Brexit is everywhere, and with so much contrarian thought on the subject its hard to know what to believe. Brett breaks down his simple thinking on the subject.
Brett Alegre-Wood here, and this is Property Investment News.
So, today what I wanted to really talk about was Brexit, and I guess...so what I want to do is, I want to sort of talk through Brexit, because I think it's really...it is apt to talk about it, lots of people are talking about it, you're reading lots about it, and a lot of people have got a negative opinion about what's going on. Or a very positive opinion, and it seems to be very much, you know, the two sides, rather than, you know, kind of where I am, which is actually, you know, I can see this side and I can see that side. And I think both sides are right and wrong,
Now, for me the reality is Brexit's been decided, it's happening, and okay that's going to piss a few people off, too bad, you know? I mean, this is my opinion, if you don't like it, you know, watch somewhere else. But the reality is...oh, I'm going to look a lot more from a property investor's perspective, because actually that's the way I see myself, and that's who I see myself as representing, you know, is the people who are investing in property. And, you know, smaller landlords, you know, who have under ten properties, or ten properties and under, you know, there's so much stuff, you know. "UK house prices in worse slump since 2009 crashes. Brexit and tax hikes hit home." And to a degree that is correct, but I think there's another story, which is the cyclical nature of property and the economy is, we haven't had a down-turn for 10 years now, So are we due one? Are we in the middle of one? Well, you know what? You can probably say in certain areas we are. In other areas it's absolutely ridiculous. And I think, you know, look, there's so many articles about this. How, "UK housing market shrugs off concerns" and "Brexit slow-down," you know? Actually, you know, Right Move's survey shows 4.6% rise, you know? "House prices in London hit by Brexit slump as third of homes see fall in value." You know, Brexit, you know..."The Brexit voters dramatically dampen International enthusiasm for London property." You know, and it's kind of like, you know, all this sort of negativity, positivity, nobody knows where the hell to sit. Now, for me, actually, I look at it and go, "London dramatically dampen," I mean, for a start it doesn't "dramatically dampen." Actually what's happened is there's a lot of things happening back, for instance, in Singapore, and Hong Kong, and Asia, and Middle-East, and all these sort of things. Which means they're now not putting as much money into outside. And that's not just London, that's everywhere, Because their own economies have slowed down, You know, so when you start looking at things like that, it's not just that Brexit vote did that. In actual fact, if anything, people are jumping back into London, because what the Brexit vote has done, is decrease the value of the pound, and so it's got cheaper, you know. About 10%, 15% cheaper for people to buy, which is a huge discount, you know? So it depends on how you look at it and you can sway it either way, you know? And I love this, you know, this is the expression, "How much will your house be worth after Brexit?" yeah? "The calculator can predict value." No it can't, it's a ridiculous concept to think it is going to be able to predict it. It can't. Don't even listen to it. But they're happening. You know, this is the expression again. "House prices. Ongoing Brexit negations are having this impact on UK home movers." No. That's your opinion, and to, you know, to say, "This impact is because of Brexit," there's so many other things going on. You know, you can look at Trump, you can look at, you know, the fact that other economies are slowing down, that other economies have been growing for, you know, a 10 year period out of the financial crisis. And they're a cyclical nature. You know, so there's so many other things to look at. I mean, this is one thing too, is we tend to be talking about, you know, house prices, and transaction levels. Now, transaction levels have dropped, Now, normally if you've got lots of transactions happening, then that can drive prices up, But also, if you got few transactions, depending on which way it is, that can drive prices up or down, But a lot of times if transaction levels drops off, because confidence in the market has dropped off, and therefore prices will start to drop off. But actually, prices are still going, transaction levels have dropped, but, you know, you've had tax change, you've had all these changes in the market. So to blame one particular thing is ridiculous. The real point is, is how do you make money out of this? And look, you know, okay, so first of all, I've written a book about Brexit, so if you want to have a bit of my opinion then have a look at the book. You can download it, just type in "Brexit Gladfish book" whatever, "Brett Alegre-Wood." And download it, and you'll come to this page, and just press download. You know, "London's 21.6 billion property boom despite threats over China." You know? That's a lot of money coming into London. You know? I always say, "London will astound." So if you're jumping out of London, yeah, because you think it's had its day. Okay, short-term maybe. But I would argue that actually the last two years, London has slowed down. And now, actually, if anything, now it's bottomed-out. "Brexit property boom, house prices arise 52,000 in the next four years." You know, "House prices set to increase 7% next year, despite Brexit uncertainty." You know, "House prices to rocket 30% next five years." "House prices set to rise 50 in the next 50 years." Do you notice anything here? "UK house prices set to soar 50 over the next 50 years." David Mars, former member of the Monetary... Bank of England's Monetary Policy, That's the guy that sends you interest rates, or on the committee. Says, "The shortage of homes and the restriction of availability of land in the UK will mean house prices spiralling upwards for decades to come." That there, for me, is one of the key fundamentals of anything. And, you know, if we look at it, now let's bring it together, because I want to sort of, don't go on forever. Supply, The supply of housing is so, you know, it's so restricted. The restrictions on planning, actually getting...even if you do want to build, it's so hard to build, because you've got to go through such a process. It just took two years for us to get planning when it should have taken no more than three months, you know? But the council basically said, "What can we do? We haven't got the resources. We'll cut the resources, we'll get there eventually." You know? You've got restrictions on funding, it's so hard for a developer, for us, to get funding, to then go through the planning process. You virtually cannot now, you virtually have to pay cash and get a...somebody to fund you for that period, before a normal bank or a normal institution will step in and lend, because...and then they want personal guarantees. And it's not just personal guarantees now, it's almost 100% coverage guarantees. In other words, if you want to borrow 60% loan, to value, they actually want you to guarantee their 60%, their full loan, which is ridiculous. I mean, you know, it just makes it so hard for everything, you know.
The way I look at this, is this, and this is a simplistic view I have. You either have the choice right now of being rich, or renting. And what I mean by that...and that's not a negative to renting. I think, and where I really think things are going, is this. Either you buy a property and you start investing, you build a portfolio and you put up with all the restrictions, and you put up with all the, you know, hoops you got to jump through to get financed, and you build a portfolio,
Because right now, yes, you know, it makes a difference. But in 10, 20, 50 years time, it's going to make a huge difference. Because all those people who rented are going to be stuck in that cycle and they will be dictated terms, yeah? They will not be in control of their reality.
The people who I'm saying rich, they will be in control. And I'm not talking about rich in terms of money and, you know, billionaire and all that. I'm talking about having choices about how you live, And that is what comes down to it now, and now is the time to be getting in, and plotting, and planning and just, you know, making those decisions bit by bit by bit.
Okay guys, bit of a long one today, but have a great day.
Live with passion,