about the most successful city in the uk from an economic growth point of view where you can still deliver deals in this current market of that level it's absolutely bonkers that deals like

3:23Fred Harrison:this can be achieved in a place like manchester but it's still happening so what can you do just

3:30Rob Bence:wake up everyone like now is the end of a very very beautiful window for property investors i I do not think this will last much longer. Please, please take advantage of it. As I said, this is not an advert for everyone. It's just a deal that Property Hub Invest are doing right now. And by the time you inquire, it'll be gone. So it's only for existing invest clients who can take advantage of this. So if it's not an advert, what's the point of raising it? Well, the point of raising it is that you can do this in this market. In the most successful city economically in the UK, you can get yields of over 7%.

4:04Rob Bence:That is crazy. That is nuts. But this window will not last. So take advantage of it. Take action. I do not believe this will last much longer. You don't have to work with PropertyUpInvest. Just go and do a great deal somewhere in a great city. And that's exactly what we've done here.

4:21Rob Dix:Well, I'll tell you what, there's one person who will not be excited about how well Manchester is doing and who will not be excited about property at all. And in fact, is very worried and says that property prices will crash this year. And not just any person, not just that guy down the pub who's always moaning.

4:36Fred Harrison:Oh, you've met him as well.

4:38Rob Dix:I'm sure there's only one in the country. No, not him. This is Fred Harrison, the person who pioneered, popularized the idea of the 18-year property cycle, is convinced that 2026 is the year that property prices will crash. He's been saying similar for a long time, but within the last month, he's come out with another interview where he's more adamant than ever that a crash is coming. So this episode, we're going to see what he said, why he believes this is going to happen, and we're going to assess just how likely it is that he's right. So Rob, we've spoken about the 18-year property cycle many, many, many, many times, going back probably 10 years, but some people will not be overly familiar with it.

5:14Rob Dix:So maybe you should just give us a super quick rundown of what the cycle is and how it's supposed to work.

5:19Fred Harrison:Okay, this is the very quick version, but like Rob said, we've podcasted on this already many times so do go back and understand what this is all about because it is really interesting but the very short version is that the market moves in 18 year cycles after a crash you have four years of bottoming out so the prices of property will slowly fall after that crash then you have 14 years of growth now there are different things that happen within these 14 years but the important part of the 14 years is the end, particularly the last two years, so the years 17 and 18, which are called the winner's curse.

6:00Fred Harrison:And when you invest in property, 16 of the 18 years are pretty good to invest in. It's these last two years that you need to avoid, and that's why it's called the winner's curse. And that's when people are just piling into the market. It's pure speculation at that point, and people aren't investing for solid long-term reasons anymore. It's all about getting rich quickly. And that's what happens in the last two years. Then you have a crash and it all starts again. Four years of bottoming out, 14 years of growth. Now, there is a lot more to this. There's wobbles in the middle and it's all really interesting.

6:33Fred Harrison:So we'll link in the show notes to an episode that gives you much more context and much more depth on this subject. But that is the high level version. And right now, according to Fred Harrison, we are in the winner's curse stage. We're at the very end point of that cycle. Yeah.

6:50Rob Dix:Now, lots of people come out with predictions all the time. It's very cheap to come out with a prediction. You can just keep throwing them out there and occasionally you're right and you can point to that one and everyone forgets the others. But Fred Harrison is worth taking seriously because he doesn't do that. He's got this one theory and in the recent past, it has worked. So he correctly predicted the crash of 1990. Then count forward 18 years, you get to 2008. He correctly predicted that one as well. He was warning government about that years in advance and telling them how they could prevent it.

7:16Rob Dix:But of course, they didn't pay attention and it happened anyway. And he is sticking to his guns. He believes 2026 will be the year of the next crash. And let's acknowledge, that really doesn't feel right. If you look at the market right now, are prices flying up? Are we in a speculative frenzy? Does it feel like 2007? Obviously not. Given his track record, it's worth taking seriously what he's saying and trying to understand it a bit better.

7:39Fred Harrison:Now for the last few years Fred Harrison has stuck to 2026 will be the year that property prices crash because that's what he believes that's his whole thing the 18-year property cycle but in the last month he's given us an update on his beliefs and he is still very much committed to this idea that property prices will crash in 2026 but the great thing is we've got a bit more detail now so Rob what did he actually say?

8:04Rob Dix:So he basically believes that late 2026 will be the peak. And probably the most surprising thing is that he believes that there'll be a 15 % growth in property prices between now and then. So he's not saying that right now this is the peak. He's saying that we're about to have this giant run-up in prices that will then culminate in the bubble bursting. So why will the bubble burst? Well, he says that it'll be blamed on some kind of geopolitical conflict, some big event somewhere in the world, or maybe even the AI bubble bursting and affecting the stock market, which brings down everything else.

8:35Rob Dix:He says that that's what's going to be blamed for the collapse. So the root cause is going to be basically the same as it always has been, debt. Because people, companies, governments have now got more debt than ever. It's going to become impossible for them to service that debt, and there's going to be a collapse. And he believes that this collapse goes far beyond property. It's going to be a major, major crisis because central banks can't print their way out of it in the same way as they did last time. Remember, the way that we got out of the last financial crisis was by creating even more debt.

9:04Rob Dix:And those debt levels are now such that it's endangering things yet again, and printing even more cannot be the solution. So, Rob, that's what he believes. We need to take him seriously. But it's hard to know where to start unpacking all this.

9:17Fred Harrison:I think it's worth saying that for many, many years, we also believed in the 18-year property cycle and I think it's a fair argument to make that for the first part of the cycle it followed along what you'd expect in the 18-year property cycle again if you don't fully understand what to expect in the cycle go and listen to the episodes in the show notes that we've linked to but it did follow along where it absolutely deviated though and this is where I think I changed my opinion

9:46Rob Bence:quite quickly and I think you came around to it not a similar point as well is that COVID's changed things.

9:53Fred Harrison:So Fred Harrison acknowledges that the only time that he can find in history that the 18-year property cycle has not worked is around world wars. And it just did not work then because the world was just a completely different place. It wasn't operating in a normal, rational way. And the 18-year property cycle didn't play out because he says he's gone back through hundreds of years of data to show that this 18-year property cycle hasn't just happened a couple

10:21Rob Bence:times it's happened many many many times over but the only times it's not happened is around the world wars one and two now why we believe the 18-year property cycle is broken is that covid broke it covid was a world changing event like a world war obviously very very different two very different disasters in very different ways but ultimately it changed the world because of covid and other reasons but the main driver being COVID the 18-year property cycle was broken that's our belief but this isn't a oh well who you're going to believe episode we need to justify

11:00Fred Harrison:why we believe it is broken and we're not fearful at all of a market crash but let's go into the reasons because it's all about the education it's all about the knowledge because without the knowledge you're just listening to opinions but with knowledge you're able to make informed

11:15Rob Dix:decisions yourself yeah so the first big reason for me why a crash just doesn't seem on the cards is that markets don't crash from a point of stagnation and pessimism which is where we are now let's be honest sentiment around property is incredibly poor well to put it another way rob

11:33Fred Harrison:you see a boom before a crash that is what you see through history you see the market booming any market any market tends to boom if you think about bitcoin the crashes happen after massive surges. If you look at the last property market cycle, we had a huge boom and then you have a crash. That's what you expect to see. But like you've rightly pointed out, there is no boom here. And actually, it's far away from boom territory.

11:57Rob Dix:Exactly. And you can contrast it with 2006, 2007, which was the boom. That's when you had literally 125 % mortgages, but not just no money down. You could buy a house with no money and they'd give you money. You had people flipping off plan properties. They were buying properties off plan and then flipping them on and then they was flipping them on before construction even completed. We're so far away from that now. And for the cycle to work, it relies on hitting this endpoint of speculation, lessons from last time being forgotten, lending standards being loosened. And interestingly, I think Fred Harrison is acknowledging that in this interview, because he's not actually saying that property prices are going to crash from here.

12:31Rob Dix:He's saying there's going to be a last minute, really quick run up, like a last ditch frenzy, and then the crash happens from there. So I think he's tacitly acknowledging this point. What I find so hard to believe, Rob, is that that's going to happen. So it may well be that property prices do better this year than we predicted they would in January. But a run-up of that magnitude from here to a speculative frenzy, from here to banks throwing caution out the window and going nuts, if you're taking the uncharitable view, it sounds a bit like he's really clinging to the timing and therefore trying to compress everything into a very short space of time when the evidence doesn't suggest it may well be missing something but it just seems

13:10Rob Bence:so unlikely well i agree rob because it's only one year of growth as well we have to remember that he's saying it's going to be 15 which is a lot in a year it is it is way above average but we've had way below average for many years as well and in the last cycle property prices doubled in five years. So from 2003 to 2008, property prices doubled. That's the boom there. Now that is a boom. Property prices doubling in just five years. What he's saying here is we'll have one year of 15%. So it technically is a boom, but it's not anything like previous cycles we've had. Again, the cycle before, very, very fast growth.

13:51Rob Bence:The cycle before that, extremely fast growth. In fact, in the 70s, property prices doubled in even the shorter space of time so we have seen booms in the past and then a bust but the boom goes on for many years but what he's saying here is we're just going to have one year of it and then it's all going to crash after that year it's very hard for us at least to buy into that especially when you you talk about that loose lending rob and i want to pick up on something else you've said rob you talked about loose lending and lessons being forgotten and that's not happened either because the mortgage market is very sensible at the moment there are stress tests to make sure that people can afford the mortgages they're going into both for buy to let and residential and that's evident when we look at what happened in the UK property market when interest rates rocketed up now lots of people said oh well this is going to cause lots of repossessions now it was an absolute squeeze on households and people did struggle and I'm not saying that was a nice time for everyone but what we didn't have is waves and waves of repossessions happening because we had these stress tests in place and we didn't have irresponsible lending.

15:02Rob Bence:There's no such thing as 125 % mortgages. They don't exist and the vast majority of mortgage products require you to put a good deposit down. In buy to let the standard is 25%. In the previous cycle, the average was 85 % and you could do 95 % by flat mortgages as well. That might sound great, but that looser lending absolutely aided a massive boom. And we don't have loose lending. And that's because the finance sector still remembers the last crash and has prevented loose lending by these stress tests that are enforced. It's not a recommendation, they're enforced.

15:41Rob Dix:Yeah, so Harrison seems to be saying that this is all going to change, that lending standards will be loosened, that more and more money will be pumped into the property market and we'll have that frenzy. And it could happen. It would just need to happen so quickly and it seems so unlikely. But there's another key reason why we've drifted away from the property cycle. And this is that the crash has actually already happened, at least once you adjust for inflation. And this, Rob, is where we get into some truly incredible facts, which we will have mentioned on the podcast before, but it's well worth emphasising because the numbers are amazing.