As always, the ‘experts’ in the property sector are making bold predictions either doom and gloom, a strengthening market, or stagnation. Well, one of them is bound to be right. The problem is deciding which one.
To some extent, what happens depends on whether it will be a hard or soft Brexit. The problem is, even if you get that right, what real impact will it have? I can hear some people saying that it is obvious… it will be… but will it?
For every argument for one scenario, there is an equally valid argument for another.
No one wants to sound uninformed or ‘wishy washy’, but when it comes to predictions it is extremely difficult to get it right and most get it wrong (how many fund managers fail to beat the index!).
The honest truth
So here is the honest truth: I can say with certainty that the price of properties in the UK will either fall, stagnate, or grow in the next three years. That it as far as I am prepared to officially go when it comes to predicting capital values. For an unofficial view, read on…
History has shown us that property is a sound long-term investment, and the effect of Brexit – whether good or bad – will wear off over a period of time. So, with all this uncertainty, is now the time to invest?
We are firm advocates of a secure rental income stream and capital growth in line with the market – whatever that may be.
Irrespective of Brexit, people are still going to need rented accommodation. Yes, rents may come under pressure if the economy dips, but the number of prospective tenants in cities like Manchester is not going to change overnight and demand will remain strong.
More affordable rental properties are always in demand, particularly in a recession, which is why we think our acol properties will be sound investments, irrespective of Brexit.
Seeing an attractive rental income going into your account every month may more than compensate for the notional capital loss in the event of a fall in prices. Hold for the long term and enjoy the income.
As for individual locations – if you want rental income, buy in the north and enjoy capital growth in line with the market.
Of course, there is always a risk of things going wrong in the short term. However, Greater Manchester should tick along. But there may be an oversupply in the city centre, which will affect rental demand and prices.
For capital growth, I would wait until the picture clears, and then invest in London.
There is a downside risk for London in the short term and rental yields will never be great. However, for capital growth over the medium to long term, it will take some beating, especially if you get your timing right.
Finally, I hereby solemnly swear that I will not mention Brexit again (for at least three months).
