Everyone has gone a bit Brexit mad this week, so Rob & Rob are here to discuss what’s going on, how they feel about it and what you should be doing.
If you tuned into The Property Podcast last week, you’ll have heard some of our Hubbers giving their views on Brexit. (https://propertyhub.net/podcast/investors-talk-brexit/) But today, it’s Rob & Robs turn to tell it like it is.
Before they dig in, it’s worth taking a look at the media hype we’re dealing with right now:
UK property market at weakest since 2012 as Brexit takes toll (https://www.theguardian.com/business/2018/dec/13/uk-property-market-at-weakest-since-2012-as-brexit-takes-toll-rics)
UK property market at its weakest for six years, says Rics (https://www.theguardian.com/business/2018/nov/08/uk-property-market-at-its-weakest-for-six-years-says-rics)
UK house prices take pre-Brexit hit, says Nationwide (https://www.theguardian.com/business/2019/jan/04/uk-house-prices-take-pre-brexit-hit-says-nationwide)
Brexit gloom to hit housing market into 2019, says RICS (https://www.bbc.co.uk/news/business-46538831)
Birmingham and Manchester benefit from Brexit blues (https://www.landlordtoday.co.uk/breaking-news/2019/2/birmingham-and-manchester-benefit-from-brexit-blues)
UK house prices make surprise 5.9% rise in February, Halifax says (https://www.theguardian.com/money/2019/mar/07/uk-house-price-surprise-rise-february-halifax-experts-question-reliability)
If you’re familiar with the 18-year property cycle (if not, you can learn more here (https://propertyhub.net/course/the-18-year-property-cycle-explained/) ) then you’ll know that we’re heading into the mid-cycle dip. And today The Robs will be sharing exactly where they think the market will head post-dip.
So, if you fancy a bit more Brexit madness – tune into this week’s Property Podcast. We promise, it’s a good one!
In the news this week, and sticking with the Brexit theme, the BBC have released an article explaining what the 7 possible outcomes (https://www.bbc.co.uk/news/uk-politics-46393399) would be if the government was to get an extension on Brexit. What would each potential scenario mean?
And whilst we’ve got you, make sure you sign up to become one of our Hubbers and receive our valuable (weekly) Hub Extra emails. Create your free account here (https://propertyhub.net/amember/signup) .
We’d love to hear what you think of this week’s Property Podcast over on Facebook (https://www.facebook.com/propertyhubuk/) , Twitter (https://twitter.com/PropertyHubUK) or Instagram (https://www.instagram.com/propertyhubuk/) . You might even have a topic you’d like us to cover in the future – if so, pop us a message on social and we’ll see what we can do.
If that wasn’t enough, you can also join our friendly property community on the Property Hub forum (https://propertyhub.net/forum/) .
See omnystudio.com/listener (https://omnystudio.com/listener) for privacy information.
[Music] the eyes to the right 242 the nose to the left 391 so the nose haveit the nose haveit this is an issue of grave importance for the future of our country just like the referendum there are strongly held and equally legitimate views on both sides it’s fair to say it’s all a bit chaotic right now with brexit but this week on the property podcast we’re going to help everyone C [Music] Sense yes welcome to the property podcast where every week property investors come together to be informed and inspired we normally record our episodes at least a few days in advance but today we’re recording it the day before it airs because everything’s changing on a day byday even hour by hour basis today we’re going to cut through all of that and take you back to the big picture we’re going to explain what’s going on how we feel about it and what you should be doing now as Rob has said this is a very special episode and normally now we do the new story but the whole episode is the news story because there’s so much Happening Now luckily the BBC have put together a fantastic article which is titled brexit what happens now and it looks at all the scenarios that could play out so we thought it’d be useful before we get really specific about property and what’s going to happen there is talk about brexit more in general and look at the scenarios that could play out whether they’re likely or unlikely so so the BBC Rob thinks there’s seven ways this could go just seven just the seven yeah so we’re recording this episode on the morning of Wednesday the 13th of March so yesterday for us two days ago for you if you are listening promptly to this episode there was another vote on Theresa May’s deal which failed today on the day that we’re recording this yesterday for you there’s a vote on whether we should go for no deal at all and Rob fair to say that’s likely to fail yeah it’s fair to say it’s going to fail now we could look very silly and it’ll be a double silly for me because at the start of year I predicted there would be no no deal so let’s wait and see there could be many of you laughing at us right now but we are very confident that that’s not going to happen and we’re also very confident that the government’s going to vote to extend the brexit process now the EU will have to approve that but we believe our government at the very least is going to vote for that so if those two things happen they reject a No Deal and they vote for an extension what are the seven scenarios okay so first option No Deal eventually so we have an extension still can’t work anything out so end up leaving without a deal How likely do you reckon that one is Rob I reckon actually got this has got a chance although we’ve said there’s not going to be a no deal now it’s possible that we get there in the future I don’t think likely but I think the odds increase as time goes by because people may just get fed up of the whole process I don’t think this will play out though out of all the seven scenarios I think number two has the most chance of happening which is another vote on Teresa may steel now you may be thinking well wait there she’s had two cracks at this why would it go through a third time if we have an extension and everyone comes to realization that this is the best worst option we’ve got I know pretty Grim hey then people may be resigned to taking that deal and there’s already been talk that people who’ve said no for the first two times would take this deal if they thought brexit was in Jeopardy so a third crack of the whip it may get through if you think about the voting the first time Theresa May lost by over 200 votes the second time she lost by roughly 150 votes that number is going down she has a chance of getting this through at a third attempt if everyone realizes that the other options just aren’t worth thinking about so the third option is that rather than to May’s deal we throw that out and have a complete renegotiation so rather than just trying to tweak from where we are start all over again that option I would say is very unlikely for a start it would involve Parliament actually deciding on what it wants in the first place so it knows what it’s trying to negotiate for and it would also involve the EU actually wanting to have a renegotiation and it’s hard to see why they’ want to entertain that so I’d say that’s probably one of the less likely ones yeah I’d agree number four another referendum although some people would really want this and some people really wouldn’t I’d say it’s less likely as well three and four aren’t impossible but they are less likely because the time that it would take to put another referendum together plus the appetite within Parliament means that this one probably isn’t going to take place and if it does would just extend the uncertainty for longer I’d say this one depends on the length of the extension so if it’s an extension of a few months very unlikely but if the EU comes back and says well let’s give it another year or another couple of years to make sure we’ve really got time to figure all this stuff out then I think it’s looking a lot more likely because by that point so much time has gone by that there’s more of an argument for going back and asking the question again but on the assumption that it is going to be a short extension as it’s meant to be then probably not going to happen now another thing that could happen Rob the fifth option is that Theresa May calls a general election she’d have to be pretty brave to do that at the moment she would and that’s why it probably isn’t going to happen because the conservative party is barely a party they aren’t together and therefore what is their Manifesto what do the conservatives stand for and because they can’t even decide within their own party what they stand for because they’re so divided I don’t think they then have the confidence to propose a general election things would really have to fall apart for this scenario to play out it’s in Labor’s interests it’s not in conservatives and therefore it probably won’t happen another scenario number six which I think we can quickly dismiss is another VOE of no confidence we’ve already had one which means that is another 12 months before another one can take place the chances of this one happening are really Slim and if it does happen it probably be the same result as last time anyway because the one thing the conservatives can agree on is that they want to be in power over labor and that takes us to option number number seven just call the whole thing off no brexit at all that is an option if Parliament so wishes it could unilaterally cancel article 50 and it could just say you know what we’re not going to do it there’s nothing to stop them from doing that nothing that is except for the anger of roughly half the population it would be a really unpopular move to just cancel the whole thing so if that is the way that things end up going it’s going to happen gradually and it’s going to happen over a long period of time it’s not going to happen over the next couple of months so out of all the seven scenarios this is not a prediction just what looks most likely at this point we will probably vote on terresa May’s deal again is the most likely outcome however no deal at a later date or another referendum can’t be ruled out completely but the politicians when under some time pressure will probably come together and just accept a deal but we will see so Rob that’s where we are at with brexit brexit affects our economy and a huge part of the UK’s economy is the housing market which means that it’s fair to say it’s mixed things up a little bit Yeah so before we get into what happens next let’s have a quick look at what’s happening right now and the links to all these news stories will be in the show notes the first one we know already widely reported the UK property Market is its weakest since 2012 says Rick surveyors from Ricks reporting that sellers and buyers are sitting tight because of political uncertainty the number of people looking for a new home of fell and house prices are falling in parts of the UK like London the southeast and East Anglia what’s the effect of that well stagnant ating house prices according to Nationwide they found that property prices almost stagnated in 2018 they Rose by the smallest amount in almost 6 years worth noting that the Nationwide index is biased towards the South generally speaking whereas the Halifax is biased towards the north so it’s possible that things are actually a little bit better than Nationwide was saying that they were but still not great and they put this down to uncertainty over the economic Outlook undermining confidence in the market so that’s what happened last year and the consensus was that it was going to continue yeah because the BBC are reporting a story that says brexit gloomed to hit housing market in 2019 and there information comes from Ricks the Royal Institute of chared surveillance and Rick predicts that the number of homes being sold and their prices will fall over the next 3 months short period but still not great news because of all the uncertainty that brexit is providing us right now so the word there is uncertainty nobody knows what’s going on economically or politically therefore they’re doing nothing and indeed another study found that transactions dropped by a third between November and January this year and that’s dropping by a third bear in mind from an already very low level why is everyone sitting tight well apart from the general uncertainty Rob there’s been plenty of stories doing the rounds scaring people I think it’s fair to say about what might happen when the uncertainty finally clears and things resolve themselves yes we’ve seen so many new stories that I’ve spun negativity around brexit and you can understand why because it whips people up into a frenzy and in property specifically there’s been some big stories last September Mark conney was meant to have said that property prices Could Fall by 35% now the newspapers did report that that’s what Mary said would happen wasn’t quite true what Mark Carney did was produce a report on the absolute worst case scenarios and was reported as that’s what he said is going to happen but doesn’t matter don’t let the facts get in the way of a good news story the property Market was going to fall by 35% and most people would have just read the headlines and not really dug into the story to see what was happening so there’s loads of negativity out there and Rob that then made people question on what is going to happen understandably and would do things like put off buying decisions definitely and you can see the logic of it well if there’s a possibility that in a few months time the whole brexit thing will be resolved and when that happens there might be this huge drop in house prices then why not just wait and indeed anecdotally I’ve heard of a lot of BU pulling out of purchases both residential buyers and investment buyers just because they’ve got nervous and you can see why it happens especially because every day there is fresh bad news and fresh uncertainty and fresh terrible things that might happen and because the purchase process can go on for a couple of months quite easily there’s a lot of time in there for people to get nervous and think oh actually am I doing the right thing and a lot of time for people to talk to their friends and their friends say oh what are you doing buying now I read that this is going to happen and indeed there was something in the guardian where someone wrote in saying should I wait to buy because brexit might make house prices fall I’m trying to buy a property in Oxford here but some friends say I should hold off on the deal so with all this going on you can see why transactions have fallen it’s not a surprise markets hate uncertainty people hate uncertainty and almost nobody has said well when brexit is resolved things will get better prices will go up that hasn’t really been an option it’s either going to be a catastrophic fall or a bit of a fall or things staying as they are so you can see why people decide to either try to time the market or just try to avoid making a terrible mistake there’s really nothing to be lost by holding off if you’re not in a situation where you have to move so if you’ve not been a long time listening to the podcast you may be feeling a bit panicked right now because wow all that negativity all that uncertainty it absolutely make sense to hold off and just wait and see wrong this is why we repeat over and over again do not let the media be your investment guide because if you have been letting the media being your investment Guardian then you’ve been losing so since brexit was announced and we had the referendum in June 2016 here’s the crazy thing all those headlines all that negativity all that uncertainty UK prices rise by 8% that’s right UK prices have risen by 8% since June 2016 and if you’ve been listening to the podcast Rob you’ve probably done even better than that yes that % number comes from homet track and that is not a bad result really is it for 2 and a half years when things are meant to be terrible and no one knows what’s going on and so on and so on so if you’ve been sitting on the sidelines to wait to see what would happen then you’d have missed out on that 8% but if you’ve been listening to the podcast for a while and you’ve heard us talking about Manchester for quite a while and you decided to go and invest there you wouldn’t be up by 8% you’d be up by 15% since the EU referendum in 2016 Manchester prices are up by 15% so put that another way and if you had not done that if you’d been put off by the media and thought Oh I’m just going to sit in cash for a while and wait and see what happens you would have lost out on 15% growth that you could have had in Manchester and just to rub things in a bit inflation would have destroyed the value of your cash by about 5% as well so it’s absolutely not the case that there’s nothing to be lost by just waiting to see by trying to avoid a situation where you could lose you’ve created a situation where you’ve definitely lost and that’s the data they’re not our opinions that’s what’s happened the media gives you opinions but what we’ve given you there is what’s played out now yes we said these things would probably happen and we went against the media but we’re not the only ones there are people far wiser than us who go against the flow of traffic Warren Buffett being one of the most famous and his very famous quote is probably worth rolling out right now which is be fearful when others are greedy and be greedy when others are fearful and that just means that when everyone is scared or unsure that is a time to get involved and invest and when people are bullish and confident and think everything is flying hold back and that’s really what we’ve done over the history of this podcast when the market has been its the most darkest and the uncertainty has been at its peak that’s when we’ve been the most bullish because where we are right now isn’t going to last this opportunity is only here for a while and that absolutely links back into another one of our favorite subjects which is the 18-year property cycle ah yes the property cycle if you are not familiar with the property cycle go over to property hub.net University watch our free course there it’s so much easier to understand with the visuals but if you are familiar with the cycle then you’ll know that what we’re seeing right now timing wise you’d expect to be coming into the midcycle dip right about now looking at all the evidence that appears to be the case at least in some areas of the country but we all know what comes after the midcycle dip what comes after the dip is explosive phase and yes after that comes a crash again it always does it’s a cycle after the dip you get that aggressive growth in the second half of the cycle that might sound crazy right now I’m not saying that we’re necessarily going to have growth as aggressive as we did in the second half of the cycle last time round things are a bit different but it sounds crazy even to suggest that prices are going to go up once the brexit situation is resolved because the only predictions on the table seem to be different flavors of catastrophe but actually given that so many people have been holding back so many people have been delaying making decisions once that uncertainty clears however it clears whichever of those seven options we get or however many options there are beyond that depending on how things play out when things are resolved everybody who’s sitting around waiting to see what will happen next will know what’s happening next and they will act and because they act it’s going to be a self-fulfilling prophecy and it seems highly likely to me Rob that we’ll get a mini boom we will because the uncertainty will be removed and then people can crack on and the other reason why that boom will take place is stimulus whatever result happens the government is going to make sure it’s a success and will stimulate the market through a variety of measures and they’ll probably overdo it to over compensate for the uncertainty that we had but once we have certainty plus stimulus we have a boom and that is what will play out next so in a weird way property investors today should be thanking our Parliament for being a mess because what they’ve done is by giving us this extens and we’ll see how long it is it’s given us an extension of this window to get in while people are uncertain because when people are certain and when stimulus hits the market the Market’s going to go and the prices you’ll pay in a year or two are going to be a lot more than you’re paying today and the deals that you can push for today are going to be nowhere near as good as the deals you’re going to be able to push for in a year or two now a year or two is still a great time to invest but a better time is right now and know this sounds crazy right when we’re in the middle of so much uncertainty but how often do you hear us this bullish and this passionate it’s only when things get dark because when things get dark we get Brave and that’s what you and many of you have been doing over the last two years since the referendum results have been announced and you’ve been rewarded but we only can encourage you to continue to be brave because Brave can be rewarded Brave is where big results happen if you’re timid and you do small steps then you get small results but if you are brave if you go against the grain and follow the man of Warren Buffett then rewards will come your way we don’t say this every week we not every week getting excited about what’s happening in the market it’s when things like this happen we want as many of you to benefit as possible and that’s why we’re trying to drive this message home so while the media may be getting itself into a frenzy you should be getting yourself into a frenzy but in a very positive way you should be getting very very focused on what you can achieve during this time period because the data is different to what the media is telling you the 18-year property cycle is telling you what’s coming next and all signs are pointing to that’s exactly what’s going to play out so as I said you could see this as a pain in the bum more uncertainty and it’s a bit frightening or you could see it as a gift yeah thank you Theresa May thank you John Claude Juna thank you ERG thank you everyone involved in making this such a mess from an investment point of view at least because the longer this drags on for the longer this buying window remains open so that’s where we stand as of today as of next week everything might have changed a little bit we might know a little bit more so we’ve reserved next week’s episode to talk about brexit again and to answer your questions a couple of weeks ago we talked about this topic on an exclusive webinar for our magazine subscribers which we do every quarter so they heard this first and they had lots of really great questions about the specifics of how we think things are going to play out and what he should do we’ve had lots of questions in by email and through other channels as well but we want more we want you to send in your questions so next week we can answer all of them so send them our way you can email in you can post on the Forum but the best thing to do is probably to send us a message on social media you’ll find us on Facebook Twitter and Instagram at property Hub UK send us all your brexit related questions and on the property podcast next week we’re going to be answering the more so we’ll be back next week with another brexit special and answering your questions we in between be back with ask Rob and Rob so until then take care be brave bye-bye bye-bye