Summary
Akhil covers the UK property cycle in the context of Brexit, and discusses Modern Monetary Theory (MMT) briefly. Key message: Brexit is irrelevant to the underlying real estate cycle — UK/FTSE charts show a market breaking out positively after the 2016 vote, not crashing. UK set for an “almighty boom” under Boris Johnson’s spending plans with a compliant Chancellor (Rishi Sunak). Also covers the property cycle’s geographic spread from city centers outward, and discusses what might trigger the mid-cycle correction.
Key Claims
- Brexit had no cycle-altering effect. UK trade with Europe is ~12% of GDP — not enough to kill the cycle. — confidence: high
- FTSE All Share chart was bullish (breakout building for 18 years) as of Feb 2020, despite Brexit narrative. — confidence: high
- Boris Johnson’s “leveling up” spending agenda + compliant young Chancellor Rishi Sunak → potential for “almighty boom” in UK. — confidence: medium (written Feb 2020)
- UK property: slow first half into 2007, then recovery, mid-cycle slowdown around Brexit, now resuming upward. — confidence: high
- Geographic property cycle: city center peaks first, then spreads to suburbs and commuter regions. Same pattern in UK, US, Australia. — confidence: high
- MMT: governments can spend without pre-taxing; limit is idle capacity in economy; but unspent income flows to land (as always). — confidence: high
- Coronavirus or oil spike are the most likely mid-cycle triggers; US election year (2020) also complicates picture with Trump wanting strong markets. — confidence: medium
Predictions / Forecasts
- UK likely to see strong property market into second half of cycle under Johnson spending. — status: partially confirmed (UK property boomed 2020-2022 with stamp duty holidays)
- Property prices in regions outside London to catch up in second half of cycle. — status: confirmed
Notable Quotes
“Whatever they say about why they’re going to conflict, it’s ultimately to control the terms on which trade takes place.” “The only person who actually does what we should do in our economic system is in fact the Queen [through Crown Estate rents].”