Why UK Property Prices Should Drop BUT They Won’t… Here’s 5 reason why!

So let's focus on the positive of house prices increasing and Why?

We could spend a whole article on why prices should be dropping but why waste the time. Let's look at the 5 reasons they aren't and why they probably won't either. 

So here's five reasons why house prices probably should drop, but they won't.

Since the start of August, we've seen Smart Money jump back in, we've seen lots and lots of activity.  In fact, Rightmove has said that it's the biggest month for deals since their records began which is over a decade, and you know that's pretty incredible.

Actually to be fair it's almost surreal and I've said this many times already, anyways here's the five reasons why.

1. Overseas Investors are Jumping Back In.
Firstly, overseas investors, international investors are still seeing London, and in fact now Manchester and Birmingham, as a flight to safety.

So they're putting their money in despite the additional 3% Stamp Duty (Which many said would kill the market totally... It hasn't). Despite the, on-the-horizon, extra 2% Stamp Duty (Which many will say will definitely kill the market... It won't).

They're still seeing that as a viable option and that's an amazing thing. We know it hasn't lost its sparkle as being a world city. And the great thing is now we also have Manchester and Birmingham, which are both added to that and personally I think that's fantastic. These cities boost some of the best fundamentals anywhere in the world.

So that's the first reason why overseas investors are creating demand. (I'm not going to comment on the pushing up prices for locals and all that sort of argument that could be for another video)

Bottom line for me is the most important next point.

2. The Government is Making All The Right Moves for Sustained Recovery.
Number two is the government's on board with keeping the housing market buoyant.

Remember Brexit. Yeah, you probably haven't heard about it for how who knows how long... The election maybe... Coronavirus has totally taken over. When, the last election happened all of a sudden, the focus changed from Brexit to Growth. Okay, so put that to bed (For now as it will not doubt arise once people realise that a hard Brexit is the only option left but even that won't stop the economy).

What the Government did was they ended austerity. Hooray... Thank Goodness... Good Riddance...

Think about it... The new government focussed on growth and spending and infrastructure... The perfect combination for the time now and the perfect response to Corona virus.

Finally focussing on the right things we're now going to spend on infrastructure, they put their initial budget in place... I was like 'Wow, that's impressive'. Okay, and then coronavirus happened.

The Recession I Predicted It Just Came a Year early... thanks to Coronavirus

Now if it wasn't for Coronavirus, I had already predicted a recession would happen six months into Trump's second term started. That's right I predicted he would do whatever to win... Well Coronavirus created an opportunity for him to shine and well he flopped. The biggest idiot ever to hold office, became the biggest loser (and not the weight kind).

So there's been a lot of changes happening but the bottom line is, the UK government has stuck to what they originally said to us, that's fantastic news for property investors. Yeah, it's fantastic news for all of us in the UK because even though we've dropped 20.4% in a recession. (With the closing down an economy that's going to happen)

What actually has, and what is looking like happening is the bounce back has been and the Bank of England has come out, and they are normally quite conservative, but even they are predicting a V-shaped recovery, which is great news for everyone and great news for property prices. And that's one reasons why.

3. Stamp Duty Concessions on all Property.
Number three is Stamp Duty.

Allowing homes under that under £500 mark, effectively free of stamp duty is an amazing thing what that's done is really stimulated the entire market (Not just the new homes market). Remember before we had the new home packages called Help To Buy but only if you bought a new home, it was a fantastic thing and resulted in the growth of new homes, and the economy but now this is an economy wide stimulus.

Some people are saying that actually come March 2021 when it ends, that it's all gonna fall over or come tumbling down. I don't think it will again I'll explain why in a minute. So stamp duty... great thing... Awesome thing.

4. Removal of Red Tape for Planning Permission
The other side of it all, is if we want to keep this boom happening you have to ease the planning restrictions.

Planning has been so bogged down with red tape and just takes too long to get through this has meant the holding costs are too great and leaves many sites undeveloped which are not being used for anything else.

Permitted Development (PD) Regulations changed this and was the first step forward in a positive direction. PDs have been a fantastic addition to get effectively disused city centre commercial stuff into residential and productive.

So it's been a great thing but it hasn't been effortless. Now they releasing even more development area and making it harder for councils to deny development. Good news... because it gets things through quicker. All right, and getting things through is critical for our housing boom.

Bottom Up Layers of Stimulus Through Build New Homes
Make no mistake, One of the great things about this whole thing about planning, and the stamp duty, new build Help To Buy and all these schemes they're putting together is that it is going to stimulate the economics where it needs to be stimulated.

In the Bottom (am I allowed to say that? 🙂 

We talk about trickle down economics, which is where you give money to the rich, and then they will (Won't) trickle it down in the form of wage rises and things like but that doesn't work, look at America, so much inequality, no hope for them. 

If you inject money into the economy through building new homes, then you get money into the plumbers, the carpenters, the contractors, all the people that are involved in building, and then they go and spend it in the economy, and that is truly what gets in kicks in economy off.

Last recession, the then Government waited... actually they went down the austerity road... and look where we ended up. They piled on austerity and more austerity for a whole decade.

This time, they're doing it a different way. Now there's huge signals the gov't isn't asleep at the wheel, huge liquidity going into the system. And that will prop the system up now.

Some might say we're kicking the can down the road. I'll do another video on that and what my thoughts on that. But actually, to be fair, I think this is the new way that economies work... they will be investing and injecting money into the economies whenever there's a recession, where there's a downturn, to prop up, so that we don't have these high-highs and the low-lows. 

5. The Market Is Busy with so much activity far beyond what would be called 'Pent up demand'.
Finally, number five is as I mentioned Rightmove had its busiest period in over 10 years and so did everyone. Rightmove is just a stat but the whole industry was released from their chains (The chains started with Austerity then compounded with Brexit.) 

It's great news that people are out there buying, letting and generally still confident enough to make moves. Confidence is such a big part of recovery.  I mean just my team we've had five people buy houses, just during the lockdown alone. So it's it's an incredible time if you can take advantage of that. As an investor, that's where you want to be.

So if you're sitting there and you're not really sure now is the time to get in, well Smart Money got in, it started early August. I predicted it in June I talked about smart money, institutional investors and the herd.

The problem is if you're going to be left with the herd, you're left with ordinary or average growth.  Smart money gets in now, and they ride that wave up, and that is what's going to happen again if you don't get in now.  I don't think we're going to see these huge drops and I think, even the people who say things are going to come tumbling down agree that the UK Government (and Governments around the world) will be there to prop up in whatever way is necessary.

The UK Government has already said 'Whatever it takes', they've said it, and they backed it up and that is the great thing about it is, they're not only saying it, they're doing it, and then putting real proof behind it, which is fantastic. That will play out in a successful and I think a great recovery.

Considering before they come into power, Brexit was there, and everybody was against everybody else, it was so divisive. Now, the economy's come together, you know at the time of crisis, often brings people together. And I think that's what's happened it's been fantastic thing to watch.

What's Your Next Move?
So guys, you know if you're not sure what to do right now, get in and speak to one of the team get a plan laid out, get those risks mitigated because there are risks. Make sure, getting three years and five years in 10 years. Give the team a call or get to one of us webinars, or speak to us online.

Just find a way to speak to us and get through your questions, get confidence, get certainty about what's going on in the market now. Otherwise, once again, potentially, you're going to miss it, and we don't want that.

Live with passion and fun, 

Brett