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SUMMARY KEYWORDSpeople, recession, property, inflation, prices, uk, slow, happen, year, talking, thinking, downturn, market, metaverse, long, starting, buy, terms, quickly, build
Brett Alegre-Wood 0:11
Hi, guys, welcome back for another week. I’m actually there’s only two of us today. So Ritesh welcome. And yeah, so we thought we’d talk about the year that was, I guess, the year that we’re expecting tomorrow, and sort of what’s in store for us? And I guess obviously, there’s lots of stuff happening, lots of stats coming out and things. And I think it’s, um, you know, we were just, we were just talking before about the fact that you’re not going to find any positive in the news, au in terms of stuff that’s going on, because obviously, the government wants us to spend less and so they’re gonna make it that happen through negative media through all everything, you know. So it’s interesting cuz I’m in Australia right now, back in the UK in January, but you’re obviously getting the news over there isn’t really that negative? Because it seems to be there is lots of negative and and UK seems to be the worst faring of all the countries in the world. And I’ve seen that happen continuously for 20 years. Really? You know, it seems to be the UK is always the worst hit the worst this the worst that? I don’t know whether that’s actually correct. But yeah. What’s your thoughts on that?
Ritesh Patel 1:21
Yeah, it’s the UK media, right? Whether it’s our economy, our property market, our job market, our sporting team England World Cup, or too much about? It sensationalism, right? I mainly look, it’s the media all over the world, but the UK media do like to dig their nails in really hard and pick up on the negatives. And, and really, it’s interesting, you know, when I have my morning coffee and put the BBC News on, I’m going to stop to I’ve got to stop doing that I just jumped on my podcast instead. But it’s always, you know, doom and gloom, even even to the degree when there’s something positive. out, you know, as in where we had some growth, which was unexpected, yep. I’m not saying that growth. You know, I’m jumping onto that growth rigour and say, yep, look, everything’s rosy now, and we’re jumping on the other end, and everything’s gonna start going up. I’m not, but it was some positive news. But yet, somehow the media that the BBC managed to sort of very quickly put that fire that that little bit of optimism out there by saying, we’re still going to be in a deep recession, it could be the longest one ever. And, you know, for me, it’s like, you know, we listen to people from Bank of England, or, you know, Jeremy Hunt, right now, they are so focused, and I’m not saying wrongly, but they are so focused on that inflation trigger coming down, because they’re passive Bank of England are tasked with that inflation target, you know, and it’s just simply, if you’re working for a business, if your role is x, and that’s your task, that’s your KPI, that’s what you’re measuring, that’s what your bonus is coming on, everything is about that, then, of course, you are going to be focused on that part of the business, and up to a certain degree not care about how what you’re saying, and what you’re doing is sometimes affecting that section of the business, that section of the business, you know, because they might, like new boys. So not, I’m not surprised, but it’s just a case of being aware of it, and understanding the detail behind what, what is actually happening.
Brett Alegre-Wood
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3:25
But I think it’s interesting because, obviously, you know, you’ve got strikes, you know, and there’s strikes happening today, tomorrow and two days next week, which is always the case when this happens when inflation hits some recession. Everybody wants more money, because obviously their cost of living is going up, etc, etc. But it is it is an interesting thing, because they and I was watching a I think today where the the you know, it was I think it was might have been Jeremy Hunt saying no, we have to stay focused on inflation, it was almost like forget everyone else, forget the people forget everything. Let’s just go back to straight up, you know, get inflation to check in a little bit. All right, well, it won’t be all right. All these people who aren’t surviving and actually aren’t paying their bills and aren’t heating their home and all that stuff are going to be right and I think that’s where I think economists you know, I have studied the economy and university economics at university and school and all that stuff and and I think it is very easy just to go okay, if we get inflation down then we get this but you forget about the human aspect and I think anytime we don’t bring the human aspect into something, you are going to miss something you know, and you are going to is going there is a cost to that. Will there be a political cost would that be an economic costs will there be a financial costs you know, that’s yet to be seen? You know, so it Yeah, I mean, the there’s some pretty serious strikes there and it looks like there’s no budging, so it sounds like we might be in for a winter of discontent. Yeah, I mean, what am I other mates is actually holding hang over there he lives in Singapore normally, which is, you know, 31 degrees normally during the day, it’s minus six where he was, who shocked me the temperature. And so he’s like, I’m glad I’m leaving tomorrow. But I tell you, it’s gonna be interesting. We’ve had our maintenance team, we normally get about 40 to 50 calls per jobs per week, we’ve been having 70 to 80 calls per week already. Which is a big, big jump. Now, normally, that would happen in January, but it seems to have been brought forward. And obviously, it’s a particularly cold spell. You know, I guess that’s going to have, you know, that’s going to weigh in on the economy. And I guess flipping over to one of the other conversations to talk about is the GDP, you know, we’ve just had a quarter of negative economic growth. Point two, we get another one, we’re in a recession, even though, who knows, our politicians might do what the UK or the US guys have done and said, you know, no, that’s no longer means a recession? Well, it is a recession. I think we’re in recession, I think, you know, things are slowing down. Maybe we might sneak out with some positive growth. Who knows, but I doubt it. But yeah, I guess, how are you? Are you finding most people are talking about this? When you’re on the phone to clients, and that sort of stuff? Are they is this forefront of everybody’s mind right now? You know, in terms of recession, cost of living crisis, all that.
Ritesh Patel
6:31
Between our clients? No, they have not been so much sort of involved in that conversation about the cost of living, of course, it comes up and everyone’s aware of area, everyone’s gonna feel it up to a certain degree, how much depends on each individual situation. We talked about more than, you know, when we’re talking about investing in property and their thoughts, whether it’s someone who’s new and thinking about jumping on, or whether it’s someone who’s already got a portfolio and is thinking, Where do I go from here in terms of expanding do I buy do I hold do I sell the key, the key number that we talk about a lot is where interest rates going. Because they have a sort of twofold effect. One effect on your existing portfolio or property based on where your mortgages are, and when they’re up for withdrawals, and what that’s going to mean, from a cash flow perspective, you know, how much more money you’re gonna have to check into that, if any, but let’s be honest, most people, we’ve all been spoiled, rotten, super low interest rates for a super long period of time. So we have to sort of manage that. But it’s a case of this, for me, this is where investors who have set about, you know, having a strategy and financially planning things for the long game will be okay. Because, you know, they would have mapped out interest rate increases at some point and factored that into the cash flow, versus people who are just buying on the short term whim of low interest rates, you know, customers are really good, let’s buy, that’s where it’s going to stay. If they haven’t factored in those rate rises, they might be not gonna say it’s a surprise, because it’s not a surprise anymore. Everyone knows about it, but they might suffer a little bit.
Brett Alegre-Wood
8:14
And it’s interesting, because this out of all the recessions and downturns and, you know, shocks in the marketplace, as I’ve been involved in in 30 years. This is the most predicted, most telegraphed. It’s almost like, you know, we talked about talking ourselves into a recession. Well, we definitely been talking ourselves into recession, because everybody’s known about their succession, it would be very hard to sit there and go, no, no, there’s not a recession, that might not happen. Actually, you know, I mean, the markets have dropped off in terms of the equity markets, commodity markets, all these sort of things, you know, tech bubble has burst, you know, pretty much every aspect has happened. But it’s a bit surreal, because normally, you have this one thing like maybe COVID, or maybe the global financial crisis with Lehman Brothers. But this time, we haven’t really had that one, you know, bubble burst. And I wonder whether the bubble is still to burst, or whether this time, it’s more of a slow on a slow unwinding, in which case, if that’s normally have the bubble burst, and then you got two years from there, where you sort of turn it back around. I wonder whether this is a slow burner where we’re, you know, we’re shutting off this shutting off that shutting off that. And it may be a, you know, a two year that starts or maybe a four year or whatever, which, obviously, you know, Great Depression was four years downturn. And I’m not saying that this is going to be the same thing, but there are a lot of people saying that is the case. But there’s also a lot of people saying it’s the opposite. And that’s why they’re saying they shouldn’t be raising interest rates because it’s gonna kill off all demand and hit us into deflation, which, and I’ll be honest with you, you know, it’s beyond my economic capability to know what the hell is going to have But I think we’re definitely gonna see a downturn. But whether it’s going to be a long term massive downturn over a long period of time or not, I mean, that remains to be seen, you know, who knows? I don’t know. I guess it’s hard, it must be hard for you guys. Because, you know, you and your team are on the phone all day, every day talking to clients. So you’re getting, I mean, I do videos, and I talk about this sort of stuff. But a lot of times, the feedback I get is from comments in the social media, but you’re getting real life people, you know, clients, although it’s probably isn’t real life, because a lot of our clients have money, they have good jobs that are relatively secure. And a lot of those guys are looking to invest now and take advantage of some of the deals that we’re negotiating. So maybe we’re just in this warped sense of what is reality, you know, that we live in, you know, to some degree?
Ritesh Patel
10:56
I think it’s because of the for every, for every downturn or, you know, what are the pain points that, let’s say, the UK clients are feeling right now, or thinking they’re going to be feeling there’s the opportunity for the international market? Because we effectively don’t, you know, we have a lot of UK clients, but we also have our fair share of international clients, you know, yeah, at least, Africa, you know, the reaches, obviously, pretty wide. And what I’ve found over the last last month or two is, a lot of them who haven’t been too active, in terms of investing or in conversation have sort of dropped a cheeky email, since the Sterling went like this. And for them, UK is 15 20% discount. None of them are thinking or last time they bought was a period when the market is where we are heading towards maybe a little bit now you know, what a bit of a downturn Sterling’s down all those things, and the opportunity opens up with them. So, you know, for a lot of them, that are pretty confident that a market like the UK, the economy, like the UK, it will always come back. It’s a matter of how long before that’s the economy recovers and Sterling comes back. legal system is strong political system is strong. I say that with a bit of a smartphone. But look into his compared to. So
Brett Alegre-Wood
12:33
I think, you know, on that point, the political system being strong, there’s no doubt the political system is strong. My, my healthy scepticism and I guess conspiracy theorist type thing is, it’s just not serving the people. It’s serving the politicians and the wealthy class. Actually, the politics is very strong, the politics is very secure. The rule of law is very secure, all these sort of things, which actually were, you know, the cornerstones of democracy and capitalism, all of a sudden, for me have been turned on their ass and turned against who they were serving, you know, and I think that that’s more, you know, my point. But interestingly, people outside the UK still see the UK is a great place to invest in and I’m, I have no doubt it is including London, and, you know, and now in fact, Manchester and Birmingham, to a lesser degree, Liverpool, commuter towns, you know, I mean, all those sort of places are, are quite recognisable, you know, even though England can’t win a World Cup. Seriously, we’re having a conversation totally off track. I reckon Argentina is going to win. Because the last three World Cups, whoever played Australia and beat Australia, in the rule of 16 went on to win the cup. So clearly, Australia is a gonna get hammered for that. Yeah. But I mean, I think coming back to the sort of property side and what 2023 has in store, I think we’re definitely gonna go into recession. I don’t think in raising interest rates like we have been, and not get some, you know, kickback from that. The question whether we go into deflation, you know, if we’ve raised them too much, and actually now we’re gonna drop like a stone. I think the positive thing and what they’ve already said, is that if they raised them too far, they can at least stimulate, you know, the other way, which is not necessarily a good thing, either. But I think, you know, the, the inflation is pretty high, and we’re still the highest, it’s come down. I mean, we just saw it.
Ritesh Patel
14:47
Where is it? So no point 4% Again, 10.7. Now,
Brett Alegre-Wood
14:51
yeah, so 10.7 You know, which is slowing, so at least it’s not continuing to go up because it was 11.1 In October a 10.9. So it’s slowly coming down. I mean, probably not as much as they would have liked and probably not as much as we would like. So what’s the predictions for our interest rate rises tomorrow, I think it is 15. Tomorrow, tomorrow,
Ritesh Patel
15:17
pretty much calling a low point 5%. In there, because then like I said at the beginning, they will keep going until they really hammer that inflation out. Because the last thing they want is for it just to become the norm. And the last thing we all want is for it to become the norm, because it is this common thief. As we say, inflation, you know, it just eats away money. You just run around longer than it needs to be, you know, so for me, obviously, there’s two camps, and I’m in the camp very firmly of look, it’s going to be painful, it’s gonna be painful for them, it’s gonna be painful for me. But I’d rather go hard at the beginning and do what has to be done to get rid of it and get it get it to the up and down very quickly. Versus versus, you know, having it lingering around and the powers to be not making big decisions early on, and which will then fix things in the long run, you know, because it’s all about looking at that long term. For me,
Brett Alegre-Wood
16:24
which it’s interesting talking about decisions early on. I mean, realistically, most governments around the world, they totally let this one slip, they printed so much money, thinking that that was going to be okay, it wouldn’t have this thing in the tail. But it did have this thing in the tail. And you know, it’s it’s hard because you think that after so many bloody years of economics and economic theory, that you they would have nailed it by now. You know, we can do amazing things with AI. And yet we can’t get something as simple as, and realistically, it’s not simple. The economy, you know, surely somebody has to come up with an AI that can run the economy for us get rid of all the politicians run the I’m sure that’s on the cards. I’m not sure what colour politicians will allow. But yeah, but it’s it is going to be addressing because obviously inflation, at least now started to come down. The question is how quickly it comes down. Obviously, we’ve got the heating bills, which people are going to get hit with. And I guess, you know, we’ve got the normal, slow time through winter, which is also good. So, you know, we’ll see over the next sort of three, six months, until spring, then that it’s going to be interesting to see if we get the spring bounce or not. Because obviously, house prices started to drop, things have started slowing down office have started to slow down, or I’ve heard, actually, I’ve had some, in some places that offers are actually starting to come back on the table. So you know, it’s hard because every everything that you hear negative, you also get a positive. So it’s a hard one to know. And to pay, you know, to say this is what’s going to happen. Normally unlikely I get this, what’s going to happen? You know, I’ve looked at this, I’ve looked at this, and this is where I think it is. But right now, I think there’s there’s two camps. There’s this camp, and there’s that camp, and I’m normally the one that sits in the middle somewhere, you know, or I’m more on the positive side, I think we are going to go through a period of you know, I think we are there is some pain to be had, which we haven’t had the shares, stocks, commodities, all that sort of stuff. We’ve had attackers at it, property hasn’t really had it so far, because we’ve been coming off so much momentum, but then property didn’t get it didn’t start until later with COVID Boom. So when all the money got printed, it had to work its way through the economy. And property is one of the last things that kick off. And so last thing is a slowdown as well. So we may see that. Yeah, that happens over over Christmas and New Year. I guess, you know, we’ll say I hope that it does. But I think the other problem you’ve got is the government’s not making enough properties, they’re not making it easy. They’ve just dropped the housing targets, which means local councils can decide on their needs, which means they could make the choice, you know, given arm to a suppressor and all that not to build more properties, which is just going to send rates up even higher, you know? Yeah, and that doesn’t solve the problem. You know, what we really need is we nearly need to reverse back to Brexit, invite some more, you know, Eastern European people will come work and do all those low labour jobs and keep the inflation down. And that will solve all our problems. Maybe that’s simple. But yeah,
Ritesh Patel
19:40
I think the supply limit is an interesting point. Because what we’re now in our world new build the new build world. What we’re finding is, you know, there’s a lot of developers who are building big schemes that we get involved in, or not having too many conversations around launching the next one. The next phase, the next phase, the next phase. And I’m not surprised. And often a question that has come up with a lot of our clients is, you know, when they’re about to sort of move ahead with a project is data concern, there’s going to be, you know, a lot of properties being built here, you know, so their concern is, will my rent out? Will there be too many? What if the market slows down, there’s too many properties. And this is where I’m always I love what you’ve got to work with in the right areas, of course, we should have got the population, the jobs, the infrastructure, support, that level of development. But secondly, it comes down to working, you know, being commercially smart working with smart developers, you know, which is a value we massively bring in, because we know, like some, some of the developers we work with not gonna mention any names, what they do very quickly, when they realise that the demand side of things is going to slow down, instead of building more and more and more are forcing themselves to have an oversupply, which could then lead to prices having to come down, slow down, future build programme. So they’ll stop that specific development, that area of supply, you know, and that even if prices, they’re not doing this, they’re not doing this, they just sort of sit around a bit. And then when things improve again, you know, they’ll start ramping it up. And then what you find is when the demand level goes to, because you know, make no mistake, people are not if people are not buying property right now, it’s not because there’s no demand where people don’t have nowhere to live, have too much too many properties, or there’s no anything, it’s down to uncertainty in the market and personal circumstances is making them sit on their chair and wait. And let me see how this plays out. Once this plays out, the demand that’s built up over the next six months, 12 months, 18 months, it all comes flooding back into the market. And that’s when either developers will start launching and selling very quickly and prices start doing this. So a lot of people who have been investing for a while in the industry know that actually they love to come out to play now when there’s some fear and call around, because now they can, you know, maybe get a better deal. They can not be hounded and pushed into, Oh, you better do this now or the possibly going up next month. They can they can make a decision and, and lay the foundations for what’s going to come in 123 years.
Brett Alegre-Wood
22:22
But you’re right, some of the conversations we’ve been having with developers is right now they’re slowing down their launches, which is exactly what they were doing this part of the cycle. But you know, I can remember, you know, last cycle a cycle before, where once, once the time comes where things are starting to stabilise, the economy is getting back, all of a sudden, then there’s a flood of properties coming on. And that’s where every single weekend I remember it, I remember I moved to Singapore in 2012. Because in 2012, I was flying over there once a month, spending a whole week doing meetings, the whole week doing seminars, we had launches, we had an every single week I was doing it and it just got too much flying. And I said to Arlene, let’s move to Singapore grow the business there, you know, because the family and that sort of thing. And of course, you know, we had three or four years of just launch after launch after launch after launch. And then it’s really slowed down now, you know, and it’s been slow, realistically, certain the London side of things have been slow. But that will come back, you know, and that that pent up demand when it does come back is huge. You know, and obviously a lot of the developers we use, they’re big enough to be able to slow down or Quicken I think that this is where you got to be careful, because some of those some of the developers, they’re desperate to sell their 20 units, and there might be 10 units in and all of a sudden, now sales are slowing down and they’re struggling. And that’s when now you’re seeing some discounts come out. But some of those discounts, you’re like hold on a sec, but we might be buying into a site that might fall over. So you’ve got to be careful. And that’s why we’ve you know, we’ve spent a lot of time picking and choosing who we work with, so that we don’t get that those issues so that we do have they are round. At the other end of the, you know, the the the recession. It’s interesting, we are talking about recession, as it’s inevitable. However, you know, I was thinking today and I was just going through some numbers and some stats and looking back in history and looking at, you know, where we are and what’s happened. You know, there’s there’s also another case, which is a really a contrarian thinking, which is that if you look at what’s gone on, yeah, in terms of the share market, and all that sort of stuff, it’s shifted a massive amount tech bubble, all this stuff. The only thing that hasn’t happened so far is the unemployment rate. Yeah. So it assuming that, you know, and so the premise of this is that maybe we’ve shed off what we needed to shed and now we may be at the bottom of the market. Yeah, ready to head out. Out of that, yeah. Now obviously, with interest rates and inflation still going, that’ll take some time. So I’m not saying that we’re just going to, you know, grow 10% next year or anything like that. But maybe what that means is that a lot of what normally happens in a compressed fashion, normally recession is two years, one year heading down, you know, six months of when you’re heading down, and then the rest of time coming out. But because a lot of the stuff that happens in that first six months, or 12 months has happened over the last 18 months, maybe we’re in for a different thing, which is more of a, you know, you normally have a U shape, or a V shape or a W, maybe what this is, is more like a ball shape, you know, where it’s kinda slow down and Slow Out, you know, who knows, or might be slow down, and then quick out? You know, I mean, that’s one of my sort of contrary theories that I’m thinking, is that possible? What’s stopping that? But so far? Look, yes, unemployment, you know, so it all depends what happens with that employment. But with so few jobs around, you know, I’m looking to hire more people. I’m not looking to shed people. Whereas come the last recession, we had 70 Odd staff. So it was kind of like, wow, okay, do I really need seven year old stuff? I was kind of rationalising. Now, I’m sitting there going, No, no, I need to hire more staff. You know. So and I know a lot of businesses like that maybe this is a totally different set of circumstances. And maybe that’s what we’ll see. You know, I don’t know, you know, it’s a hard one, because you look at some of the markets or some of the share values. And I’m like, maybe I need to start jumping back into my shares trading again. Now, not waiting. But it could be a W, you know, so we could be coming. Come down. You know, it looks like it’s coming out or the potential come out, and then we hit the next one. Now, what do they call it? Dead? Cat bounce? Who knows? But yeah, so I suppose the other side I was gonna look at is it which is totally separate to all this stuff, kind of, which is AI. It’s amazing what AI is that I’ve been playing with it over the last couple of weeks and days, nessa stuff. And so today, I wrote my first one, I didn’t write it. But virtual Brett wrote, and you know, so what I did is I put into this, I’m using, I forgot what it’s called. Now, it’s not the normal one that the chat GPT that everyone’s using. It’s the other one that I’ve got, which is very similar, but it has a more up to date. Things I can do news effectively. But so I thought I’d just put in, you know, and I put in what are the top 10 You know, biggest news stories in the UK property and UK economy today. And it pumped out these 10 things, which, interestingly, are pretty topical right now. You know, and then I said, take these 10 things and write up a 3000 word article about it. So we’ve got like a whole article there. You know, on the website, you can check it out. You’ll see it does say virtual Brett hosts, I don’t think that is me writing this. But actually it’s a pretty bloody good go at it. You know, I mean, economists are predicting housing market boom and crash in the in the UK, property market downturn for potential crisis for 30%. You know, these are predictions that are out there, increase mortgage increase concerns that’s happening anyway. Because obviously, interest rates going off house price correction unfolding faster than anticipated. Yeah, you know, things have slowed down, certainly asking prices and things like that. But although house price aggression, the the amount is not huge. But it is happening already. Yeah. rising interest rates. But to be fair, would have happened anyway, because we’re going into winter in a rising interest rates and soaring inflation weighing on global housing market yet Correct. You know, large fall in home and new buyer inquiries in October yet rising unemployment risks adding to this is a big rising unemployment risks, adding the pressure on the UK. So it’s the risks right now, it’s not the reality, actually, a lot of businesses are still looking for people, because they’re looking for people. You know, maybe that is going to be our saving grace, because there’s so few people to fill so many jobs. So just keep that in mind. Because that’s something that I’m going to I’m actually going to do a bit more research into it. And that may come into where I get my predictions before the end of the year about things may be better than they seem. Based on that one thing, the unemployment rate UK economy contracting third quarter, yep. So it’s contracted point two. So it’s not a huge contraction. But it’s a contraction nonetheless. Danger in housing markets if unemployment rises sharply. That’s pretty stating the obvious limited risk of shock reverberating through fight wider financial market. And the reason they say that is because basically banks and financial institutions have been called to account they’ve been putting in responsible lending all this sort of stuff, which has happened Since the GFC, the global financial crisis, which are already in place, yeah. So they’re likely to be a lot more robust. But it’s pretty interesting. It’s an interesting article to read. Because it actually, for the first time, I’ve used a lot of these things in the past. And a lot of them just don’t write very well don’t make very much sense. Actually, this, this one is doing pretty well. And I’m pretty impressed with it. So yeah, we’re starting now to integrate a lot more AI into the stuff we do, certainly in the researching side of things and getting that and then I’ll take that reward myself. And I’ve been doing that for quite some time. But yeah, let’s see. I see. Any thoughts for you? Ritesh.
Ritesh Patel
30:43
In terms of the AI the metaverse well.
Brett Alegre-Wood
30:52
It’s funny actually, because we’re, like, I’m right up on the metaverse, I’ve been sort of researching for a while. We’re looking to take your decentraland potentially take a plot of land to put our office in the in the metaverse. And so I’ve looked at that, you know, because I think as much as people are denying it, as much as it’s taken a kick in the guts, it is going to happen in things just as we used to trade face to face and go into a shop. We then went to the internet. The next is the metaverse and potentially the metaverse will be a pair of 3d glasses, you know, that are attached to our phone, they’re projecting onto our eyes, eyelids, whatever, who knows, probably ever even a neural link in the back of our head. It will happen because there’s so much technology, and so many smart people that are building it out at the NSA with properties. And I was chatting about this the other day with one of my mentors, he you know, he’s a mortgage broker runs a non bank lender in Australia, which you know, helped set up many years ago. Now, but I said to him and just about this whole concepts, you know, and the reality is it is going to happen and things are moving that way, even though people don’t, you know, agree with it. And I think it’s getting more and more of a part of our life as we have it. So they’re already starting to think about how that affects. But what I was saying was I don’t think anyone’s ever I don’t think anyone’s paid it and done. Ai prop Tech really, really well so far. I think we’re still in the early days of it. I think there’s still a lot of opportunity. So yeah, Darren has just sent us a message so he said, Geez, I didn’t finish change the colour. Hey, Darren, how are ya? So land registry, average house prices shows terrace prices have taken overtaken flat prices since the start of the year. Do you think flats undervalued to terraces? i Are you talking about a specific area? I thought it was the other way around that that action? How? Oh, actually, it might be new builds.
Ritesh Patel
33:06
New builds? Usually builds? Yeah.
Brett Alegre-Wood
33:09
Yeah. Okay. Yeah. So I actually, I’ll be honest with you, I haven’t actually looked at the UV leverage to prices, terrorists versus flat. I thought actually, we had it on last week, I think or the week before we started tracking very similar. So do we think that they’re undervalued to terrorists? Do I think it depends on the area? You know, so different areas with different dynamics and different things? So I wouldn’t say they are or they aren’t. But what I would say is, you know, you’ve got to look in your specific area that you’re talking about, and then look at what’s going on in that area, you know, that’s with anything, you know, because I wouldn’t buy a flat just because it’s under undervalued compared to a terrorist, you know, because the market can change and that sort of stuff, I would look at both on their merits, you know, because the flat is a different investment to a terrace house, you know, you may find the terrace house a lot older, energy efficiency, you know, but you may find that actually, it’s been updated, and it’s fine. You know, you’re buying a secondhand flat, it’s got a crappy Block Manager who just abuses everything. So yeah, it really depends that it’s very hard to say, you know, which is better Apple orange, depends on what you like, it depends what, you know, Apple, you know, the features, the apple, the features the, the orange. So, hopefully that sort of answers the questions without look, will they return higher again, which is the final part of that question. Yeah, what you tend to find is, they all sort of interact, so I can’t put my hands the same way. But you know, they’ll go up, some will take over, others will take over and they’re sort of all that sort of intricate thing. So it really depends right now. I don’t know Only go and track terrorists versus apartments, that sort of thing. But what I will do is look at new bill premiums. So if say with the new bill, which is our big thing, sometimes the new bill premium in an area gets up too much compared to the secondary market, in which case, that’s not the time to buy a new bill. But that’s certainly not the case. Now, now we’re starting to get some good negotiation with developers. And even the developers who aren’t negotiating yet are starting to talk about it. And you can just see they’re getting they’re lining up just in case, you know. Cool. Or right, what else we got to talk about then? Talked about the recession, we’re not quite there yet talk about inflation.
Ritesh Patel
35:46
Going Broke property prices next year.
Brett Alegre-Wood
35:53
I, so I’m actually going to do a an article about this, which I’m just sort of formulated now. But on my house by submission, which I do every year. This, so this is the thing, this is why I raised the unemployment thing. Because unemployment hasn’t hit yet. I’m almost something which is true. Is there something in me is thinking maybe we’re not going to see such a drop next year. And things may actually turn out better. Yeah. And when I say better, I don’t mean 10% growth. But I don’t mean 20% drop or anything like that. What I what I’m thinking is, could we end up with a 5% increase, or a, you know, steady state for next year, which, according to most people is totally unreasonable. You know, it should be dropping 1020 30% You know, which most people are saying. So that’s my concern is because the job market is so robust right now. And because so many, the unemployment is so low, that could either stretch out the recession. Yeah. And so rather than being a quick shed, it’s a slow shed. But you know, and rather than being a deep recession quickly, it’s a shallow recession or a shallow downturn, over a longer period of time. That’s what I know right now. So what do I think? Look, my gut feel right now would say minus five minus 10. If we hit recession, but then I’m also when I weigh up this unemployment thing. I’m kind of like, you know, what, maybe, you know, we can turn that round? I don’t know. I’ll be honest. Normally, I’m like, This is what I think will happen. Right now. This is what I think will happen. But I’m sort of going but there’s this bit of uncertainty. And, you know, and it’s uncertainty to the upside not to the downside. Yeah. Which a lot of times, you know, I’d be this could happen and therefore change all that downside. I’m not, I’m not one of these guys that says we’re gonna have 30% Drop in house prices, or 50% drop or the share markets got another 50% Drop? Not yet. What about you?
Ritesh Patel
38:15
I think it’s gonna be very area specific. If you’re from a blanket prospective uses, let’s just take the whole country into the equation, I think, I think we could be as a country, I think you’d be zero to 5% downturn, as is where I think we’re set next year. And a big part of that is because there is still a lack of supply in the marketplace was in mind. You know, there is a lot of people are leveraged, nowhere near to what they were doing the last the global financial crisis. And also, there’s an important one Jeremy Hunt, to encouraging banks to be more flexible and to extend people’s mortgage times to go allow them to go off of products which take them on interest only to be able to manage their monthly mortgage payments. So that should keep things like repossessions and all that sort of stuff down. So I think there’s supply demand, with with the government, hopefully following through with the talk of telling banks to be more flexible, if there’s a general appetite for people not to not to take repossessions and do everything they can to keep people in their homes, affordable plans to ride out the next couple of years or whatever that looks like. And I think, yeah, but I think some areas, and this might sound outrageous to some people, but I think certain areas will actually be up circa 5%. You know, and I say this, not from just just a total gut feeling from certain conversations with developers in certain areas and emails I’m getting about price points moving and all this sort of stuff. And there’s sort of like I can see it’s in very specific areas where, you know, they’ll hold up pretty well So zero to five in terms of the downside, my more downside approach, but don’t be surprised if certain specific areas even go up to 5%.
Brett Alegre-Wood
40:10
Yeah, because that’s the other thing, too, is London prices haven’t really done a lot. You know, they’ve been sort of sticking to where they are not really doing much. But they could come back very quickly, because actually, if the lending got freed up, and you’ve got the international buyers coming in, you could actually see some, you know, price increases. I agree. You know, it does. I mean, I’ve watched the YouTube channels that talk about 40 50% drops, and, you know, the whole economic crisis, you know, we’re gonna swap over see Central Bank, digital currencies, we’re going to, you know, the US is going to no longer be the reserve currency. But, you know, all these sort of YouTube channels, which are a lot of it, I can’t help but think they’re clickbait, you know, because I’ve seen some of these guys, day after day, get, and they’re getting 100,000 views on their videos, they’re getting, you know, they’re doing really well, or from a YouTube perspective, but you look at actually, their predictions. And for the most part, they’re just so wildly wrong continuously, but because they’re selling negative, you know, people just lap it up people want to, and unfortunately, this is the reality is, we’ve become so we’ve become so used to making excuses as to why we’re not successful. And this might hit home, you know, some people would become so victim conscious, yeah, in other words was become so, you know, we’re victims that we look for, and we crave the negative news. So we can justify our situation, which isn’t a good way to be, you know, if you want to be successful, you’ve got to take personal responsibility, you’ve got to accept that you are the only person that takes responsibility for your life, and anything external, you know, it’s, you can’t blame anything external, when you do that, that’s very hard. And that’s why I think these YouTube channels do very well, because they go, they sell the negative narrative, and therefore people can justify their situation, you know, but that’s not going to make them successful, you’ve got to sort of get over that and get where the real information is. And there is some great information out there, I have to say, you know, the content that’s been put out on a number of different channels, you know, is fantastic right now, you know, you used to have to go to university to get really good quality cutting edge information. Now, university is not where it’s at, actually, YouTube is where it’s at, you know, and I’m not gonna say tiktoks, where it’s at. That’s a whole other story. But YouTube, actually, there is a lot of content being done there. That is fantastic. And right on point. And, you know, and for me, you know, that’s why I’m spending two hours a day consuming content, you know, but positive content, not this negative shit that you just went by. So yeah. What else? I think that’s pretty much it for this week. I think, you know, for me, I’m going into 2023. With a pretty positive attitude. I mean, as much as the recession is on the horizon, I’m not, you know, batten down the hatches, we’re not just saying let’s cut all the cost back. You know, I mean, yeah, we’ve been through that sort of thing, we’ve done a few cost cutting rounds, where we’ve looked at, you know, we’re spending way too much on software, you know, paying all sorts of money. So we’ve got rid of some of that sort of stuff. So we’ve trimmed some of that fat, but we’re not actually got rid of any people. You know, there’s no intention of getting rid of any people at this stage. And hopefully, we don’t have to get rid of any people. That’s, you know, which, if you look at the global financial crisis was very different. I had to sit down, I had to go, can we really afford to have these 7075 people, whatever we had, you know, maybe we can get away with it. I think we, you know, we went from 75 to 45. You know?
Brett Alegre-Wood
44:08
Which to be fair, I want that marketing team back now, because you’re doing it myself. Not that I mean, an actual fact that it’s interesting. We are looking to build that marketing team back up, we’ve been chatting about it extensively. Because that’s where things are at now. You know, so yeah. What about you? How you going into 2023?
Ritesh Patel
44:28
Yeah, I think my thoughts on it are looking, you know, it could be five up 10 down, 10 up, whatever. It can’t control it. You know, we can’t sit here and physically for sure, say which way everyone’s got their two pens. They’re going to they’re going to put into the put into that and depending on you know, what they do and their narrative. I accept that. You know, of course, I’m going to be positive about property. This is this is what we do, you know, but the reality is, with property I always say it’s It’s a long game. So if you buy property, thinking, Well, I’m buying it because I think next year this will happen, that will happen, you’re sort of just thinking about it the wrong way. If you do 510 15 years, and you can say to yourself that I know that if I buy a property, regardless of what happens next year, I know that this property will be worth more, or these properties will be worth more, in 510 15 years time, I’ve got a capital here to do something, I’ve got somebody to do something. So rather than spend it on my lifestyle, and money, because the money will just go away. There’s no such thing as here’s, here’s a couple of 100k 100k I don’t want to invest right now. But I’m going to keep it there. Because when the markets right in six months, 12 months, I’m going to invest it that 100k will look like 50k I promise you that because you need to find somewhere to spend it family needs, you know, that sort of stuff, whatever it will go.
Brett Alegre-Wood 45:51
And if you don’t find a way to spend it, then inflation will bloody taken from 75.
Ritesh Patel
45:57
Exactly. So just my message is just up to a certain degree. Who cares when the prices go up, down short term, just think long things you can control, which is to buy and hold, and then just let the market do what it does, which we know. You know, long term it will go up.
Brett Alegre-Wood
46:14
Yep. Yeah, cool. Okay. Good. All right. Well, we’re back. We’re back on the fourth of January next. So we’re not back next week. Fourth of January. And yeah, hopefully we’ll be reading your content because we’re going to actually, we’ve got in our building with a podcast company and so they’re gonna they’re gonna be helping us build some podcasts or build the podcast out, get it out there and do it. Right, the professionalism and the organisational SEO stuff. We’ll see how wonderful they are. But yeah, no good, guys. All right. We’ll have a fantastic Christmas from all of us that easy track and glad fish and we’ll see you for a fantastic 2023 We’ll see what it holds. Alright guys, see you later.
