Why property prices have the team smiling

Brett Alegre-Wood
February 6, 2009


Investment News – Our team received some happy news

I was chatting with the team the other day discussing the investment opportunities that they have been buying up in a frenzy most of it at around 30%-50% off 2007 prices almost 20 properties in the past 4 months! I did a quick calculation to show the team just how much money some of them will make the next 5 years and suffice to say we'll have some very happy team members by the time that 2014 comes around.

Let me tell you why I say this.

Most of the property we've bought is coming in below the “reinstatement value”  the price the surveyor puts on the valuation as the cost to rebuild the property in case of disaster. This is also the value for insurance purposes, but it doesn't include the cost of the land. It's simply removal and rebuild costs.

For example, I had one complete the other day that was bought for £62,000 whose reinstatement value was £75,000. Just to spell it out, in case of disaster, I'm getting the land for free and a discount on the rebuild. I think it's plain that prices simply can't drop any further than that. I have also spoken with a number of builders, and they're all saying the same thing: “We aren't making money! We're just paying down the debt and keeping the cash flowing.”

I believe them.

But statistics say that prices will drop further this year since it's the top end of the market which always falls the most that will continue to fall. What do I mean by that? Well, by way of explanation, here's a joke the other day. “Q: What's the difference between a banker and a pigeon? A: The pigeon can still make a deposit on a Ferrari!”

Crude I know, but it points to a truth. Until the bankers can afford the Ferraris again, the top end housing will continue to fall and this in turn causes average prices to drop. Of course, this doesn't mean that all property will drop this year. As I always say – know your indices!

The average property expert (if there were such a thing) says prices will fall 10% in 2009. So assuming you buy at 30%-50% off 2007 prices for whatever you buy, you're still going to be ahead of the game once it bottoms out, if it hasn't already, and already this year, a number of areas see an increase in interest for property and a slowdown in the rate of fall.

This will continue to build throughout this year. My team can see it too. They can see the prices that were paid in 2005, 2006, and 2007, and the prices they're getting now are putting huge smiles on their faces. Some of them have bought 2, 3, 4 and 5 properties in the past 4 months – each with substantial discount off today's already discounted property prices (and massive discounts off 2007 prices.)

They can all see that once the market turns (as it always does) they are going to make more money than a job could ever pay them. They will be set up for life and I'll probably have to hire a whole new team.

Now the only question for you is, do you want to be their neighbours? If you would like to take advantage of the incredible property prices that are fast drying up then give the team a call now on +44 (0)207 923 6100.

Live with passion,
Brett Alegre-Wood

PS. I say, “fast drying up” because we are already having difficulty finding a stock and have now starting to negotiate more off-plan property.


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