By Paul Mahoney, the Managing Director of Nova Financial Group
Brexit is first and foremost on every investor’s mind at the moment. What does it mean? Is it good or is it bad? How will it impact the market? Well, what it has done to the property market over the past few months is simply reduce transactions, due to the uncertainty it is creating. It hasn’t necessarily impacted prices, aside from in London, where prices were already cooling off.
Given all the uncertainty that Brexit has created, it makes sense to hold off buying, just to see what happens, right? WRONG! If you listen to the media and the general market sentiment, then I can certainly understand why you may feel that way, but, remember, we don’t do well in the market by following the market. Sheep do not prosper!
A great example of why it’s worth buying now is to look back at all the doom and gloom predictions prior to and following the Brexit referendum. Some predicted price drops of 30% plus, and what has happened since then? Prices have risen by 8% on average across the UK since the referendum in June 2016. So, if you had waited for the uncertainty to pass over that period, you’ve missed out on 8% growth in property values or, with a 75% leveraged buy-to-let, you’ve missed a 32% uplift in the value of your equity (given the multiple return provided by the leverage). If you invested in Manchester in June 2016, then, on average, you’ve achieved an uplift of 15% on property prices or a potential 60% uplift on funds applied to a 75% leveraged property! Now, given the market hasn’t exactly been booming over that timeframe, that’s a great return on capital.
Warren Buffet is famous for excellent investment returns, and why? He is a contrarian, he buys when people are selling, and he sells when people are buying. So, how do I suggest you apply this to Brexit? BUY NOW! The uncertainty has created great buying opportunities, and it won’t last long. This is a short-term blip in the grand scheme of things when considering property is a long-term investment of seven to ten years plus.
There is also strong evidence to suggest that we are about half-way through the commonly accepted 18-year property cycle, and we are currently in what is referred to as the “mid-term wobble”, which can be caused by any event, but, in this case, it’s Brexit. What happens after the mid-term wobble, you ask? A BOOM IN PRICES, followed by another dip in three to four years. Be bullish while we have this wobble, thank the politicians that have made a mockery of this whole process, because, what it’s done, is cause uncertainty and buying opportunities, so that you can buy good properties in good areas and benefit from the next boom, which isn’t far off.
What’s more is that regardless of the outcome of Brexit, the Government will likely provide stimulus to make it an economic success and justify their decisions. What happens when you combine a return in confidence with stimulus? A BOOM!
Ignore the media – they only print what sells papers and creates click bait, not the reality of the situation. All house price indices are positive for the current year-on-year 12 months, especially Halifax, which has a weighting to the north, and it is no secret that the major cities in the Midlands and North West are performing great at the moment, which is expected to continue.
So, what should you do? Be brave, buy now, target desirable properties in good areas using sound fundamentals for the long-term, and, once this Brexit malarkey passes, see what happens and you can thank me later.
If you have any questions or would like assistance with property selection, strategy or finance, contact Nova Financial Group on 0203 8000 600, www.nova.financial or firstname.lastname@example.org
LandLord News asks you to accept cookies for the performance of our site only. We do not enable any cookies which track your browser usage or for advertising purposes. To read our full policy, please click here