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London

Lets talk about London

 

Video Transcription:

Hey guys, so welcome to Brett’s Property Rants. So, I want to talk about London today. London’s really actually starting to impress me, I have to say. Most people are talking it down. Most people are actually still saying… It never ceases to amaze me how people can be so two or three years behind

I’m in Singapore now, right now on the beach so you can see this lovely view of all the shipping, and I’ll tell you what, Singapore is not slowing down, that’s for sure. The number of boats that are out there.

So London. So it’s amazing, I find consistently how people quote what was two to three to four to five years ago, the market. So people are saying, oh yeah, house prices are dropping a lot in London, it’s like, no, they’re not, actually. They were, and it’s amazing, when they were dropping, people were telling me, oh, I want to get into London, house prices, growing. It’s like, no, they’ve gone down. But that’s the reality here, is that most people are behind the market by about two or three years. And the problem is when there is a massive change in the market, all of a sudden they’re shocked by it. Now, look, for the last sort of six months, probably even longer than that, nine months.

I’ve been talking about that there will be a downturn. Make no mistake, there’s going to be a downturn. America with what it’s doing, China with what it’s doing, the world with what it’s doing, and whether it be Brexit triggers it, whether it be Trump triggers it, whether it be Trump invading who knows where to keep the war machine going, who knows what the trigger is going to be.

Go into YouTube, and have a look at all the videos that predict prices going down in 2013. And in 2014. And in 2016. 17, 18, 19. Every single year there’s, house prices are dropping. People are quite happy to try and predict the moment that it’s going to happen. But you know what? Most the time, they’re wrong.

And it’s ridiculous. So, what do I see with London? London is going to do well. Make no mistake, it is still a world city, I don’t care what happens with Brexit, at the end of the day, Brexit hasn’t been the downfall of London. If anything, the business has been moving from London up to Manchester and Birmingham. So actually, they’re being the real beneficiaries. But nobody’s really talking about that, are they? Understand, London is still growing.

London is still expanding. So you’re not gonna get rid of London any time soon. But what I will say is this. Right now there’s roughly one million… There are seven million people in the world, okay… One million people live in North America, one million people live in Europe. Sorry, what am I saying? There are seven billion people. One billion in America, one billion in Europe, one billion in Africa, and then there’s effectively four billion in Asia. So, those four billion in Asia, that is starting now to really show, and we’re talking India, and Asia, and China, effectively, and southeast Asia and that. So that’s where the population is.

So what you’re starting to find are historical things where… The UK used to rule the world. And then it lost its place to the US. And the US is losing its place to China. Now, is it China, or is it Asia? That’s interesting, that’s a topic for another discussion. But the reality is what we’re finding is the population now, is going to continue rising, it is going to level out because not as many babies are being born now. So what does that mean? Well, what that means is in about two generations, we’re actually gonna see a lot of our towns, our suburbs, places outside the fundamentals, are gonna start to drop off. In other words, people aren’t gonna live there anymore. They’re gonna become the ghost towns. Look in some of the American… I can’t think of the route name. In the deserts of like, Nevada and California and that sort of stuff. You know, when you get out and there’s an old place and there’s like one petrol station, and there’s no one for kilometres. That sort of thing. The Hollywood movie type scene. That, potentially, is what’s gonna happen with a lot of the suburbs far out, because people are moving to the cities.

Because they move to the cities, what’s one of the best cities in the world, still to this day, what’s still seen as a safe haven is London. And that’s not going to change any time soon. London is a fantastic place. If you can’t afford London, okay fine, Manchester, Birmingham, long term, fantastic. Now that’s not to mean that they’re not gonna still go up and down. With the market, that is gonna happen. But if you buy for the long term, which my suggestion is you are and you should be, and you should be buying to hold, as opposed to trading, then this is a great way and a great place to buy. The thing I like about London right now is that we’ve got developers that are having problems selling. In fact, no stock is moving. So they’re willing to do deals.

So actually, London is the cheapest it’s ever been. Two years ago, house prices were dropping. They’d stopped dropping and they were sort of evening out, but what was happening is a steady rate of sales. So what actually happened, developers and agents that, they weren’t negotiating. But now what’s happened, things have dropped off. Now, prices aren’t really moving that much. They’re still staying. Actually, in fact, they went up this month, and down last month, and the reality is what happens now is vendors and developers and that are willing to do even more deals. So you’re getting that extra push, but the fundamentals are still there. I mean, Brexit isn’t that much of a drum as people are making out. A lot of the damage is already been done. It’s been slow, ripping off the Band-Aid rather than the quick get rid of it and date it done.

So look, London is back. Make no mistake. We’re looking at stuff that… Now, I’m not talking central London now, we’re not really looking central London, but some places like Southwell, which you may not have heard, out of Eling, that sort of places. Moving out of the centre now places that… We were very much in the southeast, southwest, that sort of area, the last boom if you like, but now we might be moving east. Sorry. West. But further west. So what you’re finding now is rather than being in the centre, you’re sort of moving that out and following that ripple effect out where the fundamentals are changing. So there are some major, major things happening.

Communal towns. They’re all doing really well. As long as you get the fundamentals. Even with things like Airbnb, if you get within five minutes of a train station in London, and potentially, if you get an Airbnb through your lease, then that’s another option as well. So there are more options now to make more money on some of our properties. We’re starting to get into the service apartment side of things, which is really exciting. It’s hard because on one hand you’ve got the developers that are saying no to it, and so they’re prohibiting it in the leases, but then, on the other hand, it’s actually where the market is heading. London is back.

Make no mistake. Research it, look at it, and you will start to see things starting to move in the right direction. It may be a year or two before, even three years, four years before you see booming growth again. But it is worthwhile and now I think is the cheapest time that you’re ever gonna find. I don’t see it going down further, because developers are willing to do that extra development, that extra discounting, that extra bargaining, because they need to get the volume of sales. It’s as simple as that. And people are starting to realize if they need to get rid of it, they need to get rid of it now. They don’t wanna be waiting til the Brexit happens or doesn’t happen, or referendum second who knows with Brexit. It’s all up in the air. Anyone that says they know, they don’t know.

I’ve been actually predicting it quite accurately so far, but really, it’s a, if you wanna, it’s just an amazing thing to view. I mean, I don’t think we’ll ever have this happen again in our life. But maybe it will, maybe this is a sign of all politics to come. You know, in the future. Anyway guys, have a great day. Live with passion. And make sure you subscribe, comment, anything you wanna say. If you wanna argue with me, you wanna prove me wrong, do it. I’m looking forward to it. Looking forward to a healthy discussion.

All right guys have a great day. Live with passion. See ya.

London Property

Property fundamentals show it is time for investors to be bold in London

Savvy property investors ignore Brexit ‘expert’ forecasts

As the ‘will we, won’t we?’ Brexit juggernaut rumbles on, it’s time that property investors got back to examining what really underpins profit potential, by concentrating on the property fundamentals that drive supply and demand.

Why you need to ignore Brexit

We’re currently in the second round of ‘project fear’, with the Treasury and the Bank of England warning of an economy driving off a cliff if the UK leaves the EU with no deal in place. We heard exactly the same before the EU referendum in June 2016, when all the same economic ‘experts’ forecast that after a vote to leave the UK would immediately fall into a deep recession, interest rates and taxes would rise, and property prices would fall by up to 30%.

What these forecasts (now being relabelled as ‘scenarios’) don’t do is take into account policy decisions to manage the economy. The Bank of England (under the leadership of Mark Carney) was quick to claim that its 2016 forecasts of doom were avoided because of the action it took. You may remember that it cut interest rates and increased quantitative easing (QE) by £85 billion. It has since increased interest rates and stopped its QE.

If you pay heed to all the headlines, you would think that the UK’s economy is already on its knees. In fact, the UK is in a much stronger position now than it was before the EU referendum in 2016:

  • There are now almost 820,000 more people employed in the UK than there were in June 2016
  • The unemployment rate is at a 45-year low
  • Wages are rising faster than inflation
  • The UK average house price in September 2018 was £233,000 compared to £214,000 in June 2016 – a RISE of 8.9%

What about London?

So, the UK as a whole is still doing pretty well – and much better than those May/June 2016 forecasts. In fact, comparing the actual outturn to those experts’ forecasts, there are more than 1.3 million more people in work than was expected, and average house prices are as much as £80,000 higher than predicted.

In London, it was forecast that up to 100,000 jobs would be lost from the city as financial firms fled to set up European headquarters. That hasn’t happened – it is now forecast that less than 5,000 jobs ‘may’ be lost in the City after next March. Perhaps one reason is that the EU has changed some rules to enable financial firms to maintain access to European markets and financing from London post-Brexit.

Meanwhile, the collapse in London house prices that was predicted also hasn’t materialised. Sure, property prices in prime central London have eased – but don’t forget that they had risen very strongly just prior to the EU referendum as home buyers and investors rushed to beat the imposition of extra stamp duty from April 2016 (as The Guardian reported in March 2016). Elsewhere in London and Greater London, house prices have continued rising.

Including the weaker prime London market, the average house price in London has increased from £472,204 in June 2016 to £484,926 in September 2018. Yes, you read that correctly: average house prices in London have increased since the vote to leave the EU.

Could this be the opportunity of a lifetime to invest in London property?

Investors buy property in London for potential capital gains. In 1998, the average house price in London was around £115,000. In 2008, this had increased to around £350,000. Despite the Great Recession in 2008/9, the average house price in London has increased by a further £135,000 in the last 10 years. That’s an average of 7.5% per year for 20 years.

The property fundamentals in London have not changed:

  • The population is still forecast to grow strongly, with an increase of almost 9% between 2016 to 2026 – more than 800,000 higher than in 2016
  • There is no better place to go shopping in the UK than in London
  • It is a lifestyle city with amazing leisure facilities
  • It is undergoing huge regeneration, such as the regeneration at Elephant & Castle
  • Huge spending on infrastructure such as Crossrail is producing new property hotspots
  • It is home to some of the country’s best schools, colleges and universities
  • Its economy is growing, with a huge financial and professional services sector and tech and the digital economy

The land is scarce in London. It is a world city in every aspect. The London property market is sluggish at the moment, but the long-term attraction of investing in the capital remains. There is a lot of uncertainty in the market today, but when this is removed we believe that price growth will return. You may never have a better opportunity to invest in London property that exists today. However, not all areas of London are equal. Some locations are packed with potential, others not so much.

To find out where our research tells us are the best investment opportunities in London pre-Brexit, get in touch with Gladfish today.

Live with passion

Brett Alegre-Woodtime fo

Brexit

Get ready for a Brexit bounce in London property prices

Why London prices may rise, and where

Property investors should be preparing now for a bounce in London property prices when the UK leaves the EU. This is what several experts are now predicting for the London property market, with almost three years of experience of Brexit uncertainty behind us.

In this article we examine why the experts are so positive about the potential for property investment to produce great gains in the coming years, and we’ll also highlight a couple of locations where that potential could produce the best returns.

What is in store for London property in the next five years?

London’s property market has been the most sluggish of almost all UK locations since the EU referendum produced its surprise result in June 2016. Many experts predicted a crash in London prices, causing an exodus of financial firms from the City.

However, these predictions have proved wide of the mark. Additionally, the EU has altered its rules to allow European firms access to the London financial markets even in the case of a no-deal. But, without a doubt, those predictions and the uncertainty surrounding Brexit affected the London market, especially at the high end.

JLL is among those who now expect a post-Brexit bounce. It forecasts that, between Brexit day (29th March 2019) and 2023:

  • The average price of new build homes in Zones 1 and 2 will rise by almost 18%
  • Luxury property prices will rise by 15.3% in Central London
  • The average price will rise by 14.3% across Greater London

Why could property prices in London rise?

JLL expects a Brexit deal to be done, in which a transition period smooths the path to final exit from the EU. This, it says, will lead to a more stable and confident economy. This will encourage homebuyers and investors to return to the market. As job security returns, property values will rise faster, it says.

We’ve got to put this reasoning into context, though. There are currently no forecasts that the UK economy will crash post-Brexit. GDP is expected to grow by more than 1.5% in 2019, and rise to 2% and above in the two years after. Wages are expected to continue to grow faster than inflation.

But it is not only the economy that dictates house price direction. There is a chronic shortage of homes in London. The Mayor of London has a target of 66,000 new homes each year. Developers are currently delivering around 20,000 to 25,000 new starts each year. That’s a massive gap between supply and demand, and a lot of pent-up demand in a city whose population is forecast to grow by almost two million in the next 23 years.

Will there be a boom in London house prices?

As recently as 2014, London property prices increased by as much as 20% in a single year. It’s clear that those days are now gone. If the Brexit deal finally turns out better than expected, the cork could be released from the bottle of pent-up demand. But a rapid bounce in property prices is less likely today than in the past – the government’s property tax reforms and more regulation have dampened buy-to-let interest.

So, while we may not see a sudden boom in property prices in London, there is likely to be a more measured return to a rising market. The question is, where might it be best to invest for growth in London?

Look for growth potential in London property locations

Recent research from Dataloft and property developer Mount Anvil (and published in Homes and Property) suggests that the best locations to buy will be those that are benefitting from regeneration and offer apartment living. In such areas, average prices rose by around 17% between 2012 and 2016. Boroughs such as Tower Hamlets and Newham performed particularly well.

London property plays well for the greater investment emphasis on capital growth, as the tax advantages of rental income have been eroded. So, where might that capital growth be found in London?

Outer London is hot

Some of the hottest areas for investment in London property are found in Outer London right now. Boroughs such as Redbridge and Merton have bucked the trend of sluggish house prices in the capital. With 24-hour underground services, massive infrastructure investment and regeneration, these areas in Outer London are gaining in popularity with buyers and renters attracted by greater affordability.

A few ideas for your investment location research

London property investment benefits from a wonderful basket of strong fundamentals. The question is, where are the best locations to invest in the capital? Here are a few key locations which we believe could produce above-average returns in a market returning to growth:

  • In East London, our favoured locations include Tower Hamlets, Hackney, Redbridge, and Waltham Forest
  • Locations that are likely to benefit most from infrastructure projects include those on the Crossrail 2 route, such as Haringey, Wood Green, and Battersea
  • We also think that Canary Wharf, Woolwich and Aldgate are attractive for investors

To find out where our research tells us are the best investment opportunities in London as we move through the final stages of Brexit, get in touch with Gladfish today.

Live with passion

Brett Alegre-Wood

Hayes-Property-Investment-Guide-Blog

Hayes Property Investment Guide

Urban regeneration is making Greater London truly great - and Hayes is buzzing with growth potential

Millions of pounds of investment

As Crossrail prepares to bring fast and convenient connections between London and surrounding areas, many towns are benefiting from huge investment in urban regeneration. Hayes is one town that will undergo a massive transformation into a highly desirable location, giving commuters and investors plenty of reasons to go West. Read More
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