Gladfish Corporate News

By Brett Alegre-Wood | [fa icon="calendar"] 31-Aug-2018 08:24:06

UK Property News - 31 Aug 2018

Video Transcription:  (Coming Soon)

Hey, guys. Welcome to "UK Property News." So, could house prices or one in three experts or people polled by Reuters, think that a housing crisis could happen. You know, it's a big ask, you know, one in third, a 30% chance of a massive drop. Now, what I actually think, or what most of the predictions are is 1.6%. I think, yes, that's probably about right. I think we'll see London still remain quite calm. I think what we'll see is the rest of the UK slow down a bit, certainly in the major cities. I think there's still gonna be some growth in some of the other cities, some of the smaller cities. Maybe like Leeds and Sheffield and a few places like that where they haven't seen huge growth yet, but there's a huge investment going in.

But I think the key is really, it's, look, it's as I've been saying for a couple of months now. The housing market is not booming. You know, what it is doing is, it's sustainable, it's doing very well, you know, considering all of the outside pressures and that. And look, this report is talking about a one in three chance if we get a no deal, so, if we get a deal, you know, they're saying 1.6% approximately, drop, that is, so, you know, so don't expect much from next year, and I don't think anyone's expecting much from next year. We've got Brexit, it's gonna be a dog's breakfast, irrespective of whether they work something out or not.

In this article, what we're seeing is, you know, £27 billion house prices have dropped, or the value of property has dropped this year. So, £27 billion, it's a lot of money, except when you think of it as a percentage of the entire market, it's only 0.33%. So, given that all that's going on, actually the market, this is what I'm surprised about, well, not surprised, you know, actually I'm not surprised. This is what I find amazing about how they report it in the news, okay? So, the headline was £27 billion. In the subtext was 0.33%, okay?

So, one of the other things that we're seeing is, you know, tenant demand is up because the supply of housing is down. That's both because landlords are selling up, you know, and because they're just not building enough. You know, we're not building enough properties. No matter what the incentive the governments have put in, they haven't yet worked, because, for every incentive they've set to build more homes, they've made it harder to buy more homes.

The key here, with all these sort of things, is when you see these news articles, what you're gonna see is, sales figures and you're gonna see rental figures. And right now, rental is looking pretty good because there's a diminishing market. Supply and demand, Supply is decreasing, demand is increasing, yeah? Sales supply is actually increasing decreasing demand. So, you know, you're seeing house prices drop, but rents increase, okay? So, depending on how that affects your portfolio, whether it be the capital or the cash flow, you can look at that.

I think this article here talks about...well, lots of articles are talking about the fact that, you know, it's gonna be so much easier when there's a house price crash, or their prices drop and all that sort of thing. But I think the key here, and what's being missed is that, yeah, if prices drop to say 40%. The damage that that would do to the economy generally Because let's face it, people are gonna lose their jobs, unemployment goes up, people have less money, blah, blah, blah. And, you know, and you follow that through all the industries and what's gonna happen. That's not necessarily a good thing. Whether you like it or not, we're in a market where increasing house prices is something that's gonna do it. And look, let's face it, part of the reason this is, if you forget about the house prices because this is one of the, if you like, the, you know, the fake parcel whatever. Actually, it comes down to land values. And, you know, land values here, you know, this article, we're talking about land values growing £10 trillion in all, being at £10.1 trillion, the value of it. Now that's pretty bloody good, you know, and when I say good, to compare it because, actually, it's neither good or bad. It's what it is.

Land values are growing and will continue to grow because that is where the value is in property. It's not necessarily bricks and mortar, you know. The land component is the thing that actually adds value, not necessarily the building. The building is depreciable. The building actually, you know, will cost you this much there, and this much there, but it's relative to what it's worth. So, in actual fact, when you buy a property investment, you're buying the land value. And that's why I talk about fundamentals. Shops, schools, transport links, major employers, major investment. In the opposite order. So major investment, all the way down to shops, and that's why I talk about fundamentals because fundamentals are about land, not the building. Now, yes, the land..the building can add a bit to it, you know if it's a nice spec if it's a whatever. But the reality is most of that is just the sales gumpth that you get from the estate agent, actually, it's the fundamentals you wanna look for.

So, let's talk about Brexit. So, look, you know, despite all that's going on, actually, we're bloody resilient. I have to say, I'm freaking impressed, you know. When I first heard Brexit happen I was kinda like, "Oh, no, you know, this is really going to be bad." But then, I actually sat down that weekend, and I spent the whole weekend writing a book about Brexit, and the interesting thing is, after that, I had quite a positive opinion about it. The opportunities that it presented. Not to say that, you know, I don't think the EU is a good thing, you know, I'm very indifferent about that because it's got it's good and bad. But, there is no doubt about this, we are very resilient, and the trick is, I think for all of us, is just to prepare for a no deal, and make sure we can hold our portfolio. And if you can do that, you're laughing.

And I think, you know, the final thing, I guess I wanted to raise, was, you know, because we've got Brexit coming up but the reality is we'll have an election at some point in the future and it looks like Theresa May, you know, yeah, she's not really holding very well. So, I thought I'd have a quick look at Corbyn, you know, because, one of the things with Corbyn, and I'll introduce him. I'll actually cover him next week as well, a bit more detail about his policies and things like that. The trouble with Corbyn is he doesn't have the backing of London, but he has the backing of the country, so Labour, you know, he's the Labour leader, you know. People say he's not popular and the news actually derails him all the time. You know, it's amazing how much flak he cops.

Some of his policies, I think, are very good. Some of the things, given what's been going on, he's almost striking a re-balance between the rich and the poor. And that's a hard thing to do. And the problem is, some of the things he's talking about are talking directly to property investors and saying, you know, basically, "You rich landowners," or, "You rich property investors," you know, "need to pay more." And it's like, "Hold on a sec, we're already paying more. You're talking about the large corporations, not the small landlords who are just trying to secure their pension and look after their families." And that's one of the keys that are hard one you know I haven't think. His real problem is how does the bridge a gap between the sort of, the Londoner cities and the country? And that's really gonna hold on. And I'll leave that with you after today.

Don't forget to subscribe or comment. Like, you know, I'm jumping on, responding, recording videos. We've got a heap of videos, I've just got a new editor so, the great thing is, I can edit a lot more quicker really, which means I can get them onto Youtube a lot quicker, or, Instagram. We're doing one minute video's now on Instagram, so if you go across my Instagram, BrettsRants, sorry. You know, you can get me anywhere. I'm there. Any questions you've got about anything, whether it be the UK or any of the fundamental principles of property investment. You know, I may not know about, you know, this interest rate in Canada or whatever. But the realities principles remain the same wherever, regardless of the market. So, if you're sitting there in Bangladesh, and you go, "What's the principle about this?" I can help. All right guys. Have a great day.

Topics: Investment news Brexit London Property Investment

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