We were delighted to have Richard Bowser as our keynote speaker at July’s PIM, discussing the current market and the implications of the Brexit vote.
As well as being the editor of the UK’s leading property investment magazine “Property Investor News” Richard has been a hands-on landlord and property investor for over 25 years, with a portfolio in north London and in Co. Durham.
Richard gave us all a fascinating overview of the current market and look at what property investors, landlords and developers need to be considering in the years ahead, as the UK economy deals with the fallout from the Brexit vote.
Darwinism and Property
As Richard highlighted, we are in changing times – and the key to survival and success is to adapt. Here are some of the highlights of his presentation:
Current Economic Situation
- The markets are in shock after the Brexit vote
- Bank rates have now been at 0.5% for 7 years – historically this is totally exceptional; they were last this low in about 1632! Uniquely, a further decrease is now likely
- Quantitive Easing has flooded the market with money, much of which has been invested in the property market – and there could be more in the next few months
- Deflation has been triggered by falls in oil price and food – the Chinese economy is also driving this
- The North East is a different economy with few job opportunities – the Brexit vote reflected the disenfranchised parts of society
Property Investment Market – key factors
- Buy to Let has been a huge success, growing significantly 2009-date, with 2 million private landlords now; David Cameron has been wooing the next generation, encouraging them to buy property – no doubt since property owners traditionally vote conservative
- The tax changes from the 2015 budget will now have an effect on some private investors
- The government has promised to build 200,00 new houses, but this simply is not possible – there are not enough builders
- The planning system is very difficult
- This sector remains extremely strong overall with finite supply and increasing demand, especially for rental property
- However in some areas there is now an oversupply of HMOs
- Property prices are down approx 15% in central London, from the high of April 2016
- Analysis of the housing market shows that poorer areas such as Wales and the North east are still down by 20% from the 2008 high; whereas London is up 20%
Approach to Investment
- With the government wanting to build new houses and penalising private investors in the tax front, it may be wise to consider working with the government, rather than against them – perhaps over the next few years, developers will do best?
- It’s worth remembering that you can always invest via the stock market – being a landlord is only one route into the market
- The key is to look at your objectives – capital growth or income
- In high property value areas, BTL delivers gross yields of approx 4% – in lower value areas approx 8% but with greater risk
- Property prices are all driven by employment – areas with high employment have boomed
- Environmental / infrastructure projects typically have a significant impact on jobs and therefore house prices – knowing your local market and upcoming plans is essential
- Larger investors are following government money and moving to more affordable areas with employment prospects and focusing on development
- Provided you have building expertise, then problem properties can give good returns
Richard highlighted key issues and challenges, as well as different approaches and opportunities in property, stressing the need for local knowledge and the benefits of long term investing. This was a fascinating analysis which kept everyone totally engaged and provoked much discussion afterwards.
We are living in changing times and right now it’s more important than ever to keep in touch with market moves and have the opportunity to discuss the situation with other property investors and experts.
So do make sure you join us for our next PIM on 29 September 2016 at Holiday Inn, Bristol City Centre, 6-9 pm
For more info and to reserve your place CLICK BELOW!
We look forward to seeing you then.
Del Brown and the team at Property Options