The world is at war - should you invest?

0:00Have you ever wondered what successful property investors actually do? Well, after more than a decade of helping thousands upon thousands of people invest, we found that actually it's really simple. The investors who do the best are just following some basic principles and sticking by them. So we put together an entire guide that sums up these principles, an investment philosophy, if you like. And you can find that for free at propertyhub.net forward slash strategy. hey everyone it's robby here with rob d and you are listening to the property podcast got a big topic for you this week but it's an important one the world is a bit of a scary place right now when things like this happen it creates a situation that is unique a unique investment situation and we're going to dig into all of that and so much more in this episode So do listen from start to end because there's so many important lessons for you.

1:25up next week so we'll bring you fully up to date then. But for today there's one big thing we need to talk about. It seemed like the property market was turning a corner. After a few really grim years we were just starting to see the green shoots, the positivity was starting to return, people were starting to feel a bit better, maybe the market was going to get going again. But then war happened. Everything that you're seeing on your screens about what's going on in Iran and the Middle East is unsettling for a lot of reasons. But when it comes to property in particular, it has shaken up the mortgage market and made a lot of investors very nervous.

1:59So in this episode, we're going to unpick what that means for you. Should you be pulling back from investing and seeing how it all plays out? Or is there another way of playing this? Now, let's be clear. It's not just the property market that's been rattled. It's all markets of all asset classes. Some are up, some are down, most are down, off the back of what's been happening there because there's uncertainty and volatility and markets do not like uncertainty and volatility. They get very, very nervous. And while property prices don't balloon up and down on a day-by-day basis, we do take mortgages.

2:35And with mortgages, the rates that we actually get are in a way linked to interest rates. But to be more accurate, the real way a mortgage is priced is through swap rates. Rob, I'll let you do the geeky part of explaining what a swap rate is. But it's important that all of our listeners do understand this because you hear these terms thrown around, but it's rarely actually explained. That's right. You think, well, the base rate hasn't changed. Bank of England hasn't done anything. Therefore, the mortgage rates are going to be the same. But that's not necessarily the case because fixed rate mortgages are not just priced off what rates are today, but what the market expects rates to be over the two years or five years that you're borrowing for.

3:16because what happens without worrying about the mechanics too much is that the bank when they issue you a fixed rate loan goes and guarantees that rate for themselves with someone else to make sure that they're not exposed to too much risk if rates change in a way that they weren't expecting so if a lender is pricing a two-year fix today they'll be going well the base rate is here right now and we anticipate it will come down to this on this date and then that on that date so over the entire term of the loan it'll average this now of course those expectations are always changing as news comes in, normally they'll change a little bit from week to week, nothing too dramatic.

3:48But because of the war in Iran, everyone's very worried about energy prices. If energy prices go up, that of course means that inflation will be higher. And if inflation is higher, then it's highly likely that the Bank of England won't cut rates as fast as people had previously thought. And because the market's expectations of the war and how long it will last and how severe it will be are changing from day to day at the moment, that means lenders are really struggling to work out where to set their prices. And that's why we've seen headlines like a quarter of all buy to let mortgages have been taken off the market over the last couple of weeks.

4:22That's not because lenders are suddenly not wanting to lend. They think, oh, this is terrible. We shouldn't be making loans at all. No, it's because they need to keep taking their prices off the market to reprice them and do that repeatedly because things are changing so fast. I think it's fair to say it all feels really intense right now. And that's the thing, right? When world events land, when something new and enormous happens. Emotions are high, reactions are quick, and the way people react isn't always the best. Some people actually do very well in these environments, but most people, the vast majority of people, make poor decisions and they get burned.

5:01Now, it's very hard to get over the present and the emotions. Now, what's clear is that when you're living in the moment, And the intensity is present. It's hard to be rational. But I think what we can do is just look back over the last 10 years, because a lot has happened over the last 10 years. A lot of big world events, which creates a lot of chaos, a lot of emotion, a lot of reactionary behavior. and when we go through this brief history lesson it will feel less emotional because it's history now and that's the thing right when it's history it doesn't feel anywhere near as intense so by going through some of the recent lessons but we don't have to go back far because a lot has happened in the world in the last 10 years but if we go back through some of the recent lessons I think together we can all learn a tremendous amount let's start with a non-controversial one Brexit.

6:01So Brexit 2016, a huge event. And let's face it, most people were predicting that we would remain. That's what the markets predicted. That's what the polls predicted. But that's not what happened. And when it didn't happen, it created chaos in all markets once again. And And the headlines were catastrophic leading up to Brexit and after Brexit. And what was stated? Well, pretty much everyone forecast the property market would fall. Even pro-referendum forecasts predicted falls of 18%. The people in favour of Brexit said it would fall that much. And of course, the people against Brexit said worse.

6:48The headlines were terrible for the property market in the UK. so what actually happened well house prices grew by 32 percent the six years after brexit and the six years before brexit so before all the chaos they grew by 22 percent now that's not an endorsement of brexit to say look brexit made house prices go up it's not what this is about what this is about is that everybody predicted the worst but the worst didn't happen but when the worst happened opportunities presented themselves at that point of the chaos those who invested did really really well because they wouldn't have been buying at normal prices because in the midst of the storm you could get yourself a better deal so you would have exaggerated that growth even further and i did this in the stock market the day after brexit i bought a significant amounts of stock and that was because I didn't think the world was going to change that much.

7:51Lots of stocks collapsed in the UK but I found fundamentally there were some great companies there and it's exactly the same as what happened with property. The fundamentals hadn't changed, just a big UK event had occurred but what we tend to see is things settle down but that's a UK exclusive one and brexit was quite big but i think we can take it up a few notches rob with world events and i don't think it would be a controversial thing to say much bigger than what's going on in the world right now no and that of course was covid so while brexit paralyzed the market covid completely froze the property market for a brief time it's virtually impossible to transact in property because you weren't allowed to go and view anything and of course with so many fears of people losing their jobs and all the disruption it entailed, people were predicting price falls.

8:41I think 20 % was pretty typical in terms of what people were saying would happen to house prices. And what did happen? Well, again, the complete opposite. So far from collapsing, house prices went on a tear. They grew by about 10 % between March 2020 and March 2021 and went into this mini boom. But again, just like you did with stocks in the Brexit vote, Rob, there were big opportunities when the market was in that initial frozen state when no one was in the mood to invest because they were so panicked about what was going on and quite frankly preoccupied with other things at that point i bought we've talked about it on the podcast at the time because it seemed like such an unusual thing to be doing but now five or so years on that's one of the best deals that i've done in a very long time it's been performing really well and the numbers in retrospect look amazing because no one else was buying that's the thing the opportunity was created because buyers had disappeared everyone was too scared to do anything and everyone was anticipating these terrible events for the property market that ended up not happening so like i said the market did not collapse it went into a mini boom but then rob something brought that to an abrupt end so covid obviously a huge global event maybe not directly comparable to what's going on now but rob unfortunately we do have something more comparable in recent memory as well we do and that was war on the doorstep of Europe, the Ukraine-Russian war, which still goes on today, which is interesting for many reasons.

10:05But when we look at the markets, I think there's a great lesson there as well. This is not a great situation to be happening. But when it first happened, energy prices surged, very similar to what's going on right now. So this is why it's such a good example of when we look at the markets. Inflation spiked off the back of it. Mortgage rates started to climb. What happened to the UK market? Well, prices rose a steady 1 % between the start of the invasion and June later that year. So in just a few months, the market went up. And then house prices increased by nearly 10 % in the 12 months after the war, one of the biggest spikes that we've had.

10:48Now, it wasn't because of the war those prices went up, but not at all, but in despite of the war. And that's what's really interesting, is we had a huge world event. Everybody shocked, particularly people living in Europe, because Europe is seen as a steady, peaceful place, but yet we had war. And we still have it today. But the markets, while they were very nervy at the beginning and there was lots of volatility, the UK property market steadied itself and went on to do really good things. This is probably the closest comparable world event in recent times that we can look at to what's happening now.

11:32And the markets were more than resilient. They actually grew. and Rob I'd actually argue that in terms of impact on property prices we've demonstrated that these big huge events had little to no impact on the short to medium term of the UK property market never mind long term like they made impacts for weeks and months but after those weeks and months the impact was well history shows us none at all in the last 10 years the biggest event that actually impacted the UK property market was an economic event. And that was the Liz Trust mini-budget. Yeah, and you could argue about how much of that was due to that event itself and how much it was just a trigger from lots of things that had already accumulated that suddenly came to the surface.

12:21But regardless, the impact shook the property market again because those interest rates that had been creeping up started to fly up. And obviously, that caused a lot of investors a lot of problems. But despite that, like you say, Rob, we were both investing at this point. And the mortgage rate that I secured on that investment was terrible and still is terrible because I'm on a five-year fix but again the property itself is great and the deal was fantastic because all of these events were going on when we had that brief year or two after covid when the market was going nuts and everyone was feeling good incredibly difficult to do good deals with property hub invest we were still managing it but there weren't as many of them and we were having to work blooming hard but going from 2022 into 23 when everything took a turn for the worse again once again despite everything that was going on with mortgages at the time the buying opportunity was there so why does this happen well world events create sentiment shocks sentiment affects buyers buyers affect the market and when that happens most people make poor decisions you know what the irony is the very thing that makes people nervous that that uncertainty that's been created that's what creates the best buying conditions at all of those points in time you could leverage the situation the market's nervousness to get yourself a stronger deal than normal yes you could use a company like property of invest but you don't need to in those markets you don't have to twist someone's arm very hard to get yourself a really good deal once certainty returns that leverage that you have as an investor to get an incredibly strong deal disappears.

14:00And every event we've covered created better opportunities, a short window for those investors. Now, the biggest window that we've seen over the last few years was probably the second half of 2025 because low sentiment, not low prices, remember, low sentiment, prices grew last year, but low sentiment, low confidence allowed investors to take full advantage. We've talked about what we were doing at Property of Invest. We've shared that with you so you could replicate it yourself. We were doing the strongest deals that we've done for over 10 years at the back half of last year. And this was starting to end because of the green shoots that we talked about earlier.

14:41But the instability that's now being created has reopened or extended this window. And that's how you should be thinking right now. It's about deciding that, you know what, the world's not great. Am I going to be punished by that not being great? Or is there a different way of acting? Is there a more sensible, switched on way, less emotional way to navigate through this? Why would you pause if you knew these windows would exist? In fact, it should be the opposite of pausing. It should be aggressively moving because as we've demonstrated, these windows do not last for very long at all. I want to be really clear.

15:21Things like war are horrible and this is not you acting in some weird evil way. It's just understanding that the markets are acting in a weird way. They're being distracted by the noise. You're taking advantage of the market's nervousness, not what's happening in the world. If the market is nervous, that's built up by irrational behavior, by people operating in those markets. So that is your opportunity. It's the nervous market that you are taking advantage of. You didn't create that nervousness. You just blocked out the noise and were able to make stronger investments off the back of it. But it leads back, Rob, to an important question, and we shouldn't ignore it, that mortgage rates recently, in the last week or two, very, very recently, have ticked up a bit.

16:10Not like doubled or, you know, even gone up by 20%, but they have gone up a bit compared to where they were a couple of weeks ago. And I think we do need to acknowledge that because while there's really great buying opportunities for investors right now, we can't ignore that the mortgage market has moved. It has. And when it moves as abruptly as it has done over the last couple of weeks, that's always going to cause some people issues if they were just at the point of arranging a deal, and then that deal gets pulled. And that has been happening. So if you are in the middle of a transaction at the moment then you need to be leaning on your broker and using their knowledge to get you the best deal possible.

16:46As we said a lot of the increase is due to this volatility. Lenders are finding it really hard to know what to do so chances are rates will come back down somewhat relatively soon as things start to settle and lenders know where they stand. Then if that is the case then you might find that your chosen product actually gets cheaper while you're going through all the legal process and if that happens normally they'll honour the lower rate so you might end up getting a bonus, getting a better rate than you thought. But let's say that doesn't happen. Let's say rates permanently reset half a percent higher than they were, and it takes longer than expected for interest rates to fall again.

17:18My question would be, how much does that matter to the investments you're making? Half a percent really shouldn't be enough to sway the investment case. You should still be making a profit, just a little bit less of a profit. And as we've said repeatedly, that's not where you make your money anyway. Where you make your money is capital growth over the long term plus any discount you secure at the point of going in and as we've just been talking about through this whole episode you can do better discounts when the market is uncertain so if you play your cards right the size of that discount will way outweigh any extra interest that you're paying for the first couple of years so to make it real say that you get an extra five percent off a 200 000 pound house that's saving you 10 000 pound but then let's also say that you end up paying half a percent extra interest than you were planning to well on 150 000 pound mortgage on that that would be£750.

18:06So maybe you end up paying that extra for two years before things settle down again. Well, that's£1 ,500 against a saving of£10 ,000. So when you put it like that, it really casts things in a different light. And like I said, that investment that I made back in the mini budget chaos, my interest rate was and still is really bad. Far worse than the interest rates that you could go and pick up today, even with everything that's going on. But still, I'm making a profit. I got a great deal and I'm nowhere near thinking about selling that property and when I do I'm sure I'll do really well and I will not be thinking about that mortgage rate for the first five years at all.

18:38What hopefully we've got across here is this isn't just a lesson for now this is a lesson for life. When there's instability there's opportunity and instability can be caused in so many different ways and it's not just opportunity in the UK market as we've said there's the opportunity in many markets when this happens. Some of the best investments we've both ever made have been at the most uncertain times. And it's that upside that can really accelerate your portfolio. So whether you're in the market right now or not, maybe you're saving for your next investment. Remember, when these events occur, they offer a window.

19:19The window will be brief, but when that window opens, you can exaggerate your returns by an incredible amount. the world is a weird place and unfortunately these world events will continue to happen it's absolutely inevitable just look at what's happened over the last 10 years but when we look over the last 10 years and we look at those huge events it's also created the best buying opportunities in the last 10 years as well the two go together so use this lesson for life use this lesson as an investor Warren Buffett doesn't buy when the market's buoyant. He buys when things are underpriced and unloved.

19:58And you want to buy unloved assets as well. And at the moment, UK property market is an unloved asset. But the fundamentals do not agree. The fundamentals are very, very different to the sentiment. And when that occurs, it creates an incredible opportunity. So do not sleep on this if you're active right now. And take this lesson if you're not quite ready right now and use it in the future. These windows are rare, but they create a unique investment opportunity. Okay, time for Hub Extra now. That part of the show where we bring you a little bit more before we close. And this has become, over the last year or so, the AI section of the show unofficially because we just keep talking about AI every time.

20:44But the reason for that is if you're looking to upgrade your life, your work, whatever you do, then AI is the way to do that at the moment because the things you can do and the pace at which it's changing is just unbelievable there are things that are possible today that can make a huge difference to your job your work life your productivity that literally were not possible six weeks ago there are some things that were even possible three days ago there are some things we can talk about today Rob they'll be out of date by the time this episode comes out in a few days it's absolutely wild and I know that you in particular are on a bit of a rocket ship with this at the moment uh i'm obsessed i think everybody should be getting obsessed i fear for you if you're not because rob this is probably about the third or fourth time you've heard me say this analogy but i feel like i can see the matrix and i'm walking around the world with people who can't for those who are adopters of this and ingrained in this and using this you're not giving yourself a mild advantage against everyone else in the workplace you're giving yourself a gigantic advantage.

21:41The difference is huge. The majority of my day now seems to be spent in Claude. I get up excited about working with Claude each and every day. What I'd encourage you to do is, one, start using Claude every day because it will learn more and more about you. I would use it for work, investing, business, something that's likely to have you using it day in day out. I wouldn't use it as a glorified search engine. I think ChatGPT and Gemini are probably even better for that anyway. But what I would do is use it as a day-to-day companion for your big goals, your big projects, whatever is important to you.

22:21And then just ask yourself, what could I do if anything was possible? And what I mean by that is, what could I connect Claude too, because you can connect Claude to an awful lot. So you could connect it to your emails, for example, your calendar, or the websites. There's lots that you can do. Not everything is possible, but more than most people realise and understand. And then, if you had those things connected, what type of reports would you want or information sent to you? When would you like it? don't be limited by what you think is possible because the chances are you are the limitation not the ai when you want to do something it's nearly always possible that's how far things have come on in the last few weeks and months what it was was something better than google what it is now is something that can seriously upgrade your world and your life it sounds big and dramatic but I promise you things have changed and what's happened with Claude for me is bigger than when the iPhone was released.

23:30I'd argue that it's bigger than the internet. This is up there with electricity in the wheel. That's how big I think this is right now. They are very big bold claims but the point in my provocative statement is to be provocative, to push you into action. the only limitation right now is your imagination your ideas they are the valuable things right now in this world are the ideas and the creativity and the great thing is ai can help enhance those even further as well but when you have those ideas you have that creativity and then you work through a platform like claude so much more is possible right now yeah you mentioned seeing the matrix rob the way i think about it rob is you've just got like this country lane with traffic crawling along of like 99 % of people doing things the same way and then 1 % of people just like to take this slip road and they find that there's a motorway there and they go speeding off and the difference in where they end up over a period of time just keeps getting bigger and bigger and bigger and that's why this is not just something we're dabbling with it's not just something we're obsessed with but it's something that we are obsessed with embedding into our business so if you're obsessed with this kind of thing too then we should have a chat so if you go to propertyhub.net slash jobs you'll find some jobs listed there but there are also roles we're creating that are not on there.

24:44You will, though, on that page, find an email address. So if you are similarly obsessed, if you're watching countless YouTube videos, if you're bookmarking threads and articles on X, if you're up into the early hours experimenting with this stuff, and if you're frustrated that you can't make more use of this in what you're doing now, maybe you're in an environment that's not so open to it, then get in touch. Go to propertyhub.net slash jobs, find the email address, send us a note with a CV, and more importantly, what it is that you've been working on recently and what you're excited about, and we can have a chat from there.

25:11Well, there's a light episode for you this week we've talked about world events the iran war we mixed in a bit of brexit and then we ended up with telling you the world has completely changed with ai and it's bigger than the invention of the internet so join us next week for more light-hearted topics and we will be back on tuesday with ask rob and rob you'll see us in the sunday times answering more of your questions there but until those wonderful events take place do take care and do have fun bye Bye-bye. Bye-bye.