If you read the news, you will have seen the articles stating house prices up and and house prices are down but they are not from the same source or the same area. It’s a strategy the media use to throw you into an endless frenzy of on-the-edge uneasiness. Ignore it and go back to basics.. Namely follow the property cycle. Let me explain…
Prime Central London has had substantial growth, but it’s also been dropping and stagnant for the past 4 years but it’s recently settled into small increase again, Zones 3,4 and 5 have been growing but it’s now dropping. The Major cities are still growing and the towns well they have largely done NOTHING for the past 10 years. This is what we call the Ripple Effect which is just the usual property cycle at play.
How can I say this with a level of certainty… Well I cannot, there are so many factors at play that I could well be wrong, but let’s look at the facts so far. We’ve had Brexit, tax changes, mortgage restrictions all to dampen the market when it could have been galloping away, these all act as brakes on house prices, which mean there's less growth and therefore LESS CORRECTION (Good news!) when it naturally happens (as part of the cycle).
Wages are growing, house prices are in check and just about everything else in the economy is normal except for the ELEPHANT IN THE ROOM - BREXIT… I believe the EU and UK politicians will sort it out and we WILL HAVE A DEAL. Politicians are FIRSTLY about getting voted into power, they secondly about KEEPING THEMSELVES IN POWER. Having a NO DEAL BREXIT is a failure and would warrant a change of government on both sides - EU and UK. They cannot afford to have this happen.
Imagine being the Prime Minister who let through a NO DEAL… It won’t happen… What will happen is a DEAL. We believe the markets will play along and everyone will go back to normal maybe after a period of absolute disarray of about 3 to 6 months.
In that time those that jumped out will think they won, breathe a sigh of relief and think how smart they were at predicting the right outcome… then the market will come back stronger and they will be kicking themselves they got out, didn’t buy or made excuses. I have seen it happen so many times before.
Let’s face it, we were told that a leave vote was going to be disastrous the day after the vote, remember, Cameron, Osborne, old PM’s, even Obama said his piece, but apart from a drop in the pound and no leadership for 2 years, the news has actually been pretty positive. Why? Well welcome to my Three World Cities Theory…
I think that most people within the UK don’t realise that in just a few short years, despite the Global Financial Crisis, Brexit and what appears to be the total breakdown of political inspiration and leadership, the UK has gone from being a one world city (London) to three world cities (London, Manchester and Birmingham).
Investors have recently pulled their investment resources away from the towns and placed them squarely in these three cities. The towns are not attracting the talent.. the young or.. well anyone really. This means that an ageing population is left behind in these markets where little growth or investment is happening and little chance on capital growth on your properties.
The cities such as London, Manchester and Birmingham are vibrant places being rebuilt with massive inward investment from all corners of the globe, major fund managers are piling money into them. These are the cities to invest your capital and ride on the shoulders of the big boys - where Capital growth is most assured.