The Long Game Wins
Hi there,
Yesterday morning I spent a few hours doing some research.
Looking for positive articles and papers on the UK residential market.
Hoping to find some inspiring articles that I could send out to people I have been speaking to.
“Look, 12% growth this year alone”!
“UK property is great!”
How did it go? Not that well to be honest.
The best that I found;
Mortgage rates may continue to fall, albeit at a slower pace.
Savills 5 year forecast suggesting growth of 24-28% in the next five years. That’s not bad.
More people are now selling, trying to beat the stamp duty change.
Increased stamp duty does not put off expats.
I was in the weeds, looking for nuggets of good news. And, I felt put out for a short while.
Then, I reminded myself of what I always say to people, property is a long term game.
The gains, the benefit, the reward, all comes from the long term…. Not short term news.
It reminded me of a client we once met with in Singapore, first meeting was 2016, followed by subsequent
meetings in 17, 20, 21, 22 and 24….
It went something like this;
2016: “The UK just voted to leave the EU, no way am I buying there”
2017: “This crazy guy Donald Trump just got into power, it’s all going to the dogs!”
2020: “The UK has actually left the EU! Bad time to buy”
2021: ““Covid has changed the way people live, I don’t think property is a good buy anymore, certainly
not in the city”
2022: “What has Liz Truss done? I was thinking about it, but with a 7% mortgage? No way”
2024: Insert some other reason for the world ending.
All valid, I suppose.
In 2016 the average UK house price was GBP205k, last year it was GBP288k.
A 40.48% increase. In 8 years.
Yes, not quite shooting the lights out, but not bad, and this is a nationwide average.
If you look at ‘hotter’ markets such as Birmingham the same period gives 54.4%.
Plus, factor in that you bought 100% of the property with only 30% down (leverage).
Plus, rental income.
Then it starts to look better.
Example - an ‘average UK property’ bought in 2016;
Valued at £205k
Purchased with 30% down at £61,500
Valued at £287,984 in 2024
An increase of £82,984
This is a 134% increase on your initial 30%.
If you want to add in rental income at 5% per annum?
£10,250 per annum, £82,000 over 8 years.
Yes this goes to cover mortgage and costs, but you get the point.
If you are struggling with the same as I was, looking in the weeds for insignificant nuggets.
Don’t. Look at the bigger picture.
The sky may be cloudy and grey now. But the blue sky is just behind it.
Think a friend would like this? Forward it their way.
Have a great Saturday ahead,
Callum