The half-time predictions report

0:03Hey everyone, it's Rob B here with Rob D and it's half time. The year's data is halfway through. We look at what's happened so far this year and some of the numbers may surprise you. We then look to the future and predict what the rest of the year may bring us. And then for some reason, we also look at our predictions of what we said would happen this year as well and assess that against the data. It's a great episode.

0:34Welcome to the Property Podcast. In case you don't know, we run a business that arranges more than£100 million worth of property deals on behalf of our clients every year. You can find out about that at propertyhub.net slash invest. So it's always a bit of a concern when we have to put our reputations on the line and make predictions and even more so when we have to review how they're going. But we're going to do it anyway and we're going to do it for you because there's lots of lessons to take from how 2026 has gone so far compared to how we thought it would go and we're going to share how we think it's most likely the rest of the year is going to play out so do stick around so it's time for our new story of the week now and the headline story this week is the bank of england have held rates again which on its own doesn't sound that spectacular rob the rates are held at 3.75 but actually there was a bit of movement in the voting from last month so that's interesting and then what happened with the mortgage market as well was also a bit interesting which we can cover in a minute but first of all let's cover the bank of england they held the rates rob but there's more to it than that yeah because it was not unanimous and it wasn't close to unanimous so of the nine members of the committee six voted to hold but three voted to increase rates from 3.75 percent to four percent they are worried about inflation they're worried about inflation in general and they're worried in particular about energy prices and the u.s iran conflict and i'm never sure quite how genuine all this is because in reality i think they're reasonably comfortable with inflation being moderately above target and they certainly don't want to run the risk of damaging the economy by hiking rates too high.

2:03I think that's probably the greater threat at the moment but nevertheless their job is to deliver this inflation target of two percent so they need to be looking like they're trying to do it. So all they say will rates go up next time or at any point this year? It's possible but far from guaranteed in my opinion but regardless Rob, the reason we care about this is mortgage rates, and mortgage rates are not based just on what the Bank of England does, but on expectations of what they're going to do. And I think the mortgage market was confused by the Bank of England, because on one hand, you had the number of people voting for a rate rise going up from two to three people.

2:39So some of the lenders have increased rates. But CPI, the measurement of inflation, has actually fallen and that's down to 2.6 % now. So when you look at the information that's present, there's a bit of confusion on which way it could go. So as I said, some lenders have increased the rates, but some have cut the rates as well. So what should you do as a buy-to-let investor if you're going through the process of investing right now? I would say relax. Overall, it's not had too much impact. It's not like they've all surged up or they've all surged down. It looks like the mortgage market hasn't known what to do with this reading so there's been a bit of movement around and I think the competition will keep adjusting it over the next few weeks anyway.

3:24It'll probably end up where it was before the vote happened. But the good news is everyone's going on holiday, well certainly the Bank of England anyway. There is no rates announcement in August. The next one will be in September so that also gives the mortgage market a time to calm down and rate stabilise as well. So here we are in the middle of summer. January feels a long, long time ago, but it was roughly half a year ago. And that means it's time to revisit the predictions we made at the start of the year. As always, in January, we went on the record saying what we thought would happen with house prices, rents, interest rates, the works.

3:59And the good news is we can't be wrong yet. We've still got the rest of the year to go. But the reason why this is a good time to check in is it's worth seeing what's happened. Has anything fundamentally changed in the market over the last six months, which affects what we think is going to happen and therefore, by extension, could change our behaviour. So Rob, we'll go through all our predictions. We'll throw in what the experts said as well and see how they're getting on. And we should probably start with the big one, house prices. Yes, house prices. So before we reveal where we're at with Nationwide, let's quickly give you the run through.

4:31So the experts, Capital Economics, said the market would be up 5 % this year remember these are all by the end of the year not the halfway point Hamptons they had a couple of numbers delivered they readjusted them but it was either 3.5 or 5 percent Savills was at 2 percent and Suplo was at 1 percent and then good old Rob and Rob what did we say well Mr. Dean you went for a 3 percent increase and I said somewhere between 2.5 and 3.5 percent and where are we at this year year to date so the first six months of this year well according to Nationwide we are up by 0.8%. You may if you go and search for the nationwide numbers see it up by 2.2 % but remember that's the trailing 12 months.

5:16We're looking at the year of 2026 and so far in 2026 property prices are up by 0.8%. So at the halfway point Rob we are seeing a number based on the market sentiment that we've seen that is probably expected where it will end up by the end of the year probably a little higher i would say all things being well will it get as high as the lower range of my prediction i certainly hope so because i love being right but it's way off currently from where capital economics and hampton said things would land and savills zupla and then maybe our good selves could be in the range of being correct by the end of the year but what's more important than who's correct is where we're at and i think it's interesting that it's still a positive number you could say in real terms it's fallen that being that inflation is higher than house prices but still in nominal terms it is still up and i think if you'd only read the news for the first six months and hadn't seen any of the data you would have said house prices are cratered yeah and it is region specific as well so we'll come to cities in a minute but there are some parts of the country in some segments of the market where prices are down but it's being held up by more resilient markets elsewhere i think there's a chance that we'll luck our way into the bottom end of the band but what we were saying back in january it didn't feel like we're in particularly ballsy at the time that felt like a fairly safe range but i think if we're looking back over the year it was really end of february beginning of march when things really fell off rates picked up sentiment went from poor to really really apocalyptically poor and on the flip side of that our business property hub invest started doing some phenomenally good deals because so many other people had decided to step back so i don't know we've already seen that a lot can change in half a year a lot could still change in other direction there's a chance that our prediction will end up looking respectable come december now rob historically our strongest predictions have been around that regional point i was talking about earlier and cities in particular and first had a quick look at the data it looks like once again we're on our most solid ground here thankfully so because this is kind of our main breath of butter right it's like sharing where the value is helping people see things that aren't obvious sharing the extra insights that we're lucky to have and the cities that we picked well we both picked Liverpool we both picked Newcastle we both picked Manchester we both picked Leeds and then individually I picked Sheffield and Rob you picked Birmingham and all are beating the average and in some cases by some way Liverpool is actually up by 4.6 percent the top performer in the whole of the UK so I'm very glad we picked Liverpool.

7:59Newcastle up by 3.6 percent Manchester 3 percent Sheffield 2.6 percent Leeds 2.5 percent and Birmingham 1.9 percent. Now when we do our house price predictions we pick the cities from England and Wales because they're the countries that we operate in and Liverpool is number one Newcastle is number two Manchester is number three Sheffield is number four and Leeds is number five so wow I mean I'd say can we stop the year here Rob because I've got all five I think I normally get maybe four out of five but the good that used for you is number six is Birmingham so you're not doing too bad either you're not exactly disgraced yourself so it's a good pick from us so far we will see where the year ends but we're not surprised I think that's the most important thing where as maybe some people may be surprised by the number being up this year for overall UK property prices some of these areas are very healthy in terms of capital growth levels you know Liverpool 4.2 percent these are annual changes I must say so these are the trailing 12 months and we'll see what happens when we're looking at just this year's data but so far so good and none None of these places, clearly, because we predicted them at the end of the year, are a surprise to us that they've performed so well.

9:16No, this is the easiest of the lot. It really is just, well, where is the relative value? And it's just so clearly concentrated in certain parts of the country. And then you pair that up with the ripple effect and you go, well, growth tends to go to where the jobs are, where the infrastructure is, where improvements are happening, and then ripple out from there. And the regional divide is so strong at the moment. I can't remember it ever being anywhere near as pronounced as this, that it's probably never going to be as easy again as to make accurate city picks. But nevertheless, I don't want to detract too much from my achievement.

9:45Still happy that that's going the right way. Now, a trickier one is rents, because the backdrop to this is that rents spent a couple of years going absolutely bazonkas. So you had double digit rental growth, a really acute shortage, and rents were just going crazy. Then that was moderating. So coming into January, like, okay, Clearly the trend is rents rising, but rising less fast than they were. But where is it going to land? We both ended up picking the 4-5 % range. The experts went a bit lower. So Hamptons said 3.5%, Savills said 2%. And at the moment, it pains me to say the experts are doing better than we are.

10:22So year to date, it's roughly 1.6 % so far. If you look at the last 12 months, the ONS shows rents up 3.3%. So that's coming in below our 4 % to 5 % range. A couple of interesting deviations within that overall average. One is that renewals are doing better than new lets. That is the complete flip of what we were seeing for a few years. We were seeing rents on new lets going up way faster than within tenancies, which is kind of what you'd expect. But I think because of renters' rights and everyone suddenly deciding to get their act together and put their rents up, combined with supply and demand in the rental market coming back more into balance, we have seen that completely flip.

11:00and then the other interesting point within there for me rob is once again the regional picture where there is a huge divergence between best and worst so london over the last 12 months has put on 2.2 percent not bad but the northeast 6.3 percent again it's just obvious right it's just prices go up where there is room for them to go up and where the value currently is rob it's so true and actually we spotted a deal recently for property of invest which is outside the areas we normally talk about but the yield was so strong and the fundamentals were so strong that we were like this is crazy it's clearly undervalued as an area i don't know our clients are absolutely loving that it's just a simple play but so many people don't look at property that way that's why we've had some success with picking the areas because it's just spotting where the value is and looking at the yield of those areas plus the fundamentals is quite a simple way of achieving that we've got an interesting episode coming up which will probably go out at the beginning of next month where we look at the concept of value investing within property so i'm sure you'll love that one if you have not subscribed to this podcast this is just a one-off for you or an occasional thing make sure you are properly subscribed so you do not miss that episode it's gonna be a really good one so moving on to the base rate we talked about that at the beginning of the pod but let's just remember where we started the year back in december 18th the bank of england moved the interest rate from four percent down to 3.75 and that is where we have remained for the rest of the year yes as we talked about there's been a bit of voting a bit of movement there but it hasn't moved and not as much as people expected capital economics thought we'd end the year at three percent same for goldman sachs rob you were at 3.25 and i was three and a half percent now i have to say that to be fair to everyone in that group and it looks like i'm the closest but to be fair to everyone else these predictions were all made before donald trump got involved with the whole world and the wars that have subsequently happened and the volatility as the result of that so because of all that i do think nearly everybody should be given a pass even though it makes me look the best at the moment with the projections because i'm the closest so it could have taken an easy victory there rob but i think in fairness i think it was perfectly reasonable to expect that the interest rates now and now being that we're at the beginning of august would be lower than where they started the year but they have held will they drop at all before the year ends that is the big question it is and the bigger question is will they drop far enough for anyone other than you to be right i'd say that's probably pretty unlikely because i need at least a half a percent from here and i think really this ties back into what i was saying earlier the world the markets really have changed significantly over this first six months and that has affected house prices like we saw earlier and that has affected interest rates and of course house prices have been affected via interest rates among other things so i think really that shows that yeah making predictions is It's fun.

14:11It's interesting. It can be informative. But really, you need to have an investment strategy that works over the long term and doesn't get completely derailed if someone randomly decides to go to war, for example, because who knows what's going to happen in the short term. But Rob, hopefully you know what's going to happen in the short term because I'm about to ask you, given everything that we've learned in the first half of the year, what do you now think we can expect in the second half of the year? Because yeah, I've just said you need to have a strategy that works and plays out over years.

14:35And that is true. But nevertheless, there are people who need to make decisions today. There are people who are getting into property. There are people who are deciding about expanding. They're deciding what to do with remortgages. So they're not going to be satisfied with, oh yeah, anything could happen. What do you think is the most likely to happen over the second half of this year? Rob, I'm sure people now are waiting for something big and juicy. But I'm going to be so boring because I actually think not a lot will happen for the rest of the year. I think the maximum we'll see in interest rate changes be one move.

15:06I actually think more likely down and up but we will see i think property prices will be a bit higher than they already are now rent inflation will be a bit higher again than where it is now but not in a dramatic way i think our city picks are pretty solid and they'll be there or thereabouts so they'll be fine for the rest of the year i think it's going to be a little bit better than the first half of the year but not suddenly where everyone's going mad in the front pages of newspapers are talking about property booms just people have got used to the world that we are in right now which always happens when there's big change you have volatility things tend to settle down people are getting used to the status quo they're used to interest rates where they are right now yields continue to improve property prices aren't moving that much in real terms when you look at them against inflation they're falling slightly i think it'll just be a bit more of the same with a slight tiny uplift before the end of the year and then we get into next year and maybe then there's time for something new and more exciting to happen but for the rest of this year more of the same just a little bit better than it has been so far sorry rob can you be a bit more sensationalist than that i'd love to be for the podcast i can't get to anything super dramatic but what i can say is as we've seen this year and as we've seen at some past turning points as well things can change very quickly and a lot of the muted let's say market that we've seen so far this year is around sentiment yes interest rates and rates being higher than expected are certainly a part of it but there is also this blanket of negativity across the market the country the world i don't know and sentiment can change just like that it doesn't necessarily need months or years to slowly turn things around so while i don't think it's particularly likely to happen I do think there's a possibility of a more dramatic change from here.

16:59And if there is one, I'd say it's more likely to be to the upside than the downside, purely because so much of the downside is known and priced in and expected. But if for some reason there is a change of sentiment, then you could get the surprise to the upside. So that's as close as I can get, Rob, to something a bit more exciting, which is really just acknowledging the possibility, because at heart, I think you're probably right. But it's interesting, right? Because people listening to this would probably be thinking, well, I hope Rob D's right, because that sounds a bit more positive and upbeat.

17:29You want me to be right, because what I've said to you is, it's more of the same. Well, what do we have? We have a market that's ticking up in the slowest possible way in terms of property prices, but you have rents and yields that continue to improve, and you've got sentiment which is low. So what you have are paying opportunities you don't want to be transacting in a hot market that's not what you want you want a market that you believe in long term but that offers great opportunities short term and it's hard to get your head around because people are so negative but if you get your head around it then it's amazing so it's it sounds like i'm being doom and gloom and what i'm laying out for the rest of the year is not great.

18:18Maybe overall for the country's morale, the economy, it's not great what I'm saying. But if you believe in the fundamentals of property long term, which you pretty much must do if you listen to this podcast, and then you understand the opportunity short term, you absolutely want my prediction to play out. Well, that's right. But before we end, I'm a bit concerned, Rob, that our predictions haven't been looking so great so far. people might be losing faith in our general aura of omniscience so let's share one prediction we made where we don't have to wait till the end of the year we already know what has happened and this is the important one the world cup and the great news is we got second and third it's not bad is it yeah it's not bad it's not bad we predicted that the winner would be well in your case rob argentina or england and i went argentina or france so that isn't bad because we got the runners-up and then we got the third and fourth playoff as well and you know what i'm very glad i'm wrong because i'm very pleased to beat argentina in the final as i'm sure a lot of other people were as well so maybe picking areas of the country rob and football teams is what we should just stick to from now on i think it's probably a good rule let's see if we still feel that way come january but one thing that we will want to keep on doing of course it hub extra fitting in a little bit more value before the end of the show in the form of a resource a tip something we've been enjoying recently and rob i think you've got something this week i have so regular listeners will remember hopefully remember i recommended a ai app a few weeks ago maybe months ago now time does fly called whisper flow and whisper flow is a dictation tool you're talking to your computer it also works on the phone not as good on the phone but amazing on your desktop or your laptop and I just wrap it on all day at my computer.

20:12I've even got comfortable doing it in public spaces now like coffee shops and things like that and I will talk at my computer. That ramble of words is going into my AI platform of choice and it's been a game changer for me from a productivity point of view. In fact when Whisperflow said it's time to upgrade because you've maxed out the free version. It took seconds to make that decision. My bank details were in and I was paying for the premium service. But I recently discovered a platform that is completely free, sits locally on your computer. You can get software updates to keep upgrading the quality of it, but there is no catch.

20:54It's free to use. It's been working really well for me. does it have the UI interface as friendly as Whisperflow? Not quite but I'd say it's an 8 out of 10. The accuracy to me seems like it's exactly the same thing. I mean if you really get into it Whisperflow is probably built on top of the same technology it's just a platform after all but this one Fluid Voice is free. I've been using it for a few weeks now I didn't want to recommend it until I did a proper run but if you're not using an app like this you should be. Check out the free version of whisper flow or going download fluid voice the setup is slightly harder with fluid voice but with a little bit of effort and i mean just a little it's not hard you'll be fine if you're techie it'll be a breeze if you are a bit of a noob when it comes to ai just persevere just search for how to set it up properly and then once you get going it will be a game changer i can't stress enough the difference that these apps have made to me and i'm sure they'll make a big difference to you as well yeah whatever you use talking over typing is such a game changer and piggybacking on that a bit not quite the same thing but the new chat gpt voice mode is so unbelievably good rob i was going about this to you the other day but i think it's worth saying if you haven't used chat gpt's voice mode in a while it is just so ridiculously good now it does make me a bit concerned that we are all just going to become progressively more insane going around seemingly talking to ourselves on our airpods being ever more isolated from each other but at the moment i don't care because it's just so good and you know what else is good coming back to this podcast week after week we will be back on tuesday with ask rob and rob so make sure you join us then of course we'll be back with the pod same time same place next week and you can find us in the sunday time smiling back at you answering your questions there so however you choose to have your fix with us do lap it up so until we catch up with you in one of those lovely formats take care have fun bye bye bye