Hi all,

Right now governments are lowering the entry bar for first-time buyers and that will push a big, short-lived wave of demand into a market that has very little supply.

The government has made it easier for people to buy homes with very small deposits. I want you to understand three facts right away.

All of that equals more people rushing to buy, faster.

When new demand hits a market with low supply, prices and sales activity spike fast.

That spiking does a few things.

This can feel good for a while, but it also adds risk if interest rates or incomes change.

From past programs we can see the likely pattern. When governments hand out demand-side support like grants or deposit relief, it usually creates a front-loaded boom.

History shows the fast part generally lasts about six to eighteen months. After that, the support is priced into the market, take-up slows, and activity cools.

Past examples include programs in the 2000s and the large stimulus in 2020 which pulled building and sales forward for roughly a year or so.

Based on when this new grant starts, we can expect house prices to jump from around June 2025 to June 2026. After that, the government or the central bank might raise interest rates to cool things down if prices rise too fast.

That’s why this is being called “the final countdown” — it’s the last big rush before the next land cycle crash. This marks the final stage of the low of 2010 to the low of 2028 property cycle, before everything resets again.

Listings are down in many cities. Agencies in some markets are getting multiple offers on properties again.

New supply from construction is also slow to arrive because projects take longer to finish than they used to. That means even if builders are starting more projects, completions are lagging, so there is less real housing available right now.

Think about two different machines inside the whole economy.

The first one is the real machine — it makes things people use every day, like food, houses, cars, and apps. This is where jobs and real value come from.

The second one is the money machine — it doesn’t make things, but it moves money around through loans, banks, and investments like houses and stocks.

When the money machine grows too big, it can start to hurt the real machine, because more of everyone’s income goes to pay interest and rent instead of buying things or building new stuff. Ray Dalio says that’s when the economy gets “out of balance,” and it often leads to a slowdown or a crash until both machines match up again.

People fixate on headline prices and auction clearance rates, but a better warning sign is turnover — the amount of buying and selling.

When the number or value of transactions falls sharply, the industries that rely on moving property — agents, builders, lenders, movers, furniture shops — slow down. That hits jobs and income.

There is a long historical pattern where a big fall in transactions precedes wider recessions. When that drops by a lot, say 25 percent year on year, it has historically signaled a recession inside a year or so.

Use turnover ratios as a warning light: when they fall fast, we are moving from boom to bust.

In the US, some states often lead the cycle. When those markets slow, it can be an early sign national activity is turning. And right now, we are seeing Florida crashing.

For example, Florida usually shows the first signs when the U.S. property market is about to go down. A famous case was the Florida land boom in the 1920s. Back then, people could borrow money easily, and ads made it sound like everyone could get rich buying land in the sunshine. People from up north rushed to buy lots without even visiting them. Many sold the land again just weeks later for big paper profits — until the bubble popped and prices crashed.

Another indicator, building permits, especially, peak before downturns because builders stop ordering new projects when they see demand fading.

Low permits now mean fewer homes will be finished later, but also that builders are cautious, which can presage a broader slowdown.

Real estate shows long rhythmic patterns. One commonly discussed rhythm is about 18.6 years.

That does not mean a crash every 18.6 years like clockwork, but it helps explain long swings in prices and sentiment.

When you combine short-term policy shocks with a long-term cycle phase that is near a peak, the chance of a sharper correction rises. Right now we appear to be late in a long cycle phase, so adding big demand stimulus can pull up the peak faster and make the correction steeper later on.