Investment News - 18th November 2015
This week's Property Investment News see a mixed bag of news and don't provide much certainty about the future of the property. With now many changes over the past 18mths, it's taking its toll on the property market. OR IS IT?
Brett Alegre-Wood takes a look.
18th November 2015 - Property Investment News Transcript
Hey guys and welcome to Property Investment News.
I'm Brett Alegre-Wood and today is Wednesday the 18th of November, 2015.
So today, it's a mixed bag, actually. I want to start off with a bit of a negative story about what's going on in London-- certainly at the higher end of the market-- but then I think as we move through today, you'll see that actually a lot of the fears and a lot of the things that people are talking about being negative are actually unfounded and aren't being seen in the market.
And actually things are quite upbeat still. Although, it's upbeat with lots of different things happening. So there's been a lot of changes. And so that is the big thing that's causing-- change is never good. People want certainty. And when they got certainty, they act.
So there is a little bit of two-sidedness in the market right now, as opposed to being all positive or all negative. And certainly, there's a lot of confusion about the tax and whether it's going to be in. The new tax, the buy-to-let tax.
So anyway, we'll get started.
So just look at this first article - Tories harming London market more than Labour would have done.
Now, there's a truth to this, certainly at the higher end of the market-- the lower end of the market, not so much. But when you consider stamp duty changes that happen. The property tax, non-dom reform, buy-to-let taxation, the mortgage market review for mortgages. All these things are playing a part in this. There's a lot of change, a lot of uncertainty. And that is affecting the market.
And when you look, at say, a six million pound property-- which I know most people don't even think about-- there's about a million pounds worth of property fees attached to buying that. That's not able to be lent. That is money you have to lay out of your pocket. So not only are you buying that property, but you're also going to pay all those fees. So it's quite hefty fees.
And, I mean, look, it's all good to say evening out the marketplace, because that's one of the things that the Chancellor is talking about. Crack down.
He's evening the market-- level playing field between new people getting onto the market and existing buy-to-let investors. I don't think it's really done that. I think it's turned the other way a little bit, in terms of its turn against buy-to-let investors. It's not as good as it was. It's not as attractive as it was. Do I think it's actually going to get in the full force, I don't, actually.
I think this guy's; I think they're stepping a bit too far. And I think what will happen, there will be a rebellion. They'll be out in the next three years-- of Parliament-- unless they turn and start really supporting the people who have supported them.
And the interesting thing here-- one of these articles that says, Chancellor's crackdown may threaten the profitability of buy-to-let and drive some landlords out of the market. That's true.
But the reality is, is it going to have a big enough impact that people turn away in droves? No, because where are you going to put your money? There's nothing else that actually performs as well as buy-to-let. So what else are you going to go to? The reality is, that's the thing you're faced with. What are you going to turn to? And really, there's nothing else like buy-to-let, certainly in the UK. And if there was, I'd probably be selling it. But the reality is still-- even with all these changes-- there's still a lot of positive and there's still a lot of good in the marketplace.
Master strategist or political blunderer? Will the real George Osborne please stand up.
There's starting to be a lot of articles about is this guy just a monkey in a suit. And to a degree, some of the things that he's doing are just taking a step too far. And that's my concern. I think because they won the election-- they won it quite convincingly-- they've almost feel like they've got an arrogance. And that's one of the problems with the conservatives, is they can get an arrogance about them and they think they've got a remit to do whatever they want.
You might find that that's not necessarily the case. And actually people start turning away from them and they start getting negative articles like this.
Interestingly-- this is where I always say, don't believe the media. Because the media hype around Northern Rock was-- you know, Northern Rock-- bad bank. I've got mortgages. I've got lots of mortgages with the bad bank. I was one of these bad bankers, if you like, or the mortgages at least. Where everyone thought that because there was 125% loans available and all these different things, that they're just going to default. That hasn't been the case.
And in fact, actually, what they're finding is people have paid on time in keeping these things. The government's actually make money out of buying this Northern Rock. So what was such a negative thing.
Oh, what's-his-name-- Fred, um, I've forgotten his name-- got stripped of his knighthood. Now the reality is, actually, the business and the bank was actually a good asset. And that's what you're finding now. And that's what I've always maintained the whole way along.
Securitisation was actually a good thing and done well. And the UK was done well. US, maybe not. But the problem was, the fear-mongers and the media got hold of this Northern Rock run on the bank, and basically rode it for all it's worth. That hasn't been the case. It's been a profitable investment for the government. This part of it. Maybe not HBOS and we'll see what happens with a few other things, a few other assets. But certainly, Northern Rock-- what was supposed to be this climactic, catastrophic thing actually has turned out to be quite a good thing, because people are just not defaulting.
So let's get on to the good stuff that's happening. Because, actually, a lot of good stuff and a lot of positivity is in the market. And really, if I want to take away something from today, is that, actually, all developers that I know and everyone I'm speaking to are very positive about the future and are actually looking forward to positive things happening.
Taylor Wimpey optimistic about property market. You got Barratt reassured over a strong UK property market. And this is what I'm hearing from everyone I speak to. All the developers I speak to, is that, actually, their plans haven't changed. And if anything, they're ramping them up. There is going to be building boom for the next 5, 10, 15, 20 years in the UK. So really, this is the time to be getting involved in it. London's already shot up. And actually, now, with the ripple effect has taken effect.
So we're out as far as the major cities, the major towns, I think, will come on. And as I've said all along, 2017, I think, will be the year that everything's clear, that everything is back to normal. And everywhere in the UK is growing and has sort of shaken off that recession. And it was a big recession. Make no mistake. It was a massive recession.
I think part of it was the recession. And part of it was the way that we dealt with it-- that we dealt with it-- the politicians dealt with it, which I think was incorrectly, yeah?
So, house prices-- house prices offer little respite for buyers. What does that mean? Well, they're still going up. And, actually, they're still creeping up. Now, sure you're going to have variances and that sort of stuff. You're going to find that, actually, house prices won't go up as much now.
Why? Because it's cold. It's not great weather. People don't want to go out as much.
So, actually, it's interesting, because I've just invested in Property TV which is a new TV channel. And one of the things they're expecting is over the next four months, five months, through winter is when viewership goes up. People don't want to go out and view properties. What they want to do is watch it on TV. And it's interesting thing like that. That's the reality.
Property house prices set to rise 4% next year. I think they're going to rise actually a little bit more. But next week, I'm going to give you a bit of an idea of what my predictions are. For the next five years from a trends cycle, but also for the next year, in terms of percentage. This year, I predicted 5%. And it's pretty much-- I'm on par with that. So that's been quite good.
Just out of interest, if you're interested, I've written a book called How to Predict House Prices. So have a read at that. It gives you a really good idea of why you shouldn't listen to property experts, including myself. And how to replace their expert advice-- yeah-- with your own actual certainty and with your own ability to be able to predict trends in house prices. OK guys.
Have a great day, and remember Live with passion.
Brett Alegre-Wood
