There was a note recently on CNBC pointing out why fears over Brexit were massively overdone:
"One of the best trades you can do right now is something you'll only see every few decades, and that's basically going long London real estate," Kay Van-Petersen, global macro strategist at Saxo Capital Markets, told CNBC.
Property prices in London have surged by more than 85 percent since 2009, according to data from Hometrack's U.K. Cities House Price index. But look back to 2015, before Brexit fears set in, and you'll see prices in London were already trending down from 2014 highs.
Knight Frank flagged declines in prime central London real estate, blaming in part the introduction of a stamp duty on high-value property, which has since been extended to include second homes and buy-to-rent properties. And so, while price increases in London are beating the national average in the U.K., according to the Office for National Statistics, the headlines are all about a collapse in house building in the British capital and prime property bargains for foreign buyers.
That's why Van-Petersen said going long London property is one of his high-conviction trades over the next five-to-ten years. According to his research, the average GBP/USD has been about 1.74 over the last 45 years, a 40 percent lift from the current levels.
"Why are you messing around trying to catch the last 3 or 5 percent down, right? So from my perspective, that to me is a rock n' roll kind of trade. I would be more inclined to actually look to upside on sterling. I actually think we'll make the lows in the first half of this year, if we've not already made the lows."
Van-Petersen said he believes the U.K. will emerge from its EU exit "leaner, meaner, and just much better." Investors who go long London property, he argued, aren't just getting real estate in one of the capitals of the world at multi-decade lows on the pound. They're also betting on the world's wealthy.
"In essence, what are you being? You're being long emerging-market billionaires, you're being long emerging-market new wealth because London always ends up being a trophy city, right, at the end of the day," he said. "To me it's the screaming, screaming kind of trade. You're not going to see something like this again for a long time."
Now you may well disagree with what he says about the UK being better outside the EU. However, his point about emerging market new wealth is undeniable. More importantly, the people in these countries will not only be significantly richer, they will also have access to much more credit. This is what will drive up land and property prices globally, but especially London and other global super cities.
Brexit is a political issue rather than a credit issue. I know I repeat this point incessantly but it is so important for you to understand:
ACCESS TO CREDIT AND INCREASES IN MONEY SUPPLY ARE THE KEY DRIVERS OF LAND & HOUSE PRICE GROWTH
There are centuries of evidence to back this up. Unfortunately for the masses, they are spoon fed information by the media, economists and politicians which is, on the whole, largely inaccurate and misleading, which is why the length of the bull markets confound them.
Then they finally capitulate thinking that prices will actually continue to go up because they have somehow guided the economy to a “safe place” of virtuous prosperity. This is normally a good signal that a crash is on its way and is exactly why the Queens asked an audience of economists in 2008 “Why did no-one see this coming?”
As Kay Van-Petersen points out above, trying to time the last 5% drop in prices is a fool’s game. Especially as what the market does as a whole is irrelevant. Remember you are not trying to buy shares in Walmart, Glencore or Berkshire Hathaway. You are just looking for that one ideal opportunity to buy an exceptional property at a favourable price.
Waiting for the market is frankly idiotic when what you actually need to do is find sellers who own a “best in breed” property and who are keen to transact.
This is why you need to be actively looking now.
Of course, if you are worried about making an expensive mistake because:
1. you are not sure on valuations
2. you don’t have time to look at all the potential opportunities
3. you are not an expert in property negotiations
4. you can’t face the bureaucracy involved/don’t understand the process
5. you will not see the best opportunities
then you should enquire about membership to Mercury Homesearch and discover how we have helped our members acquire hundreds of millions of pounds worth of the finest homes and investment opportunities for prices they didn’t think possible.
Indeed, we are so confident in our service that we guarantee it so you can test your membership with no risk. Simply call 0800 389 4280 (+448003894280 from outside the UK) or email email@example.com to find out more about how we can help you, just as we have helped some of the world’s most successful business people and families over the last 16 years.
Please note that we are not estate agents. In the UK, estate agents are legally obliged to try to achieve the highest price possible for the sellers. You, the buyer, are not their client, which is why so many buyers are duped into overpaying or buying average properties – you only need to look at some of the dreadful mistakes people have made buying in new build developments and relying on the sales agents’ predictions to know this to be true.
At Mercury, we only represent buyers to find the best homes and investments and to acquire them for the lowest price possible. Consequently, we spend most of our time advising our members not to buy property as there are so few “best in breed” properties. This is why I have personally inspected over 23,000 properties but bought under 1% of them. This is how selective you must be.
More importantly we guarantee our service so that you can test your membership with no risk. So to discover more, simply call 0800 389 4280 (+448003894280 from outside the UK) or email firstname.lastname@example.org.