All posts by Bryan Kavanagh

I'm a real estate valuer who worked in the Australian Taxation Office (ATO) and Commonwealth Bank of Australia (CBA) before co-founding Westlink Consulting, a real estate valuation practice. I discovered, by leaving publicly-generated land rents to be privately capitalised by banks and individuals into escalating land price bubbles, this generates repetitive recessions and financial depressions. We need a tax-switch: from wages, profits and commodities onto economic rents/unearned incomes, if we are to create prosperity and minimise excessive private debt.


JM Keynes


A key point emerging from the COVID-19 crisis is that we’ve seen that governments may spend money in support of people and businesses without the world coming to an end.

This comes as bad news for those who have long lambasted John Maynard Keynes for suggesting governments may flow into the socio-economic void during economic downturns.

Shorn of its hokum, the neoliberalist case for balanced or surplus budgets–put by the Reagan, Thatcher, Hawke/Keating, Howard and Blair governments–were arguments in favour of greed, private rent-seeking and the selling off of public assets for which our forebears had worked very hard.

The long and short of it is that people do matter, and that there is such a thing as ‘society’.

We need to build upon that understanding and espy that the taxing of labour and capital are literally counterproductive, and that society’s best interests lie in the public capture of publicly-generated ground rent. This was well understood by classical economists, before speculation and greed became the name of the game and was blessed by the advent of neoclassical economics.

“DAILY MAIL” 1 June 2021

‘House prices will boom before crashing in 2026’: We speak to the man who forecast the last two slumps, but will his 18-year property cycle be right again?

 Fred Harrison conceived the concept of the 18 year property cycle. He correctly predicted both the 2008 and 1990 property crashes. He now predicts the UK will suffer its next major house price crash in 2026  


Anybody predicting the average house price would rise 10 per cent during the lockdowns would probably have been laughed out of the room as the pandemic hit. 

The exact opposite was on most expert minds: Knight Frank predicted property prices would fall 7 per cent, while Savills forecast a 10 per cent fall. The Bank of England was even gloomier – predicting that house prices in Britain would fall 16 per cent due to the coronavirus economic crash. 

If the Bank of England and the property industry itself isn’t capable of predicting the future of house prices, who then would be bold enough to do so?

Well, one man is happy to give it a try – and what’s more, time and time again he has got it right.

Fred Harrison, a British author and economic commentator, successfully predicted the previous two property crashes years before they occurred – and his 18-year property cycle theory says that house prices should continue to boom before crashing in 2026.

Nationwide’s house price index can be mapped reasonably well to the 18-year property cycle pattern, which we would be currently 13 years into under the theory

In his book, The Power in the Land, published in 1983, Harrison, correctly forecast property prices would peak in 1989 as well as the recession that followed it.

In 2005, he published Boom Bust: House Prices, Banking and the Depression of 2010, in which he successfully forecast the 2007 peak in house prices and ensuing depression.

Fred Harrison developed the concept of the 18-year property cycle after mapping out hundreds of years’ worth of data

According to Harrison, he had already predicted the 2008 crash at least a decade before.

‘When Tony Blair and Gordon Brown entered Downing Street in 1997, I wrote to them and others, including Alastair Campbell, to explain they had 10 years in which to prevent house prices peaking in 2007,’ says Harrison.

‘I explained that house prices in the UK would peak in the final quarter of 2007 and that this would be followed by a global depression.

‘The 2008 financial crisis could have been avoided, except that Blair’s government failed to heed my warning.

‘HM Treasury did not take a blind bit of notice of my analysis and the UK paid the price with 10 years of austerity’

In his most recent book, We Are Rent, Harrison predicts house prices will next peak in 2026 before we are hit by a recession that will eclipse the events of 2008.

The 18-year property cycle theory 

He is able to make these predictions having identified an 18-year cycle that he has mapped out from hundreds of years’ worth of data.

‘Back in the 1930s, an 18-year business cycle was identified for trends in the city of Chicago,’ explains Harrison.

‘It rested on a theory about the land market, which operated on a 14-year cycle.

‘I checked the theory against US-wide evidence for the 19th century and cross-checked the theory against the diverse cultural and geographic evidence from Japan and Australia over the 20th century.

‘And I identified the cycle as operating within the UK for at least 300 years.’

Although the property cycle is not an exact timeline, according to Harrison, it is made up of two main phases.

After a crash happens the market will take about four years to restart its upward trajectory again.

Then begins six or seven years of modest growth in what is known as the recovery phase.

Next, there is a mid-cycle dip, often a one or two-year downturn in the market, before a final boom phase ensues.

The final boom typically lasts for another six or seven years and this is where prices, on average, grow more than at any other point in the cycle.

‘There are two phases within the 18-year cycle, divided by the mid-cycle downturn,’ says Harrison.

‘There are ups-and-downs within each of the two halves; but the trend is inexorably upwards towards the final peak.’

What drives the house price cycle?

Many property commentators believe house prices in the past year have been driven up by low interest rates, the stamp duty holiday and people’s desperation to move in the wake of the pandemic.

According to Harrison, although these all combine to substantially inflate prices, the underlying force behind rising prices in the property market is the finite supply of land.

This then combines with greed and speculation to turbo-charge sentiment and send prices spiralling before a bubble bursts. 

As our population and economy grows, our demand for new housing increases, forcing prices up.

Without the land supply to satisfy demand, property prices rise, causing banks to lend more against escalating asset values further reinforcing an upward spiral.

People begin to regard property as a safe haven for their money and a reliable investment vehicle meaning prices are further propelled by the appeal of capital gains.

‘Low interest rates certainly inflate prices whilst Covid and government interventions such as Help to Buy have short lasting impacts, but these will not shape the trend,’ says Harrison.

‘What counts is the innate characteristics of the land market, plus our desire for capital gains.

‘The driving force is the unique characteristic of land: they ain’t makin’ any more of it and the supply is fixed in the locations where people want to live or work.

‘On top of that natural phenomenon is the speculative habit of exploiting this market for additional capital gains.

‘Its effects help to elevate prices above what they otherwise would be and will drive the cycle towards the collapse.’

Could Covid-19 impact the 18-year cycle?

Harrison said he had to seriously considered whether the pandemic might end up delaying the boom phase of the cycle.

‘The evidence reinforced my view that the virus did not have the power to stall the cycle,’ says Harrison.

‘I concluded that the 2020s would be a re-run of the years after the flu pandemic of 1918, which terminated with the Crash of 1929.

‘There might be a short-term easing off, as the post-pandemic world returns to something akin to normal, but the price trend will continue upwards.’

Where are we in the cycle?

If Harrison’s 18-year property forecast is to be believed, it would mean we are right at the beginning of the boom phase.

For the UK, he points to the evidence of the mid-cycle wobble in 2019 when average house prices increased by just 0.6 per cent in the year to August 2019, according to ONS figures. 

‘Each 18-year cycle has a mid-cycle downturn,’ says Harrison.

‘For the current cycle, that was 2019 and sure enough, there was an on-time downturn.’

The graph from HM Land Registry shows the peak in prices for the previous cycle as June 2007 (+10.6%) followed by the slump in prices, just as Harrison had forecast.

When will the next crash happen?

Harrison is adamant that a crash will take place about five years from now and he wants people to at least be aware.

‘The overall trend from here is up and up – squeezing peoples purchasing power till the music stops in 2026,’ explains Harrison.

‘House prices will peak in 2026 followed by a recession that will eclipse what happened in 2008.

‘Then, everyone will be shocked, and people will wonder why they were not warned.

‘I have written to Boris Johnson and Rishi Sunak to explain the consequences of not stabilising the housing market, but I do not expect the government to take constructive action.’

But until 2026, according to Harrison, we can expect prices to continue booming.

‘This trend is built into the DNA of the financial model, which is treated as sacrosanct,’ he says.

‘Young people will continue to be squeezed out of the housing market.

‘The capital gains will continue to roll in until once again, the merry-go-round comes to an abrupt halt.’

What will cause the market to crash?

There is no denying that house prices look expensive based on peoples’ average incomes.

The average house in the UK currently costs more than eight-times average earnings, according to the latest research by fund manager Schroders.

This eight-times-earnings level has only been breached twice previously in the past 120 years, once just prior to the start of the financial crisis and once around the start of the 20th century.

Are prices too expensive? Average house prices are now over 8 times the average earnings of people in the UK. For the majority of the 20th century the ratio has been far lower.

Some might point to this as clear evidence that current UK property prices are not sustainable.

But Harrison believes at present, there is no sign of property prices being unsustainable.

‘When prices become insupportable, with disposable incomes crushed by mortgage liabilities, people retract on consumption; as the housing market freezes, enterprises find the demand for their goods and services beginning to disappear, and hey presto, we have a recession,’ says Harrison.

‘There are no signs that this is about to happen.’

What would stop a crash from happening in 2026?

In short, Harrison believes nothing will stop the crash from happening unless dramatic government action is taken to prevent it.

‘Nothing can stop the crash of 2026, other than if prices were limited to long-run affordable levels, but governments refuse to contemplate that prospect,’ he says.

‘If people are happy with the booms and busts, there doesn’t need to be a solution.’

‘The best I can do is explain the future so that people can make informed judgements.’ 


As there’s an inverse relationship between land prices and wages, you’d expect more from the forces of labour than you would from the Tories on the point. However, labour and the unions have clearly thrown their lot in with real estate speculators. They’ve come to believe that you can have real wage increases alongside land price bubbles ……… and will prove to be greatly disappointed.

I’ve written before about how the parties of labour became ‘mainstream’ by encouraging, real estate speculation : –

As Australia repeats 2007 all over again, with both political parties and the Reserve Bank committed to promoting yet another property bubble, it might be an appropriate time to revisit British writer Fred Harrison’s well-founded demolition of former UK Chancellor of the Exchequer and Prime Minister Gordon Brown [“No return to boom and bust”].



It was far from being a state of bliss, but Australia experienced a pretty good socio-economic period in the post-WWII years of the Kondratieff Wave which led up to its peak in 1973.

It’s been slowly but relentlessly downhill towards the 2025/26 depressionary trough ever since.

Many Australians blamed the 1974/75 economic bust on Gough Whitlam, so Malcolm Fraser seized the opportunity to have the Governor-General dismiss the Whitlam Government. Despite the political brouhaha, the electorate voted the Fraser Government into power.

A lot of people noted that the downturn at the time was worldwide, so it clearly wasn’t simply a matter of the Whitlam government’s spending. People came to blame the OPEC crisis for the economic recession instead.

In doing so, they airbrushed the world’s greatest real estate bubble out of history.

The Fraser Government was removed from office at the 1982/83 recession following the bursting of the 1981 real estate bubble.

With the blessing of a tax regime rewarding extractive real estate speculation at the expense of productivity, the process has continued and worsened – with the assistance of the RBA and governments of both persuasions: the 1988/89 land price bubble, the 2007 bubble/GFC and now the likely 2025/26 biggie ……

Aren’t we more than a little silly putting up with tax regimes which reward banking excesses, monopoly and spec?

It’s NOT going to end well as the post-WWII fourth depressionary Kondratieff Wave has its final way with us.

The un-taxing of labour and capital would address the ‘baked-in’ inflationary deadweight losses from taxation in the price of every good and service for which we have to pay. Inflation is not simply “excess money”, nor “excess demand”. It’s more fundamental than that: it’s the direct result of failing to tax ground rent away and taxing doers instead.

Lets trust we can reverse the rent-grabbing that made much easier by neoclassical economists when the Great Depression struck?


AUSTRALIA’S capital city house prices have experienced its greatest quarterly increase in 18-years, which is emboldening sellers to lift asking prices.

According to Domain’s latest Asking Price Edits report, the combined capital city median house price increased by $539 every day over the first three months of the year.

For Sydney and Canberra, the past three months represents the fasted quarterly acceleration in almost three decades, increasing by $1145 and $909 a day respectively.

As a result, sellers have been increasingly raising asking prices mid-campaign, to match the accruing capital growth experienced over a four-week sales period.

In Sydney and Canberra this accruing capital growth would add a respective $32,060 and $25,452 over the four-week campaign.

Likewise in Melbourne where house prices rose $499 a day over the first quarter, this would represent an additional $13,972.

Dr Nicola Powell, senior research analyst at Domain, said the housing market is clearly not static.

“For buyers, purchasing can become challenging during a period of significant momentum, as competition and prices move quickly, which has been seen to date in 2021. For sellers, receiving a quick or multiple offer(s), especially if above the asking price, can indicate strong levels of competition and be a sign the market has moved upwards from the initial asking price.

“The more expensive areas of Sydney and Melbourne have the highest percentage of asking price revisions upwards over April. This suggests the upper end of the market will continue to lead price growth in the coming months,” Powell added.

Though the trend for increasing asking prices mid-campaign began to level out across most capital cities in April.

At its peak in Sydney, almost 10% of sale listings saw an upwards revision of the asking price over March, dropping to 9.3% in April.

In Sydney mid-campaign increases were most prevalent in the Eastern Suburbs, at 14%, followed by Sutherland at 12.7% and the Inner West at 12.1%.

In Melbourne it peaked this year in March at 8.9%, compared to March 2020’s near 10%, before dropping to 7.8% in April.

Mid-campaign increases in Melbourne were seen most significantly in the Inner South at 11.4%, Inner at 9.1% and Inner East and North East both at 8.7%.

While Darwin was the only capital city to hold at its peak into April at 5.7%.

Due to greater price volatility in capital city housing markets, this trend has been less pronounced amongst regional markets.

Market conditions, including elevated levels of demand and competition amongst buyers have enabled sellers to successfully increase prices mid-campaign.

Powell said while these mid-campaign price hikes will lead inevitably to annual price dwelling growth, it is forecasted that will mean a one-month lag between revised asking prices and price growth.

“When we see more homes for sale with the advertised asking price revised higher during the sales campaign, it provides an on-the-ground lens of buyer sentiment and level of market competition. It is intuitive that this would then translate into a change in pace of property price growth,” she continued.

“This data set suggests that prices will continue to grow in the coming months. However, the fast pace of price growth recorded early 2021 is likely to be less steep, supported by the fact most capital cities are now easing from a recent peak in asking prices being raised.” Powell concluded.


My comment herewith