A Positive Spin on Brexit

I know what you are thinking, ‘not another Brexit Article’, and to be quite honest I’m surprised you’ve clicked on an article in with the ‘B-word’ in it at all. However, there are a few articles in the news this week that actually make for uplifting reading for a property investor, so we felt like we had to share. Whichever way you look at the political situation, it is a mess and whether there is good or bad news the government isn’t instilling us with much confidence. The property market, and all markets for that matter, are in part held up by sentiment and this lack of confidence hits sentiment the hardest. Unfortunately, bad news sells, so we don’t expect a change in stance from the media or the bank of England. As we’ve reported on here before however, they have been wrong many times before. So, in this cloud of uncertainty it becomes difficult to find the good news. It is up to us to find opportunity in and amongst the other news. Here are some articles we think actually can be spun in a positive way for property investors.

One symptom of this uncertain climate is that activity has slowed as both buyers and sellers have left the market. This has led to drops in asking prices being reported in recent weeks. This suggests that the remaining sellers in the market are desperate to get rid due to lack of buyers. In all forms of investing we are told to buy when people are selling and sell when people are buying, taking advantage of the relationship between supply/ demand to get the best prices. So, this period where asking prices are falling could be a great time to get a lower than market value deal on a property. Another consequence of slower activity that has been in the news recently is that mortgage broker rates have dropped in recent months. Brokers make their money from lending and with no one borrowing at the moment through fear they are desperate to get their money moving. Over 65 loans requiring only 10 per cent deposit have hit the market in the last couple of months and interest rates for popular mortgages, such as the 80% LTV, have seen huge drops. So, along with potential cheaper prices for property we can also borrow the money for cheaper at the moment too. All in all, pointing to a good time to invest.

Over the last couple of years stricter legislature and increased tax for landlords have caused a decrease in private investors. However, our next article from ‘The Times’, which reports that this decrease has slowed, provides us with more positive reading. Although the stricter rules for landlords may be inconvenient, they appear to have worked to a degree. The fact that the exodus has stalled suggests that the amateur landlords that couldn’t make the new legislature work have been scared off. As well as not having amateurs giving professionals a bad name this also shows that when done properly there is still massive success to be had by investing. Throughout all this market inactivity many Fielding family members have continued income strategies almost completely unaffected as people will always need places to live. This is contrasted by capital strategies which have not been such a successful as market inactivity makes it difficult to gain the price increases necessary for capital gains. However, next we look at some recent news that may suggest positive changes for the market as a whole.

So, if we look forward many signs within property suggest that the market will rebound after Brexit. Property Wire have conducted research on people’s real estate business in recent months and found some interesting results. The first interesting finding is that 55% of people that were planning on buying a property over the past six months have delayed doing so due to Brexit. On the selling side of the market however, 37% of people have taken a listed property off the market in recent months. In previous paragraphs we have established this and established the disparity between buyers and sellers. Even more interesting is that perhaps surprisingly, despite 56% of people thinking Brexit won’t be a success, post-Brexit sentiment is currently quite positive. 52% of responders are waiting for the deadline day to continue with their real estate business, 51% believe there will be a surge in activity with the whole market after the 31st October. If negative sentiment can cause the market to drop due to inactivity, then conversely if people are positive and go about their business as usual then the market will rebound. As this research suggests people are raring to go, so it may be the perfect time to get in to capitalise on this upcoming activity.

In conclusion, when we look closely at the news, we can always find some opportunity. The current situation seems to suggest that property can be obtained cheaply and that a strong market will return sooner rather than later. Even if, despite the evidence, the market does not magically shoot up after Brexit, we’ve shown there is still money to be made in tough periods and getting in right now, while everyone else hesitates, will make investing cheaper and therefore more profitable in the long run. However, as we’ve shown, the market should return to normal very soon. This can be backed up by looking at historical data too. As we know, on average, the market increases year on year showing that after periods of uncertainty or decline there comes a period of recovery where it reaches new heights. So best to get a head start and get investing now.

References

https://www.propertywire.com/news/uk/property-investment-surge-could-come-after-brexit-new-poll-suggests/

https://www.thetimes.co.uk/past-six-days/2019-09-13/business/don-t-panic-we-re-not-as-doomed-by-brexit-as-defeatist-officials-tell-us-lthhs2phn

https://www.independent.co.uk/news/business/news/uk-house-prices-latest-fall-property-market-today-brexit-confidence-a9106681.html

https://www.thetimes.co.uk/past-six-days/2019-09-14/money/its-an-autumn-mortgage-bonanza-qp2v859cv

https://www.thetimes.co.uk/past-six-days/2019-09-14/money/landlord-exodus-slows-as-buy-to-let-investors-fight-back-nkv0vn93c

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