Summary
A critical reassessment of the 18-year cycle from a practitioner investor who had followed the theory since 2003. Mat Smith examines 200 years of UK house price data and finds the 18-year cycle was not evident before WWII — the evidence only holds for the 1990–2016 period. He raises important methodological issues: the cycle is measured in nominal prices and doesn’t adjust for inflation, and UK land price falls 2021–2024 may mean the current cycle already ended rather than approaching a 2026 peak.
Key Claims
- UK data from 1845–1920: house prices fell while incomes rose (owner-occupation only ~10%) — no 18-year cycle visible for over 75 years — confidence: medium [Source: Mat Smith, Substack, 2024]
- UK Nationwide price data (1954–1990): 36 consecutive years of price growth, not one quarter negative — should have shown two cycles if the theory were correct — confidence: high [Source: Mat Smith, Substack, 2024]
- In inflation-adjusted terms, UK cycle peaks emerge at 1973, 1989, 2003 — troughs at 1975, 1991, 2009, 2023–2025 — a 14–18 year pattern does appear — confidence: medium [Source: Mat Smith, Substack, 2024]
- The mid-2022 to 2024 UK price falls (>5%) were larger than any previous mid-cycle dip — the “most explosive period” the cycle predicts had instead seen falls — confidence: high [Source: Mat Smith, Substack, 2024]
- UK development land values have been falling since Q4 2021 — Harrison’s own principle (land prices lead house prices) would suggest the cycle has already peaked — confidence: medium [Source: Mat Smith, Substack, 2024]
- The theory is useful as a framework (cycles exist) but dangerous as a precise predictor (exact timing not reliable) — confidence: high [Source: Mat Smith, Substack, 2024]
Notable Quotes
“I really want there to be nailed-on evidence of the cycle but it just isn’t there in the UK historic data.”
“Life is easier when we can just think in predictive cycles.”
“Note: I intend to follow this article up, especially if this current 18 year cycle proves accurate and Fred Harrison’s predicted crash in 2026 happens after all. I would be genuinely happy to apply the egg to my own face.”
Critical Counterpoint Value
This source provides the strongest available skeptical case for the cycle from a sympathetic insider. Key methodological critique: nominal price data masked real downturns during high-inflation eras. The cycle appears robust in inflation-adjusted terms but less precise than Harrison/Foldvary claim. [Source: Mat Smith, Substack, 2024]