The Secret Of Property Investing

We all see professionals, experts, gurus and charlatans purporting to be able to help you succeed with property, but do any of them really know the answer or are they all just after your money?  Seven years ago, I saw the perfect answer to how the property market works and what you need to do to profit from it.  Here it is.... 

What Did I See In 2017?

It was an email and this is what it said:  

 UK property developer, banker and financial analyst reveals the secret that forecast the property bust of 2008 years in advance: "If you own a home with a UK postcode, do NOT buy, sell or even think about property until you've seen this." It's the "missing link" that explains every real estate boom and bust in Britain for the past 232 years… But I can guarantee you WON'T hear this crucial fact about house prices from your estate agent, mortgage broker or on Rightmove. It may shock you. But it could also make a £193,000 difference to your finances in the next four years (and stop you making a huge mistake with your property).

"I didn't listen the first time. That was in 2010. It's cost me millions. Potential millions. Because if I had listened to the advice… I'd be in a completely different place today." Ejay "It feels almost unfair to possess [this] advantage." RE Dogan

Dear homeowner,

Good old bricks and mortar – we Brits love it!

Let's face it – property is virtually a national obsession here in Britain. It's part of who we are.

We complain about the weather, we're world class at forming a queue and we love to fixate on property prices.

It's easy to see why.

Your home is the biggest single investment you'll ever make. It's by far the most important. It surpasses stocks and bonds as the #1 investment in the UK.

And for most of us, it's the only real shot we have at getting rich…

I mean, everyone knows someone who has made a fortune from property. I know I do. That lucky b*****d who bought in London just as the market turned in the 1990s… then made a fortune.

Or the friend of a friend who bought a couple of flats on the cheap in 2001… right before the biggest property boom in UK history (and then somehow got out right at the top in 2008).

I bet you know someone similar. Some people just seem to have the magic touch when it comes to cashing in on property.

But what if I was to tell you that there's a CRUCIAL piece of information about UK property virtually no one in Britain knows about.

A "missing link" – with two centuries of hard data to back it up – that explains exactly where prices are going next, when they're going to boom, and when you need to get out…

What if… once you understand this idea… you'd see there is NO mystery to when property prices rise and fall.

None.

Financial crises… major property crashes… huge booms like we saw in the early 2000s… it's all laid out for you, once you understand this idea.

But unfortunately, most people have never even heard of this… never mind understand it.

That's especially true for people who get all their information from The Guardian, The Telegraph, Bloomberg or the mainstream TV news.

Without this crucial fact to guide them… they're completely in the dark.

And as you're about to see, that lack of insight could be about to cost a lot of people a LOT of money. As much as £193,000 in the next four years, in fact.

Give me just a few minutes of your time and I'll show you why.

It comes direct from a property developer, banker and financial analyst. Right now, he's using this secret to line up at least two major property deals (that I know), both of which he expects to make a fortune on.

That might sound crazy to you. After all, with Brexit, the election and a house price "bubble" in the press almost daily… people are worried.

Not this guy.

He's completely calm about it all.

Why? Because he already knows when the market will drop, and by how much.

I'll show you how in this letter.

In short, this crucial fact about property prices will make a massive difference to your finances. And the financial media has completely overlooked it.

This secret would have saved hundreds of thousands of people from the negative equity nightmare of the early 90s (and made a fortune for thousands more).

It would have protected thousands from the housing crisis of 1972/3. In fact, it'd help you protect yourself and profit from every housing bust going back to the 1800s.

That includes the 2008 bust and banking collapse. As I'll show you, 2008 wasn't a "black swan" at all. Some people had it marked on their calendars years ahead of time. They made a fortune from the boom, and got out before the bust.

But here's the thing…

This has absolutely nothing to do with any of the normal "drivers" of the property market you see discussed in the press.

I'm talking about things like the "affordability ratio" (earnings to price)… interest rates… new home builds… mortgage approvals.

According to my source… none of that matters.

What is REALLY moving the markets is something else entirely.

Put simply, once you understand this single, powerful idea about the property markets… you'll be able to know EXACTLY when your house – any UK house – is going to go up, drop suddenly back, or trend sideways.

Some people think that's crazy.

Let them scoff. I'm not here to tell you the mainstream press has it completely wrong on UK property…

I'm here to SHOW YOU.

If you take one thing away from this letter it should be this:

Do NOT rely on the mainstream press for any real insight on the property market.

Sure, you'll get information…

Prices in the north up 3%. New mortgage approvals down 10%. Interest rates on the rise. That sort of thing.

It's all just noise. It's reporting what's going on. But it doesn't tell you anything.

None of it EXPLAINS what's happening… and none of it PREDICTS what will happen."

The letter then goes on at length (about 5 pages) showing examples of how the press get it wrong - I have deleted that to save wasting your time.

The letter then continues:

"Between July 2000 and July 2003 the median UK house price rose from £80,935 to £129,761.

A 60% rise in just three years.

Pretty much every "expert" believed a correction was coming.

But they were WRONG.

By July 2007 the median price was at £184,131.

In the four years following the mainstream call that property would fall… the price of the average house soared £55,000

Laughable, isn't it?

Yes, The Economist said that "sooner or later" prices would fall. But what use is that to you?

"Sooner or later" the sun will explode. So what? It doesn't help you make better decisions with your money, does it?

What you need is specificity.

You need to see big moves – up OR down – coming ahead of time.

Affordability… interest rates… rising prices… it might all SEEM important if you're just reporting what's happening.

But if you want to understand and predict where prices are going… they're useless.

Or rather,

A crucial fact about property that both explains and predicts – with a startling level of specificity – what's coming.

I was recently introduced to a group of analysts who've dedicated their careers to understanding and profiting from this insight.

In contrast to the mainstream press… their track record is incredible.

In 2003 they said to ignore the press and buy property. In fact, they said that property would boom for another three years… to be followed by a bust, and banking crisis.

They were right. They stayed in the market for the biggest gains… then got out before things turned down.

By 2011, they were telling people to get back into the market… right before prices started rising once again.

The same was true in the early 90s. The major falls in 1992 and 1993 weren't surprises to these guys…

They saw the booms and the busts coming.

In fact, these guys had every major property turning point marked on a calendar YEARS in advance.

You don't have to take my word for it.

These guys shared their predictions with a handful of private investors like you. They were able to help people cash in on this idea in real time. As you'd expect, those investors are pretty satisfied right now…

One person called this crucial property secret "the missing piece" when it comes to making decisions with you money.

Another told me it helped him "avoid getting caught up in short-term market corrections".

Another told me, "I didn't listen the first time. That was in 2010. It's cost me millions. Potential millions. Because if I had listened to the advice… I'd be in a completely different place today."

And another told me he thinks it's "almost unfair to possess [this] advantage".

I'd have to disagree there.

It's not unfair.

It's just SMART.

This one, crucial yet overlooked idea explains everything you need to know about the UK property market.

If you're anything like other people I've shown this to, you'll find that things suddenly "click". You'll be able to look at the property market and see things other people are simply blind to.

It's like a magic eye picture. The answer is right there in in front of you the whole time.

And once you know what you're looking for, everything becomes simple and obvious.

Once we're done today, you'll see:

How to accurately predict the price of any UK property in the next 2, 3, 5 and 10 years.

How to know if your home is about to lose 30% of its value or more (and take steps to avoid it).

The single best place to buy a property in the UK today (you could make a fortune from this piece of advice alone).

How to avoid making a massive mistake with your property – this could make a £193,000 difference to your finances.

But first, the big question is…

What IS this secret… and how on earth does it predict property prices so well?

During the Scientific Revolution in the 17th century, the world's top minds were driven on by a simple guiding principle.

It was called "the watchmaker argument".

As Sir Isaac Newton put it, he saw a "mechanical perfection" in the workings of the universe, similar to the intricacies of a fine watch.

In the same way a watchmaker understands the mechanics of a clock, Newton was driven to understand the underlying laws that explained and governed the universe.

He succeeded, with his three laws of motion expanding our understanding of how the universe worked.

In short, he found that beneath the external CHAOS of the universe… there was underlying ORDER.

The market secret I want to share with you works on EXACTLY THE SAME PRINCIPLE.

Beneath the "noise" of the markets… there's an underlying order.

Understand this order and you understand everything.

You see, there IS an underlying fabric governing the direction and motion of prices in the market.

At its core – the mechanism at the heart of the watch – is something most financial professionals never bother to look at.

It's not interest rates, credit cycles or monetary policy…

It's not stocks… bonds… commodities… even property prices.

It's more important.

It's more FUNDAMENTAL.

The secret is land.

Specifically, the way land prices move… and govern… the rest of the economy…

Before you can understand and forecast property prices, you need to understand how land prices move.

This is because of something called "the economic rent". It's the most important secret in the financial world.

And it IS a secret. No other research group I know of focuses on economic rent.

More fool them.

Because this is the heart of everything.

The economic rent is the secret sauce of the investing world. Why have the Grosvenors, the Cadogans and the de Waldens remained so ultra-wealthy over centuries?

Why do banks make such a fortune from issuing mortgages? Why do we all know that property can be so profitable when you get it right?

It all comes down to the economic rent.

The economic rent is to finance what gravity is to physics… the foundation principle.

In simple terms, economic rent dictates that ALL economic growth – from infrastructure, new technology, public and private investment, you name it – is "captured" by land prices FIRST.

When new transport links are built – railways, motorways, bridges…

When a major business opens a new factory to spur growth…

When new industries emerge in a town or city…

Its first gains always go to LAND PRICES.

Land appreciates in response to economic growth, which in turn drives property prices… stock prices… commodity prices… everything.

I bet you've never heard that before, have you? We're a nation obsessed with property… but no one understands land at all.

And here's the thing…

The way land prices move in the UK (and in the US) corresponds to a very strict, regular pattern.

The small group of researchers I've been telling you about figured this out years ago.

It started when they dug out, dusted-off and marshalled dozens of sources on booms and busts in the markets...

...their origins, their mechanics and their dynamics.

Some of those sources are old and ignored. Some are recent and ignored.

The epiphany finally came when they pieced together American land sale data dating back over 200 years.

They were astonished to see that – because of the economic rent – American land values move in a predictable multi-year pattern.

According to these property obsessives, this pattern has been proven right – almost to the month – since 1784.

Look at the chart below

Average out the distance between every peak in American land sales since 1800 and 1910.

What do you get?

18 years.

What do you get after each 18-year peak?

A recession and property bust: 1818, 1836, 1854, 1872 and so on.

They found every major recession in the US between 1800 and 1900 occurred, on average, 18 years apart.

So that was the first epiphany.

Property busts are linked to an 18-year land cycle

This is actually a radical departure from mainstream thinking: which is that those peaks were caused by credit bubbles.

They weren't.

These guys discovered that it's all about the LAND.

Bank credit blows up and deflates in synch with this land cycle.

Not the other way around.

But again: why should you care about all this here in the UK?

That's where the second part comes in...

So what happens inside this Cycle?

THE ANSWER IS THE SAME, EVERY TIME...

At the beginning of an 18-year cycle, land values (and thus house prices) rise for about 14 years, as the charts to the right prove.

Then they hit a peak.

The banks that financed the land boom via huge credit growth get into trouble.

When banks struggle, credit contracts, property falls and the stockmarket follows suit.

And there's the key:

The stockmarket crash is effectively caused by the real estate downturn.

The real estate downturn tends to last, on average, around four years.

Then economic expansion begins again.

In the four years that follow the bottom of the stockmarket, new business generation leads to a recovery in stocks.

The stockmarket always recovers first.

The property market recovery follows...and the cycle begins anew.

Fourteen years up, four down. Which is why these guys call this the "Grand Cycle":

They didn't just pull this equation from thin air. They pulled it from history.

Here, take a look at this... 

The letter went on with another 10 pages of examples, charts and graphs which I can share if anyone really wants them, then ended with the following predictions:

1. The UK property market will stall in 2019

2. There will be a huge boom 2020-2024

3. Prices will continue to explode upwards until 2026

4. Then there will be a crash as the market resets and another cycle starts.... 

It then continued with another 10 pages of justification and encouragement to sign up for a comparatively expensive newsletter.

What Did I Do?

Firstly I followed the primary rule of property investing - assume any prediction is inaccurate.  If things were that predictable everyone would be millionaires.

Secondly, I popped this 2017 letter in my diary and it re-appeared as planned on the 1st January 2024 where, if it had been correct, we would have just seen a sustained period of property price growth, we would be expecting an imminent crash but the 'cycle' predicted prices would rise for another 2 years.

From the vantage point of 2024, it is obvious that this 'pattern' may or may not have been true for the past 200 years, but it is not working this time and therefore, is not worth following.

That is the trouble with most forecasting - as humans we have evolved to see patterns, it has helped us survive in the wild back in the days when we were nearer primate than human and today, that wiring drives our brains to look for patterns everywhere.  However, just because we find one, that does not mean it is anything more than coincidence at best and at worst, our brains manipulating or selecting data points to suit the pattern we think we are seeing.  

Apologies if you feel you have wasted 5 minutes of your life reading thus far, but remember, it is one more example of the basics of property investment:

1. If you want to get rich with property, start with a pot of money and then wait a very long time

2. Ignore gurus and predictions, if it was so good they would keep it to themselves

3. Make sure you only sell when the market is up, avoiding having to sell when it is not

4. And accept that after taxes and allowing for inflation, it is never as good an investment as everyone says it is...