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What are people thinking about Brexit?


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Before I get too deep in, this isn’t a post about politics, sides of the fence, rights, wrongs or any of that.

 

From a pure investment perspective, how is Brexit affecting people’s thinking or strategy regarding property? Are people holding off buying until after March 29th? Are you confident that the UK is an island with a finite amount of space so property will forever be a good investment regardless of, say, potentially reduced EU immigration? Are you forsaking rental yield in the search of long-term growth? Or is it a distraction having no impact on your future plans?

 

i have the opportunity to make a few investments both now and early 2019, but just weighing up whether to stick or twist while we’re in this period of uncertainty...

 

Welcome any wise thoughts...

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I’m definitely investing, Rob.

 

I won’t get political (though I have very strong opinions on politics) but I did lots of research into the Brexit financial predictions / forecasting. I’m a bit geeky and love interrogating data and was pretty appalled at how dire the BoE and ONS are at modelling our economy. Don’t get me wrong, it’s a massively difficult thing to do. However, the simple fact is that any prediction of our economy in 6MONTHS pure assumption. To model anything over 3-4 years is futile, bordering on impossible. It genuinely means nothing.

 

On the back of everything I’ve read, I believe leaving the EU is an unknown. I dont believe the ‘project fear’ line, nor the ‘land of milk and honey’. My belief is that, say, Richard Branson would be successful whether he was selling records & air travel or selling nappies & chocolate. The UK is a very successful, modern, vibrant country, much the same as Richard Branson. I am 100% confident that the UK will thrive and develop alongside the rest of the world - inside or outside the EU.

 

Immigration may fall a touch. I have no issue with that. I want focussed immigration. Even if net immigration fell below 200k, it’d still be out-pacing house builds starts. I don’t believe demand is going anywhere but north for the foreseeable.

 

In 15 years time, we’ll be looking back thinking ‘what the hell was all the squabbling about?’ 

 

 

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Interesting...

 

We definitely have different views about the core topic (I too don’t believe the project fear line, but I also don’t believe the “we were alright before the EU, we’ll be alright after” line - primarily because the world is such a vastly different place and the levels of complexity we now have to deal with are so vastly greater and scale and partnerships mean more (to me) now...

 

...but I do get the point re demand not going anywhere other than north whilst we don’t address our house building issues.

 

Any concerns that in 15 years time, one of the Brexit impacts may be lesser demand meaning it’s difficult to sell a portfolio (or, again, you not worried about the crystal ball stuff?).

 

Thanks for replying btw

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I do think it could have an impact in some property classes in some regions. I'm thinking primarily cheaper housing/cheaper HMOs in areas with lots of lower paid European workers, so say east Anglia for farmworkers. However, we either let the crops rot or find some way to sort it, whether that be employing more UK workers in the region or bringing in foreign workers on visas.

Many migrants aren't EU anyway, so nothing changes for them and EU workers would just need to follow the same rules.

So I'm not sure that makes a huge difference to numbers.

Second part is the economy. So either it booms, wages go through the roof, house prices rocket as do rents, and investors are very happy. Or it tanks, wages slump, lots of unemployment etc. At which point, young people won't be able to get mortgages and will need to rent... Or nothing changes and we carry on as we are, and investing continues to be a good idea.

I'm more concerned about things our own govt may do than the impact of Brexit. 

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2 hours ago, rob matthew said:

Interesting...

 

We definitely have different views about the core topic (I too don’t believe the project fear line, but I also don’t believe the “we were alright before the EU, we’ll be alright after” line - primarily because the world is such a vastly different place and the levels of complexity we now have to deal with are so vastly greater and scale and partnerships mean more (to me) now...

 

...but I do get the point re demand not going anywhere other than north whilst we don’t address our house building issues.

 

Any concerns that in 15 years time, one of the Brexit impacts may be lesser demand meaning it’s difficult to sell a portfolio (or, again, you not worried about the crystal ball stuff?).

 

Thanks for replying btw

I don’t think I will ever sell, TBH. I have 4 kiddies (well, 3 and 1 on the way) and everything I am doing is very much for legacy. 

 

Just on on the demand issue, I just do not see it dropping in any significant way. Free movement of EU citizens made things easier for people but we will still have high net immigration numbers, all developed western countries do (as long as they want it).

 

I have been an economic migrant for large parts of my life - I have lived and worked in Oz, US, NZ and the Middle East. I went for work, rented whilst I was there and then moved on. None of these places were in the EU but it was never difficult nor inhibitive to have to have work before relocating. I never saw it as racist...it seemed eminently sensible to me.

 

Today’s world is international, if a country wants a skill I can offer, they will facilitate my emigration.

 

anywho, we’re not doing politics ;)

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I'm also investing Rob, but I have adapted my approach over time.

 

If you consider that we have had many 'uncertainties' Brexit, the Global Financial Crisis, Scottish Independence vote, 'America First', Bird Flu, Iraq War, Greek Bailouts, large businesses going bust, corruption scandals, currency devaluation, the Euro and the ERM, civil unrest and strikes, 9/11and 7/7, asset seizures and write-offs, wealth taxes, regulatory changes, etc. - we have seen all of these and more besides.

 

So, how do we plan for them? We don't! We plan in spite of them ;)

 

For example...from a defensive point of view:

  • Brexit (or any number of triggers) leads to UK going into recession - invest for income and diversify
  • Interest rates climb or banks need more capital - fix rates long-term, don't over-leverage and don't over-concentrate on a single lender
  • Boom and bust cycles - pound-cost averaging
  • Property tanks - spread investment across different asset classes
  • Etc.

Then, there is the offensive point of view too:

  • Economic slump / growth - have a flexible approach to strategy and switch if required
  • Property market slums - buy near the bottom, force the appreciation, etc.
  • Property cycle swings - adapt to fit the point in the curve e.g. buy low sell high during upswing (take profit), pay down debt in the downswing (grow income) or in a price crash use options (to defer payment) and so on.
  • If the masses are fleeing - swim against the tide and clean up
  • Etc.

All easier said that done I know.

 

In summary: keep calm and carry on...but not without careful thought and sensible fine-tuning as you go. If you have the capability to undertake a few investments, then maybe keep your powder dry with one of them as either a defensive or offensive move depending on what happens...otherwise proceed with the sensible fine-tuning approach I say.

 

Best

Richard

Richard W J Brown a.k.a. The Property Voice

Property Investment Strategist

10%+ ROI property deals every week: check out PROPERTY DEAL TIPS
Amazon best-selling author Property Investor Toolkit & #PropTech, YPN Magazine columnist & PODCAST host

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18 hours ago, rob matthew said:

Just as an aside, what is pound-cost averaging?!

 

No problem Rob. As for pound-cost averaging, this is an investment technique that allows regular and consistent investments to take place that smooth out market highs and lows. In property, it might mean for example deciding to buy one property per year regardless of what happens in the market. Thus you would have paid the average price of property over the period of investing, 

 

A simple example:

 

Year 1 - buy a property for £100,000

Year 2 - prices have risen by 5%, buy for £105,000

Year 3 - prices have risen by another 5%, buy for £110,250

Year 4 - another 5% rise, buy for £115,763

Year 5 - prices fall by 10% in a crash, buy for £104,186

 

By the end of year 5 you would own 5 properties with an average value of £104,186 or £520,930 in total that cost you £535,199 (£107,040 each on average) to buy. However, this smoothed out the highs (£115,763 each) and lows (£100,000 each) of the market and so takes market timing out of the equation.

 

To illustrate, had you bought 5 properties together in year 4, you would have paid £578,815 for them and they would have lost £57,885 (£11,577 each on average) or 10% in value in year 5. However, by pound cost averaging you actually have only lost £14,269 (£2,854 each on average) or 2.7% in a crash. Thus it softened the blow of the crash. The opposite is also true, where it would dampen the benefit of a boom. You could have bought 5 properties in year 1 for £500,000 in total and in year 4 they would have peaked in value at £578,815 (£115,763 each) with a profit of £78,815 or 15.7% in this example.

 

Clearly, it would be very difficult to know exactly in which years would be the highs or lows. But this is the entire point, it's a more stable and long-term investment method that smooths out the peaks and troughs of the market and so takes takes market timing out of the equation. It works best as a long-term buy and hold strategy obviously.

 

Hope that helps (ignore any calculation errors!)

Richard

Richard W J Brown a.k.a. The Property Voice

Property Investment Strategist

10%+ ROI property deals every week: check out PROPERTY DEAL TIPS
Amazon best-selling author Property Investor Toolkit & #PropTech, YPN Magazine columnist & PODCAST host

Web & Blog: The Property Voice | Curated property news & insights feed

Facebook Page | TwitterLinked In

Let's connect...mention The Property Hub :)

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Some really good posts in this thread :)  I am currently buying my first property, so thought I might add my perspective. 

 

My thought is simply to invest anyway. There will always be reasons to delay starting, and Brexit is simply the latest of these. I don't want to get into the habit of waiting until things are perfect, so I am going to just pull the trigger. To keep things safe I plan to protect against the downside by not over leveraging and ensuring that the fundamentals are solid (but I would have done that anyway!). I also think there may be cause for optimism. Aren't good investors supposed to be greedy when everyone else is fearful? 

 

Hope this helps!

 

 

 

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Brexit is a mere blip on the horizon. The economic cycle is all powerful. I don’t lose any sleep over it and ignore all the media sensationalism. When the economy booms which it will over the next 5 years or so we will adapt and Brexit will be forgotten about. Long term I think as a country we’ll do very well and there will be many opportunities available to us that weren’t there before. 

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Anybody wishing to sell by xmas needs to have their property on the market right now.  Those seeking to purchase are in a lucky position as homes currently for sale  will not all sell this year.  Those who like to monitor several properties hoping for a reduction should see lots of price cuts once November looms. And if they are still on the market in the new year there will invariably be a sizeable reduction and Brexit will instill a lack of confidence especially among private buyers. The number  of transactions will be low for at least the first 6 months of 2019.  Bad for sellers but a bonanza for buyers.

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I doubt there will be one that isn’t biased. The same would go for the Brexiteer side of the argument. I wouldn’t waste your time. We’re leaving so the issue is already settled. 

 

I very much doubt that will change. If by some miracle the remainers overturn the decision then I dread to think what the consequences would be. There would be unbelievable civil unrest. Half the population would be up in arms and it wouldn’ t end well. 

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Hi Lee dee, as youngjoe says, I think anarchy would rein if there was a re-vote or anything like that. 

 

There must be balanced books out there - but at the time, I found Professor Michael Dougan to have been one of the more educated voices on the topic, though he was a clear remainer. Google him and he has a few videos on YouTube.

 

Thanks again to all who replied as well. Interesting (and optimistic) thoughts from a property investment perspective.

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  • 2 months later...

Looks as though there's backing for the Brexit draft agreement. Anyone read the 585 pages yet? :D

If not, there's the 7-page summary (not sure how they managed to squeeze 585 pages into 7).

 

GBP was little volatile today, but seems to have bounced back a little from its lows. Let's see how the FTSE does tomorrow on open. 

 

Update: Ex-Housing Minister and Brexit Sec. Dominic Raab has resigned. Should be a few interesting weeks coming up...

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22 hours ago, DerekT said:

Looks as though there's backing for the Brexit draft agreement. Anyone read the 585 pages yet? :D

If not, there's the 7-page summary (not sure how they managed to squeeze 585 pages into 7).

 

GBP was little volatile today, but seems to have bounced back a little from its lows. Let's see how the FTSE does tomorrow on open. 

 

Update: Ex-Housing Minister and Brexit Sec. Dominic Raab has resigned. Should be a few interesting weeks coming up...

Not sure there is much backing for it, Derek! Seems she was struggling with her own cabinet to get the agreement through. It certainly will be an interesting few weeks but, in retrospect, I still believe that we will look back and think “what was all the fuss about?” 

 

With regards to Dominic Raab, I’m sure this is just a political manoeuvre by him. He must’ve been fully aware of what was going to be in the agreement. He obviously has plans of future leadership!

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Politicians looking after their own interests? What?! Never heard of such a thing. :D 

 

I do admire Theresa's resilience though. She's damned either way as she'll never be able to please everyone, so kudos to her for sticking through it! 

 

It will most likely be consigned to a History or Economics textbook for kids in the future, but definitely makes the refreshing of the BBC News website at work more interesting. Not sure who else will resign every time you press the F5 button.

Personal Blog: https://abcdad.co.uk
Property Spreadsheet and Deal Analyser: https://abcdad.co.uk/property-spreadsheet
Looking to read some Property books? https://abcdad.co.uk/books/property-books
Follow on Instagram: @abc.dad

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  • 2 years later...

Three years after haggling in the British Parliament, upheavals at the top of the government, and blaming Brussels to delay its exit, Britain concludes the chapter on approximately half a century of close ties with Europe at 11 p.m. Greenwich Mean Time, Jan. 31, 2020.  I suggest the answer by Angel Trust Family Blog. If you want to know more information about Brexit you can visit the website.

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