Ever wish you had a crystal ball, where you could see what was going to happen next in the real estate market?
I don’t need to tell you that no such crystal ball exists. (And if it did, its owner wouldn’t be likely to share it!)
But what I can tell you is this:
Often, the answer lies in the history books.
It was the American writer Mark Twain who once said:
'History never repeats itself, but it rhymes.'
It’s a clever little saying, and I think he’s right…
You see, although we’re not literally living in a perpetual Groundhog Day, we are seeing remarkable echoes of past events.
This uncanny truth has perhaps never been clearer than now…the tumultuous 2020s.
Check out these images from around 100 years ago and try telling me they don’t look BIZARRELY identical to what’s happening today…
Source: George Harrison
Source: Raymond Coyne/Mill Valley Public Library
Source: JayHenry, Wikipedia
Influenza pandemic: check.
Sharp market decline: check.
Government crackdowns: check.
It’s almost spooky to think about.
The post-war world on the cusp of 1919/20 looked apocalyptic, a bit like today.
It was a time known as the ‘Lost Depression’, an oft-forgotten predecessor to the ‘Great Depression’ just 10 years later.
In 1929 we saw the almighty peak of the post-war real estate cycle…
As everything came to a sudden crash.
Of course, what happened between these two recessions was a decade known as the ‘Roaring Twenties’.
Everything was on the up again!
Could this surge be exactly what’s about to happen next in this ’20s decade? Are we about to ‘roar’ even louder than before?
My research suggests that YES, the cycle is following this trajectory…
And some HUGE opportunities are on the horizon…
…But they’ll only be available to investors who know when and where to invest in the property market in the next 10 years.
This is what I’ll show you today. In this report, you’ll discover:
- Exactly how to time the peak of this coming cycle (yes, I’m talking actual dates)…
- How real estate is leading the charge…
- Why an Australian skyscraper in development is a major clue to the coming real estate boom…
- Callum Newman’s thoughts on one company that could soar on the cusp of this change.
Now, for obvious reasons, I can’t reveal the exact details of this stock in a free-to-the-public edition of my report.
After all, this information is only available to paying subscribers to Cycles, Trends & Forecasts — and rightly so.
But everything else I’ll map out for you plain and simple…
And right at the end of this report, you’ll be able to access an opportunity to become a subscriber today. The small subscription fee you’ll pay is, of course, fully refundable in the first 30 days of your membership.
So take advantage of this trial opportunity here if you’re interested in trying it out…
That way, you’ll get VIP access to all of my reports and company recommendations straight away — PLUS the details of Callum’s current recommendation.
But first, let’s jump into our time machine back to the original roaring ’20s.
Because we’re not only seeing similar cycles in real estate. We’re seeing it in post-pandemic technologies too…
One technological revolution mirrors another
It was technology that fuelled the Roaring Twenties:
- The television was invented.
- Homes were connected to the electrical grid and indoor plumbing.
- The first solo, nonstop transatlantic flight was successfully navigated.
- Automotive and electrical manufacturing took hold.
- The jukebox was invented.
…the list goes on.
The transformation led to a sharp rise in productivity…
- It forever changed the size and living arrangements of households and workplaces.
- Women achieved a new level of independence. Awareness of ‘women’s issues’ started to change society in ways that benefited women.
- There was huge expansion in credit and construction.
All societal changes that are HUGELY similar to what we see happening today.
As I said back in April last year:
‘And with technology being the only option to connect with people in the current pandemic, it won’t be surprising to see a similar trend following in 2021.’
But what about real estate?
The real estate boom of the Roaring Twenties
The mainstream labelled the Roaring Twenties a mere stock market bubble.
(Similar to the 1973 land price bubble that was written out of history in favour of the story of the OPEC crisis.)
Few understand, however, that the Roaring Twenties had much more in common with the ‘worldwide’ land boom of the 1880s that caused utter devastation into the 1890s depression.
Land was where the Wall Street money was ultimately settling.
In the US, it was termed ‘The Florida Land Boom’ — however, it extended across much of the nation.
Between 1921 and 1929, lending on real estate in the US increased by 179%, and urban prices more than doubled.
By 1930, land values in Manhattan — including the total value of building plans — made up around 10% of the total value for 310 cities in the US (inclusive of Manhattan) during the same period.
A staggering figure, considering at the time Manhattan only contained 1.5% of the US population.
The wealth that flowed to landowners was immense.
Thousands of new banks set themselves up in outlying areas, where:
'[they] either were operated by real estate promoters or exhibited excess enthusiasm to finance a local real estate boom.'
Elmus Wicker, The Banking Panics of the Great Depression
There was an explosion in the value of construction that would not be equalled until the boom-and-bust era of the late 1980s.
Marking the peak of the 1920s land bubble was the construction of the tallest building in the world.
The Empire State Building.
It took just 13 months to complete, utilising:
- 58,000 tonnes of steel
- 60 miles of water pipe
- 17 million feet of telephone cable
- And appliances to burn enough electricity to power the New York city of Albany.
It stood a quarter of a mile high.
The construction boom in New York City had a lot to do with a 1920 law that made sure property taxes fell only on the land.
Not the buildings.
This exempted new housing construction (but not the land values) from the property tax from 1920 until the end of 1931.
It was known as ‘The Al Smith Law’ — for the New York governor who sponsored and signed it. Smith was greatly influenced by the writings of Henry George.
Removing taxes from buildings has a remarkable effect on construction — encouraging big developers to build for-profit, and discouraging land banking.
As a result, the NYC population grew much faster — percentage-wise — than that of comparison cities, from 1920–40 (and for a while after that).
'The tallest building in the world created by man,' as former New York governor Alfred Smith proudly declared. (See side box.)
The Empire State Building had 2.1 million square feet of rentable space.
However, it opened on 1 May 1931, 75% empty.
Office space in New York increased 51% during the Roaring Twenties.
The higher up the office, the higher the rents.
Thus, everything above the 41st floor of the Empire State Building sat vacant.
It became the butt of jokes.
Dubbed ‘The Empty State Building’.
It didn’t turn over a profit until the 1950s.
Raskob (its builder) — who, in 1929, had penned the famous article suggesting ‘Everybody Ought to Be Rich’ by investing in ‘America’s booming corporate economy’ — fell deep in the red.
At this point, I don’t need to tell readers how many similarities there are in this real estate cycle (the Roaring 2020s) to what investors experienced in the Roaring Twenties.
In equities and real estate — it promises to rival anything we’ve ever seen before.
The Roaring 2020s’ peak
A cluster of the tallest buildings will mark the peak this time:
- Hyundai Global Business Center — the tallest building in South Korea, due to be completed in 2026.
- Thai Boon Roong Twin Tower World Trade Center — the tallest building(s) in Cambodia and the tallest twin towers in the world, due to be completed in 2025.
- Rise Tower — the tallest building in Latin America, due to be completed in 2024.
- Jeddah Tower — the tallest building in the world if/when completed in 2026.
- Green Spine — the tallest building in Australia, due to be completed in 2026.
The list goes on…
But to take advantage of this boom, you absolutely must have a stake in land.
Property is the core of the global financial system.
It is, by far, the largest asset class.
Our economic system’s ‘twin drivers’ are rising land value and the bank-created credit that backs it.
This is true the world over.
It is here that the rich store their wealth.
I’ve outlined the timing of the roadmap from here already, in September last year. (This information is accessible to paying members of Cycles, Trends & Forecasts. You can click here to subscribe and access that report now.)
So I won’t go into all the details here.
Except to say that the peak of the Roaring Twenties’ real estate cycle came right on time! At the end of that decade. Very close to the lunar standstill, as explained in my September 2020 report.
The next point on our radar, according to the 18.6-year cycle, is mid-to-late 2025 into 2026.
This date will be very close to the peak for the current cycle.
Real estate buyers’ guide to the second half of the cycle
The second half of the cycle historically tends to be stronger than the first.
We’re seeing this play out now. And I mean RIGHT NOW.
I saw this before anyone I know…way back near the end of last year. My subscribers were the first to get that research.
Some of my findings are summarised as follows:
- Western Australia and the Northern Territory are forecast to have the biggest increases in land inflation. The gains may push past the forecast 2025/26 peak.
- Queensland is showing strong gains ahead of South Australia, Tasmania, and the ACT.
- Sydney is likely to slow or stagnate after a strong initial run (into 2022/23).
- Melbourne is in a similar position to Sydney. However, because it has a range of more affordable options, gains may continue at a slower pace through to the end of the cycle.
Right now, lending data suggests that the above forecasts are right on track!
Who would have guessed?
The graph above shows a boom in the value of home loans taken out in March.
In Western Australia, it is nearly double the amount taken out in March last year!
The Northern Territory is following close behind — and South Australia is also showing large increases.
Sydney, although booming now, is at the bottom of the list.
Historically, it tends to top out early in the cycle due to affordability constraints.
One of the cities we forecast would be harder hit following the COVID panic is Melbourne.
It certainly played out last year, with the intensive lockdowns in Victoria.
Right now, the lending data still points toward a bullish cycle for Melbourne.
But the Andrews government could be about to put a stop to it.
Higher land taxes and stamp duties are on the way.
With $2.7 billion worth of new taxes to be levied on property owners.
It’s summarised as follows:
- A premium stamp duty on property transactions above $2 million.
- Land tax on property investments increasing by 0.25% for holdings between $1.8 million and $3 million, and 0.30% in excess of $3 million.
- A new windfall gains tax for properties whose value is boosted by a council rezoning. (To apply to properties where the value is boosted by more than $100,000, with a 50% tax on windfalls above $500,000.)
Stamp duty is a terrible tax.
It places a large penalty on moving home — reducing turnover.
The effect on the market (according to many international studies) is to lower property prices by the exact value of the tax.
Land tax is a good tax.
It discourages land banking and encourages building activity (just as it did in New York in the 1920s).
Although it should only be implemented if taxes are stripped from the productive sector as compensation!
As it is, it’s not going to assist Victoria’s economy to get out of strife.
Increased land taxes alone will dampen land prices, however.
It’s going to undoubtedly drive property investors to other states in the short term.
We’ll see a pullback in Melbourne’s property market and price growth could plateau in the not-too-distant future.
But remember! Everything you see now we forecast throughout 2020!
- The boom in Perth (and other smaller states)…
- The potential pullback in Sydney and Melbourne…
- And strong equity market gains into the second half of the cycle and the ‘Roaring 2020s’.
We’ll continue to aim to give the best guidance for the cycle as we move through this year and beyond.
But for now, over to Callum! (And remember to scroll down to the bottom to access his recommendation.)
Editor, Cycles, Trends & Forecasts