Bullish

Repetition of the cycle as experienced in 2003

Current uncertainty is brushed off in this scenario, where concerns centred on the global economy prove unwarranted, the value inherent in the residential property asset class is recognised, resulting in sustained investment from homebuyers and institutional.

Past parallels: here the parallel is the last cycle approximately 16 years ago in 2003. The lowest priced regions in the far north pick up intense momentum, and whilst London does not fall in price, it underperforms the more affordable provinces. The caveat: so far factor 2 (the overall price slope factor also called ‘twist’) has failed to match its strength in 2003-2004.

This scenario uses the same systematic factor rewards from that time to project a plausible ongoing bull market. It is useful to recognise that this will very likely not be attributed by commentators, politicians, and the press to a 17-year cycle. Instead it will be attributed to political initiatives relating to rail infrastructure and possibly the proposed creation of free-port tax havens in economically struggling cities such as Liverpool, Newcastle, and so on.