Latest / Merryn Talks Money / The Contrarian Case for London Real Estate After a Decade of Stagnation

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The Contrarian Case for London Real Estate After a Decade of Stagnation · Merryn Talks Money

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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
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Speaker 2: Welcome to Merrin Dooks Your Money, the personal finance edition
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Speaker 2: of Merin Dooks Money. In these bonus podcasts, we talk
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Speaker 2: about the best grategude and making the most of your money.
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Speaker 2: I'm Merrin Somethings at work and with me today of
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Speaker 2: course as usual, I'm senior reporter and money to little
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Speaker 2: author John Stebuck. Hello John, him and now I also
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Speaker 2: have with us today another guest, Daniel Luston, who's CEO
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Speaker 2: and co founder of ASK Partners, and he is an
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Speaker 2: expert on London property and in particular London prime property. Daniel,
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Speaker 2: thanks for joining us today.
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Speaker 3: Thank you.
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Speaker 2: Right now, Dan, I'm going to come back to you
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Speaker 2: in a minute. I want to talk to John a
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Speaker 2: little bit about the general miseries of the UK housing
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Speaker 2: market before we move on to what may or may
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Speaker 2: not be happening in London specifically. Now, John, you and
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Speaker 2: I have been talking about prupty prices in the UK
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Speaker 2: for so long, and we've always been a little more
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Speaker 2: down on property as an investment as most people. So
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Speaker 2: today looking around at all the headlines that you see
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Speaker 2: at the moment coming out on UK property, OK, here's
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Speaker 2: a quick, quick rundown, quick rundown of headlines I've just
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Speaker 2: pulled up over the last ten hours. Right, we're trapped
1:23
Speaker 2: despair for sellers as a run more Knox confidence in
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Speaker 2: UK housing housing slump threatens to trigger turmoil. UK house
1:30
Speaker 2: prices collapse, housing markets slump, UK as prices fall and
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Speaker 2: rates jump. Blah blah blahneh, on we go, on we go.
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Speaker 2: So I thought, let's go back and have a look
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Speaker 2: at how people have done in the housing market over
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Speaker 2: the last ten years and the last twenty years. Now,
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Speaker 2: obviously this isn't as straightforward as you might think. You
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Speaker 2: can't do a direct comparison between housing markets and equity market,
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Speaker 2: for example, because no one leverages themselves up by you know,
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Speaker 2: many hundreds of percent to buy into the equity market.
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Speaker 2: Maybe they should, but that's another conversation. So right, over
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Speaker 2: the last ten years banking been calculator inflation has been
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Speaker 2: thirty nine percent. Yeah, guess for me, John, Right, Daniel,
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Speaker 2: you can guess this one too. This is the fun one.
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Speaker 2: You may know the answer. Guess how much house prices
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Speaker 2: in Greater London have gone up over the last ten
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Speaker 2: years on average at the same time as UK inflation
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Speaker 2: has been just off forty percent, forty percent in total,
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Speaker 2: forty percent in total for UK inflation over that ten
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Speaker 2: year period.
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Speaker 3: I'd say the stats you've got are probably something in
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Speaker 3: the teens, but in real terms, I'd argue it's close
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Speaker 3: to zero.
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Speaker 2: Well, it's eighteen point three percent, so in real terms
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Speaker 2: we're negative, significantly negative. And then out of Southeast has
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Speaker 2: been better over the last ten years thirty one percent,
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Speaker 2: but still below inflation, so we are still negative. And
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Speaker 2: real terms Northeast Midlands except you're looking at twenty four
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Speaker 2: to twenty five percent, so still negative and real terms,
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Speaker 2: doesn't matter where you look. UK property prices have fallen
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Speaker 2: in inflation adjusted terms over the last ten years, which
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Speaker 2: to a lot of people I think will be a
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Speaker 2: very shocking number. So okay, that's fine, let's go back
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Speaker 2: twenty years. So let's go back twenty again. Bank of
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Speaker 2: England inflation numbers have the last twenty years inflation at
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Speaker 2: seventy five percent, So over that time period, by the way,
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Speaker 2: that's how much the pound on your pocket has lost. Everyone,
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Speaker 2: you are down seventy five percent on that pound in
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Speaker 2: your pocket. Remember that it's very important Okay, so here
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Speaker 2: we are seventy five percent inflation over the last twenty years.
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Speaker 2: Anyone want to guess London, how much of a price
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Speaker 2: has gone up in London over the last twenty years?
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Speaker 2: Were up or down in real terms?
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Speaker 3: Are that up in real terms?
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Speaker 2: Yeah?
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Speaker 4: Yeah, I see. This is terrible one, Chaine, because've get
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Speaker 4: the graph in front of me as well. Shut up,
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Speaker 4: I'll built this one away to go over.
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Speaker 2: Honestly, what's the point in quizz when one person has
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Speaker 2: the answers, I'll put you out of your misery unless
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Speaker 2: you want to guess, Daniel.
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Speaker 3: I think that the key point here is there was
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Speaker 3: a lot of growth from twenty ten to twenty twenty
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Speaker 3: due to a diviasing, which wasn't real growth. It was
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Speaker 3: it was money stimulous growth. And the growth since twenty
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Speaker 3: twenty to today it's been non existent, in fact negative.
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Speaker 3: And if you take it over twenty years, it's a
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Speaker 3: much better picture than ten, but without artificial stimulus.
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Speaker 2: Nothing, but it's still it's one hundred and twenty percent.
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Speaker 2: One hundred and twenty percent, So you have acted, but.
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Speaker 3: All of that growth would have been in a short
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Speaker 3: period of time. As a focus of queueing.
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Speaker 2: Absolutely, But nonetheless, if you bought your London house in
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Speaker 2: two thousand and six, you do know that you haven't
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Speaker 2: actually lost money in real time, so that's nice, and
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Speaker 2: it's kind of not true in most other places. So
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Speaker 2: over twenty years, over twenty years you brought house in
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Speaker 2: the Middlelands, your border house in the south West, anywhere
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Speaker 2: like that on average. Of course, you know everyone's going
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Speaker 2: to come in with their outliers, but on average you
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Speaker 2: have still lost money in real terms over a twenty
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Speaker 2: year period. The only place you haven't that I found
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Speaker 2: so far is the Southeast, where it's seventeen nine percent
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Speaker 2: against seventy five percent, So it's tiny. It's tiny.
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Speaker 4: I mean, that is shocking, and I'm looking at Scotland
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Speaker 4: that's fifty six percent. The only thing you can really
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Speaker 4: say is that, I guess two thousand and six, which
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Speaker 4: is the comparator year, is almost the peak or the
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Speaker 4: last houses.
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Speaker 3: In the bubble.
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Speaker 4: But even then you're kind of like or what so
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Speaker 4: the prices haven't actually recovered that kind of pre two
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Speaker 4: thousand and eight peak. So no, that's a stagger And
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Speaker 4: I thought I'm twenty years back, the UK as a
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Speaker 4: whole would be up but you're right, it's basically flat.
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Speaker 4: It's slightly lowered in real terms, which is incredible.
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Speaker 2: I used to it is. I use nationwide numbers, by the way,
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Speaker 2: not the ONS numbers, so you know, you get there's
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Speaker 2: a lot of quibbling in here. You can quibble all
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Speaker 2: over the place. But it's interesting. It will be quite
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Speaker 2: shocking for quite a lot of people, particularly all the
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Speaker 2: people who turn off in the back of the personal
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Speaker 2: finance sections of the newspapers saying that property is their pension.
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Speaker 2: It literally isn't unless you bought that house in the
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Speaker 2: nineteen seventies or the nineteen eighties, maybe the nineteen nineties.
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Speaker 2: But you know, cur to be taken right. So here
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Speaker 2: we are in a world where as John has just said,
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Speaker 2: UK property prices as a whole, London aside, have barely
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Speaker 2: squeaked up to where they were in real terms back
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Speaker 2: in two thousand and six, which is really quite something.
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Speaker 2: And I read you those headlines and we are saying
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Speaker 2: the beginning of what looks like a new round of
6:21
Speaker 2: carnage in the UK market. Right We're hearing news constantly
6:24
Speaker 2: of chains collapsing across the board. So people who thought
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Speaker 2: that they were chained is such an old fashioned idea.
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Speaker 3: Right.
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Speaker 2: Chains have been working for a while, but now we're
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Speaker 2: at the point by suddenly mortgage deals are falling through
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Speaker 2: or people find that the mortgage is going to be
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Speaker 2: two percentage points higher than they thought and that's something
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Speaker 2: they can't really afford. So people are pulling out. Was
6:40
Speaker 2: seeing gazumping. The bye de let sector is an absolute mess.
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Speaker 2: There's a little article on the papers this morning about
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Speaker 2: do you remember the old days of flipping where you
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Speaker 2: could buy buy a flat, do it up, flip it on.
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Speaker 2: You can't do that anymore because stamp duty is too high.
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Speaker 2: It's added that little extra bit for cost, not lot
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Speaker 2: in big extra bit to for cost. That makes it
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Speaker 2: really hard. New taxes in the by to let sector,
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Speaker 2: the new taxes on the second terms, I mean, this
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Speaker 2: is a big problem. One hundred percent extra council tax
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Speaker 2: on your second term. You're going to keep that second term,
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Speaker 2: you're going to sell it. And do you think it's
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Speaker 2: going to get better or do you think it's going
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Speaker 2: to get worse under a more left leaning government. So
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Speaker 2: it has a lot going on in the property market
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Speaker 2: and it's hard John across the board to find something
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Speaker 2: particularly positive to say yeah, absolutely, Oh come on, now
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Speaker 2: you're supposed to say down here.
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Speaker 4: No, the problems look to be honest, at the start
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Speaker 4: of this year, it looked as if things were ripe
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Speaker 4: for recovery because interest rates were going down, and they
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Speaker 4: were going down faster than people had expected. And those
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Speaker 4: prices are essentially and versely correlated to interest rates. If
7:44
Speaker 4: rate's got, prices go down, vice versa. But of course
7:46
Speaker 4: what's happened is the Iran war has come along not
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Speaker 4: entirely unexpected. Lately it was a potential risk, and now
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Speaker 4: interest rate expectations have gone back up again. And I
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Speaker 4: was looking at best buy mortgage rates and in the
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Speaker 4: middle of February you could get a two year fix
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Speaker 4: for about three point six three point seven percent. That
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Speaker 4: was extending the first time buyers, not just people with
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Speaker 4: lots of equity in their homes. Now now you're looking
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Speaker 4: at four point eight percent, and that's if you've got
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Speaker 4: forty percent. You know, when you're remortgaging that. Don't get
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Speaker 4: me wrong, You can get track of rates for lower
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Speaker 4: than that. But then obviously you're taking interest rate risk.
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Speaker 4: And the point is they've they've moved very far on
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Speaker 4: a very short space of time, and you can see
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Speaker 4: this reflected in the latest survey from RIX, the Royal
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Speaker 4: Institution for Charlid Surveyors. So basically that shows you how
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Speaker 4: gloomy or upbate the state agents are and they're kind
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Speaker 4: of like expectations for house prices over the next three
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Speaker 4: months have just tanked. They've kind of like dropped off
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Speaker 4: a cliff, having been recovering this year. So basically, yeah,
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Speaker 4: sentiment has shifted sharply and interest rates are gone up sharply,
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Speaker 4: and that doesn't really bode well for certainly the near term.
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Speaker 4: And I guess the problem is been now at the
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Speaker 4: point where around what is going on for long enough
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Speaker 4: that I think there's going to be some lasting janeway
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Speaker 4: even if the come out and you know, some who
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Speaker 4: can company and agadreement in.
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Speaker 3: The next week.
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Speaker 4: So yeah, it's hard to be upbeat that.
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Speaker 2: Yeah, and it's hard to imagine the government coming up
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Speaker 2: with a policy at this point that could ease things
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Speaker 2: for that housing market. You look at discussions about rent
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Speaker 2: controlled about look to Scotland where I live, and you
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Speaker 2: find some too genuinely bonkers policies beginning to come through.
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Speaker 2: And there's no cap here, for example, on the multiples
9:37
Speaker 2: that the council can charge of council tax to second
9:40
Speaker 2: terms or non residents. So you know, you have conversations
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Speaker 2: about four five hundred percent, et cetera, et cetera, which
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Speaker 2: obviously will destroy local markets. And then you have this
9:47
Speaker 2: other equally bonkers conversation going on about if a landlord
9:51
Speaker 2: wants to sell a tenant has to be given the
9:53
Speaker 2: right to buy at a fair price, fair to be
9:55
Speaker 2: determined by who can possibly know who, Which, of course,
9:58
Speaker 2: are all things that bung up mar get. Some make
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Speaker 2: people very loathe too to buy. So it's hard to
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Speaker 2: see a policy change across the UK given the prevailing
10:11
Speaker 2: political establishment that might improve matters.
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Speaker 4: Yeah, I mean poltically speaking. Okay, it looks as if
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Speaker 4: bornly get it's only going to get more kind of
10:22
Speaker 4: left leaning until someone has reminded that things like rent
10:26
Speaker 4: controls don't work, as has been demonstrated multiple taps and over.
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Speaker 2: And over again. We're not going to bother talking about
10:33
Speaker 2: rent controls now because it is simply too boring. There
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Speaker 2: is a body of research that is more extensive than
10:38
Speaker 2: any body of research on any issue in economics on
10:41
Speaker 2: rent controls, which shows you over and over and over again,
10:44
Speaker 2: it doesn't matter what you do, it doesn't work. So
10:47
Speaker 2: we're I'm going to let that go here, but please
10:50
Speaker 2: go and look at what John and I have written
10:51
Speaker 2: about rent controls over the last couple of years. Too
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Speaker 2: boring to go on about any Daniel, Let's talk about
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Speaker 2: something a bit more upbeat if we possibly can. I'm
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Speaker 2: not sure that wider London we can be particularly upbeat
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Speaker 2: about it. And the problem with the evaluations of London
11:20
Speaker 2: flats and in particular new built London flats is going
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Speaker 2: to be ongoing, isn't it when it comes to service
11:26
Speaker 2: charges issues and the inability to value flats given those issues.
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Speaker 3: Yeah, and I think a lot of what you and
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Speaker 3: John were discussing from a macro perspective UK wide applies
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Speaker 3: to London as well. I hate to be as gloomy
11:40
Speaker 3: on a Monday morning, but most of most of London
11:44
Speaker 3: suffering from those same macro factors. Right, rates are going up,
11:48
Speaker 3: demands coming down, there's an issue with the buy to
11:51
Speaker 3: let market, there's an issue with demand. And also I
11:54
Speaker 3: think the one thing that we haven't discussed is younger
11:56
Speaker 3: people are more transient. They have more than one career,
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Speaker 3: they think, call themselves living in more than one place.
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Speaker 3: And home ownership isn't the thing. It was when Thatcher
12:06
Speaker 3: got everyone very excited about it in the eighties that
12:09
Speaker 3: it became the goal of all young people was to
12:11
Speaker 3: try and get on the housing ladder. That started a
12:13
Speaker 3: demand from the bottom that doesn't really exist anymore, you know.
12:16
Speaker 2: Isn't it also true that one of the things about
12:19
Speaker 2: stamp duty, about these high levels of stamp duty, this
12:21
Speaker 2: it makes it very hard to move. I mean, I
12:22
Speaker 2: remember even when we were young, you could buy a
12:25
Speaker 2: flat and tell a flat, and buy another flat, tell
12:26
Speaker 2: a flat, buy a flat, and you know, you didn't
12:28
Speaker 2: have this massive cash payment to make every time you moved,
12:32
Speaker 2: so you felt a lot more able by a buying
12:36
Speaker 2: a flatter or a house wasn't a millstone, wasn't an anchor.
12:39
Speaker 3: And I think you're seeing that in the kind of
12:41
Speaker 3: more expensive boroughs in central London, volumes of sales and
12:45
Speaker 3: transactions are massively down. That construction is up right. One
12:48
Speaker 3: in three houses on every prime street has got work
12:51
Speaker 3: going on because people have realized that they might as
12:54
Speaker 3: well spend money on their own home and improve it
12:56
Speaker 3: then move to a bigger or a smaller house because
13:00
Speaker 3: at least the stamdude is going to cost more than
13:02
Speaker 3: the refurbishment or the extension or whatever is they wanted
13:05
Speaker 3: to do to their house. So everyone's locked in their
13:08
Speaker 3: own homes. We're all kind of trapped now. So it's
13:10
Speaker 3: just the way it is, right.
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Speaker 2: There's going to be nothing upbeat here at all.
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Speaker 3: The slight glimmer of hope might be events in the
13:17
Speaker 3: Middle East of maybe made people think about where they
13:20
Speaker 3: want to live and is London the worst place that
13:24
Speaker 3: in the world, like everyone was talking about six months ago,
13:26
Speaker 3: and maybe it's a bit safer and a bit more secure.
13:29
Speaker 3: So I think that will create a bit of stimulus
13:31
Speaker 3: to the rental market in central London, which will at
13:34
Speaker 3: least help landlords who own property and stop desperate selling
13:38
Speaker 3: that could collapse the market even further. So money coming
13:42
Speaker 3: in to the market via rentals is better than no
13:45
Speaker 3: money coming in at all, So that's a shred of light.
13:48
Speaker 3: I just think there's so much political and macro uncertainty
13:52
Speaker 3: and buying a property is it's a fixed, ill liquid asset,
13:56
Speaker 3: So why would you do that at the moment unless
13:59
Speaker 3: and less you can buy something of what is perceived
14:01
Speaker 3: to be historically very very low prices.
14:05
Speaker 2: Which you could say, I mean prices in central London now,
14:09
Speaker 2: and we keep hearing about houses that have sold for
14:11
Speaker 2: thirty percent, fifty percent below their last purchase price or
14:15
Speaker 2: below their peak valuations. So you could look at that
14:19
Speaker 2: and say, this is an amazing opportunity for me to
14:21
Speaker 2: pick up house in one of the incredibly desirable areas
14:25
Speaker 2: of central London. And this opportunity may not come around again.
14:28
Speaker 2: Or you may, of course think that house of prices
14:29
Speaker 2: will continue to go down in central London indefinitely. But
14:31
Speaker 2: if you wanted a trophy house, now might be your time.
14:34
Speaker 3: Well, look, someone paid two hundred and sixty odd million
14:37
Speaker 3: for a house for Nick Candy's house two weeks ago.
14:40
Speaker 3: Or house sold in Saint John's Wood for forty million
14:43
Speaker 3: pounds record pricing. It was four thousand pounds of square foot.
14:48
Speaker 3: The owner of the founder of Nike bought a house
14:50
Speaker 3: in notting Hill not long ago and again setting a
14:52
Speaker 3: record price. So people are still paying full prices for
14:55
Speaker 3: the best of the best on the fact that London
14:58
Speaker 3: will always be London. But I think the general market
15:02
Speaker 3: the biggest fear out. There is the left leaning government
15:05
Speaker 3: that we have and its position and the way it's
15:08
Speaker 3: leaning may may be getting worse. But I think I
15:12
Speaker 3: think that more people moving back from say Dubai, even
15:15
Speaker 3: on a semi permanent basis, renting for six months, think
15:18
Speaker 3: you know, thinking maybe I'll spend some time in London
15:21
Speaker 3: and see what happens in the Middle East before I
15:22
Speaker 3: go back. It's good for London because the restaurants are full,
15:26
Speaker 3: people are getting paid. That's good for the service sector.
15:30
Speaker 3: And the idea that Dubai is suddenly this nirvana that
15:34
Speaker 3: everyone wants to live in has definitely been a negative
15:38
Speaker 3: a negative impact on London and that and that might
15:41
Speaker 3: be balancing out a bit. Look, we've still got great
15:44
Speaker 3: we've got great education, we've got great time zone, We've
15:47
Speaker 3: got ok i'd love to say great rule of law,
15:51
Speaker 3: but even that is becoming. You know, some of the
15:53
Speaker 3: some of the events in retail. You know, if it's
15:56
Speaker 3: amazing when you're outside of the UK and the chatter
15:59
Speaker 3: that you hear about the UK from people who don't
16:01
Speaker 3: live here, you would think it was apocalyptic, you know,
16:04
Speaker 3: the way people talk about that, oh you live in London,
16:06
Speaker 3: really is it safe? You know, it's bizarre.
16:10
Speaker 2: Do you think that the wave of non bilom selling
16:12
Speaker 2: has filtered through? Is that over the nondoms who are
16:15
Speaker 2: going to leave have now left and they've sold and
16:17
Speaker 2: gone wherever they've gone.
16:19
Speaker 3: Yeah, I think that's worked its way through the system.
16:21
Speaker 3: The strange thing about London is there's very little panic selling.
16:25
Speaker 3: Most people who own a home have taken it on
16:27
Speaker 3: the chin that they've lost thirty or forty percent, but
16:29
Speaker 3: they're not really in the mood to crystallize that and
16:33
Speaker 3: don't really have to. So the market doesn't really operate
16:37
Speaker 3: in the same way that most other other supply and
16:40
Speaker 3: demand markets do. So if you've got a house and
16:43
Speaker 3: someone wants it, you might be charging the same price
16:46
Speaker 3: that you were charging four years ago. In getting that
16:49
Speaker 3: price that's.
16:50
Speaker 2: In super prime. If you've got a two bedroom new
16:52
Speaker 2: Bill flat in Canary Wolf and that's your only acid, yeah,
16:56
Speaker 2: sort of acids, you're in a bit of trouble, aren't.
16:58
Speaker 3: You, totally totally and renting that asset is becoming more
17:03
Speaker 3: and more unappealing, As you said, because the Renters Reform Bill,
17:07
Speaker 3: it's not as draconian some of the ideas that you
17:08
Speaker 3: were talking about, But basically you can only get your
17:12
Speaker 3: tenant out if you want to sell, and that that
17:14
Speaker 3: is a massive, massive shift, and we don't know how
17:17
Speaker 3: that's going to play out in practice, And landlords are
17:21
Speaker 3: becoming more and more skeptical about owning property. That's creating
17:25
Speaker 3: a more supply and it's you know, it's never ending.
17:29
Speaker 2: Yeah, you've seen this sharp, sharp rise in tenants being
17:31
Speaker 2: served a viction orders in advance of the new rules
17:35
Speaker 2: coming in which of course everyone is upset about, but
17:38
Speaker 2: to which anyone who understands the sentence will just say, well,
17:41
Speaker 2: what did you expect to happen.
17:43
Speaker 3: The flip side to all of this is if you
17:45
Speaker 3: look at the amount of people who live on a
17:47
Speaker 3: tiny little island in comparison to say, how many people
17:50
Speaker 3: who live in the States in a much, much bigger
17:54
Speaker 3: land mass, there is pent up demand to house people
17:57
Speaker 3: that hasn't been solved, and the housing shorty, which is
18:00
Speaker 3: a massive issue. The problem is you need a lot
18:03
Speaker 3: more collaboration from a centrist government and the private sector
18:07
Speaker 3: to make it work in a way that's useful for
18:11
Speaker 3: the people who really need housing and practical for the
18:14
Speaker 3: people who build it, which at the moment were miles apart.
18:18
Speaker 2: John and I do not believe in pent up demand.
18:20
Speaker 2: We only believe in I'm speaking for you again, John, sorry,
18:22
Speaker 2: we only believe in demand. Pent Up demand is people
18:25
Speaker 2: who want something that they can't afford. Right, Wanting something
18:29
Speaker 2: is not economic demand. Wanting something and be able to
18:32
Speaker 2: pay the prevailing price for it is economic demand. So
18:36
Speaker 2: we hear this conversation a lot about You know, we
18:39
Speaker 2: have a small island, big population. There are lots of
18:41
Speaker 2: people who have unsatisfactory housing, etc. Etc. But that doesn't
18:45
Speaker 2: counter as demand. If you're a property developer and you're
18:48
Speaker 2: trying to flog a load of flats that even slightly
18:50
Speaker 2: above cost, demand is absolutely meaningless.
18:53
Speaker 3: Only counts as demand if the government view it high
18:57
Speaker 3: enough on the agenda to make it happen. If the government,
19:00
Speaker 3: for example, wanted to do a temporary cut and stamp
19:03
Speaker 3: duty from seventeen percent at the top end of five
19:06
Speaker 3: percent and can add half stamp duty at the bottom end,
19:09
Speaker 3: you would see a flurry of transactions that might be temporary,
19:12
Speaker 3: but it would help construction, It would help it would
19:15
Speaker 3: help tax take Because there's nothing happening at the moment
19:19
Speaker 3: we see all these this data that says actually stamp
19:21
Speaker 3: duty take is on the rise due to the I
19:24
Speaker 3: don't believe it. I just it's got to be manufactured because,
19:27
Speaker 3: as you said, no one's moving.
19:28
Speaker 2: No one's moving. Yeah, we're just not seeing the volumes. Daniel.
19:31
Speaker 2: If you if I said to you that you had
19:34
Speaker 2: to buy had to buy a house in the UK
19:36
Speaker 2: at the moment, where would you buy it. I'm giving
19:39
Speaker 2: you three months, three months to locate and buy a house.
19:42
Speaker 3: It would have to be Central London. It would have
19:44
Speaker 3: to be because your best bet is on global recovery.
19:50
Speaker 3: If you get some kind of sense coming back into
19:52
Speaker 3: the global markets, capital always goes to London first, unfortunately
19:56
Speaker 3: for the rest of the UK.
19:58
Speaker 4: Yeah, John, London for definite. But I do think that's
20:02
Speaker 4: a really interesting point that Daniel's making because one of
20:05
Speaker 4: the things that historically, like one of the reasons that
20:09
Speaker 4: London is the only housing market that's up over twenty
20:12
Speaker 4: years in real terms, is because it was always a
20:16
Speaker 4: source where global capital kind of went, and for a
20:20
Speaker 4: long time, particularly between about twenty and nine and say
20:24
Speaker 4: about twenty thirteen twenty fourteen, there were a load of
20:27
Speaker 4: things happening the rest of the world. That prompted capital
20:30
Speaker 4: flight to the UK into London. So the Gulf was
20:35
Speaker 4: a bit unstable, there was kind of the Eurozone was
20:38
Speaker 4: unstable too, so people were moving money out of there.
20:41
Speaker 4: The problem now, I suspect we all agree, is that
20:45
Speaker 4: you don't have the same attraction to global capital because
20:48
Speaker 4: you've now got the hostility to capital, and so that
20:52
Speaker 4: kind of fundamental attraction for London that it's you know,
20:55
Speaker 4: a global superstar cety doesn't necessarily come into it as
21:00
Speaker 4: much anymore when you've got people seeing real charge an
21:03
Speaker 4: extra you know, x hundred percent on council tax or
21:06
Speaker 4: whatever for saken Tormy not So I do wonder how
21:10
Speaker 4: much Night's going to hang all our things for Well.
21:12
Speaker 4: I guess certainly up until twenty twenty nine, maybe be
21:15
Speaker 4: oinned well.
21:17
Speaker 2: And the inheritance tax business, I mean, I learn that
21:19
Speaker 2: you don't have to be a resident in the UK
21:21
Speaker 2: to own probably in the UK, et cetera. But you know,
21:23
Speaker 2: you do talk to people who, having heard about our
21:26
Speaker 2: inheritance tax issues, just wouldn't come anywhere near it because
21:29
Speaker 2: what if they change the rules again, If you tell
21:32
Speaker 2: Americans where are inheritance tax thresholders. They can't quite believe
21:36
Speaker 2: you've said those words three hundred and twenty five forty percent.
21:41
Speaker 2: Oh you mad. So I do think that there's a lot,
21:44
Speaker 2: a lot in what you say, John, that this is
21:47
Speaker 2: the UK and London is no longer represent a friendly
21:50
Speaker 2: home for capital, so capital doesn't come.
21:53
Speaker 3: The flip side to that argument, of course, is if
21:57
Speaker 3: you're brave enough and you can only the opportunities, now's
22:01
Speaker 3: the time, right, Because if you've got a center center
22:04
Speaker 3: right government elected in the UK in twenty twenty nine,
22:07
Speaker 3: I think you'd see an unbelievable ball market. I just
22:11
Speaker 3: think there's so much capital that would love to invest
22:15
Speaker 3: here that's too scared that a change in government would
22:18
Speaker 3: create just an almost a media bounce in all types
22:24
Speaker 3: of real estate here, especially housing.
22:27
Speaker 2: So if you were happy to think to yourself that
22:29
Speaker 2: the UK has nearly hit rock bottom, now's your chance.
22:33
Speaker 3: But it's a big risks it hasn't ye know. Anything
22:35
Speaker 3: could happen in twenty twenty nine and we could go
22:37
Speaker 3: further to the left.
22:38
Speaker 2: Yeah, yeah, right, We are about to talk ourselves into
22:41
Speaker 2: absolute misery. So we're going to stop. We're going to stop.
22:45
Speaker 2: But j it's The only thing we can take away
22:48
Speaker 2: from this is that if you would like to buy,
22:50
Speaker 2: if you have a couple of hundred million at your
22:52
Speaker 2: disposal and you'd like to buy something absolutely amazing in
22:55
Speaker 2: central London, now might be your time. Otherwise, maybe keep
22:59
Speaker 2: renting that fair summary.
23:01
Speaker 3: I don't think it's quite as gloomy as that, but
23:03
Speaker 3: it's not a bad summary.
23:05
Speaker 2: John, Come on, finish us off with something upbeat.
23:10
Speaker 4: It's always whatever you know, dark is before dawn. A
23:13
Speaker 4: contrarian investor. Mate, look at this, you know, and as
23:17
Speaker 4: you see, Daniel, I mean, if you only get these
23:20
Speaker 4: opportunities when things are bad, I can say on this,
23:23
Speaker 4: I'm still struggling to see how it gets. I'd rather
23:27
Speaker 4: see I'd rather see a catalyst as the value investor,
23:30
Speaker 4: special situations guys, or we see.
23:34
Speaker 2: Okay, So John is not rushing up to buy a
23:36
Speaker 2: block of new built by to let plants and out
23:38
Speaker 2: of London? Am I right?
23:40
Speaker 4: Not yet?
23:41
Speaker 2: Anyway, we would love to hear a comment from people
23:44
Speaker 2: on how they're seeing the property market. What's happening to you?
23:46
Speaker 2: Are you're trying to sell, you're trying to buy? How
23:47
Speaker 2: are you feeling about it? If you have comments or questions,
23:49
Speaker 2: Do please let us know because I know this is
23:51
Speaker 2: a subject of very close to the hearts of an
23:53
Speaker 2: awful lot of art listeners. Thanks for listening to this
24:00
Speaker 2: Vicus Marrin talks to Your Money. If you like our show,
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Speaker 2: This episode was produced by Summersadi and Moses and sound
24:13
Speaker 2: designed by Aaron Kasper. Questions of comments on this show
24:15
Speaker 2: and all our shows are always welcome. Our show email
24:18
Speaker 2: is Mirror Money at Bloomberg dot net. Thank you John,
24:21
Speaker 2: Thank you Daniel.