The Property Crash You’ve Been Waiting For

So at the moment in the UK, the government predicts that we need 300,000 new homes every single year. But in fact, we are only building 200,000 homes new year. So what do you think that does to property prices? Well, if there's an over demand, there's more demand than there is supply. Generally prices come up. That's just macroeconomics. Let's think about inflation. During the pandemic, the government in the UK and all around the world, governments have printed lots of money to help support businesses. Free money wasn't supposed to be used on property, but quite a few people decided to invest that into property. That's one of the reasons we had a boom and also the government intervention. The government knew that the Bank of England was saying property prices were going to come down 16%. They knew they had to step in because the UK property market is very important to the UK economy. They introduced the stamp duty holiday which was obviously extended. They introduced furlough to make sure those people who weren't working because of the pandemic were still getting 80% of the salary.

Lots of my friends who had this 80% of the salary were actually saving money because during the lockdowns, they couldn't actually go out and spend it anyway. So a lot of people strangely had more disposable income when they were only earning 80% of the salary because they couldn't spend it all. Some of those people decided to invest some of the money back into their properties to improve them.

As all of that money was printed during the pandemic, we're starting to see the effects now, higher inflation. For most people, inflation is a bad thing. Have you seen how much food costs in the shop these days? We've had energy increases which have been made even worse by the war in Ukraine. So this all has an effect on us living in the UK and our economy, therefore prices are going up. That’s a hard thing for most people, but I want you to think about this for a moment, as a property investor. Someone who has an asset which is going to go up in time. The more inflation is, inflation is the cost of living, it's rents and also it's the cost of property will also increase. So inflation actually is one of the reasons why we see generally in the UK property prices go up over time.

Right now it's really easy to borrow money and the interest rates, despite rates going up, are still very, very affordable. So it's important to understand that if you are buying an investment property whilst inflation means rates might well go up, I think there are two things to think about. First of all, the government cannot really afford for interest rates to go up because they have so much money they've borrowed. If they go up too much, they won't be able to afford to pay all the interest on the loans they have. So when a government defaults, it's a very bad thing. So there's a lot of pressure on the Bank of England who normally would increase interest rates to control inflation. Although they're going up slightly, their hands are slightly tied. So we're not going to see the interest rates that you might expect And we have high inflation. However, if you're worried about interest rates going up, you can fix your mortgage. I'm just fixing a mortgage right now for about 2.7% for five years. So if you're worried about rates going up, you can take out the uncertainty and fix it. So is inflation a problem for us as property investors? For many normal consumers it is a problem, for us, it's not really a problem. Also think about this. When we take out a mortgage here in the UK it's generally an interest only mortgage on our buy select properties. So we might buy say £150,000 for a £200,000 purchase. Interest only means each month we're going to pay interest. But the amount of that loan stays the same at £150,000 for the duration of the loan. In 20 years time, that house we bought for £200,000 which might have doubled and maybe doubled again to well over £500,000, the mortgage on it, the amount we owe is only £150,000. So inflation is good for us as property investors because it lowers the value of money. So the debt we have, the £150,000 is worth a lot less in 20 years time than it is when we first take out the mortgage.

If you’re worried about making the mortgage payments, the good thing is you don’t need to make them if you educate yourself and buy the right property, in the right area. The tenant who's living in the property covers the mortgage and the insurance and the maintenance. They cover all the expenses and you still have some money left over at the end of the day. Now, how do I know all this? because I've been been investing for a long time. I've been teaching other people, but one of the things I want to share with you and the reason for this particular title is because I don't believe we are going to see a property market crash.

Many people are saying, oh, let's wait to buy when it crashes. Well, it might be correct. It might not. If you read my book ‘Property Magic’ you'll understand the five golden rules I talk about.

When you find good tenants, inflation and rising interest rates are not genuine problems. The actual problems are dealing with family and friends stating “oh I don’t think you should be investing in property, it’s awfully risky”. Well yes it is risky and you can make mistakes, but if you want advice you need to speak to people who know what they’re talking about. If you want to learn about property, you speak to someone who's got lots of property and ideally has helped other people do it as well. So your family and friends who've got an opinion about property, that opinion is probably based on the media and newspaper headlines and newspaper stories, et cetera. News stories often focus on the negative. They want headlines. They talk about market crashes because that's far more interesting saying, well, property market going to continue to go up as it has for the last few years, that doesn't sell newspapers. So when you're looking at the news and I'd suggest actually you don't really look at the news, don't put that negativity in your head. You got to be very careful. Family and friends, they love you. They're concerned, they don't want you to lose money. They're coming from a place of caring for you saying, oh, I don't think you should do that. But the problem is no one ever teaches you about this in school. The only way you're going to learn about this is maybe you are lucky enough to have family or a friend who has been successfully investing in property. That's great. Or you read information like this on a blog. You train yourself, you listen to podcasts and things and learn from people who are actually doing this and recognise that now is always a good time to invest as long as you know what you're doing.

It's really important to get the right kind of people around you and what I'd encourage you to do is find some like-minded people who want to achieve what you want to achieve. People who are going to support you and champion you rather than telling you what you can't do. My strong recommendation is to go and check out the property investors network that I set up back in 2003, it's the largest network with 50 plus meetings around the country every month, apart from August and December we do big national meetings. It's a chance for you to go and meet people in your area who are like you, who are doing what you want to do and be inspired by them and learn from them. You see if they've been successful and they've done what you want, it means it's possible. You want to listen to them rather than people telling you what you can't do because they don't think it's possible to replace your income from property.

Is it hard? Of course, it's hard. You’ve got to learn how to do it properly, but we can help you. We've been teaching people since 2003. And if you want to come on a training course and accelerate your learning, we'd be absolutely delighted to help you.

So if you want to come and do this training, obviously you can reach out or we can help you with that. However, the first step is to come along to your local property investor network meeting. If you've been before, you know how amazing it is to only pay £20 to come along. However, if you've never been to a pin Meeting before, there's a link below you can click to go to, to all the pin Meetings. There's also a voucher code. It's in the description below this video. You can actually come to your very first pin meeting, completely free of charge as my guest. So you can come and check it out for yourself and decide if property's right for you and see how we can help support you on that journey. Everybody's welcome to come to a pin Meeting. Most people are pretty new. We have lots of very experienced investors who go along and they might know a lot about property, but they recognise the power of networking, connecting. Remember your network is your net worth.