What will property investment look like in 10 years?

0:02Hey everyone, it's Rob B here with Rob D and you are listening to the Property Podcast and this week we're making predictions for the next 10 years in property. Now some of these predictions are safe, I admit that, some are pretty bold and then by the end of the podcast we start to predict property prices, where they'll be in 10 years and probably make our boldest claims of all. Will you agree? Let's see.

0:30Welcome to The Property Podcast. Thank you for joining us. In case you don't know, we run a company that buys more than£100 million worth of property for our clients every year. You can find out about that at propertyhub.net slash invest. And while we're normally very focused on today's deals and what the market is doing right now, sometimes it's good to look forward. So stick around because as Rob said, there are some bold predictions coming up. It's time for our new story of the week. And this week, we're bringing you insider information. So a few weeks ago, we did an episode called Industry Insiders, where we gave you behind the scenes of what is really happening in the market.

1:04And you love those episodes. So we wanted to bring you more. And actually, I think this is the biggest story of them all in recent times anyway, Rob, is that the deals that are being done right now are the best in over a decade. So what I mean by that is we have another business that we don't talk about that often called Property Hub Invest. And it's there for you to look at if you're interested go to propertyhub.net forward slash invest but what we do there is brilliant deals for our investors and at the moment they really are brilliant and it's not just because we're doing better than normal you know we've upped our efforts we're always working hard it's the market the market is allowing us to do better deals than we've done for many years and rob we went back through the data and looked at our average discount level we've been able to achieve over the last few years and then the sort of discount levels we've achieved recently and they are very very different numbers yeah it's really striking so in 2022 the average discount that we achieved was eight percent and 2022 the majority of that year pretty hot market dropped off a bit for the last quarter but generally hot market therefore it was hard for us to push a bigger discount 2023 and 2024 quieter years for the market right therefore we managed to increase our average discount to 10%.

2:23This year, the number's been trending even higher. But the really incredible thing is this window that we've had recently. Over the past quarter, our average discount has been nearly 13%. And our biggest discount has been 17%, which obviously is just crazy. The last time we saw discounts anything like that level was literally 10 years ago. And when we're doing those deals 10 years ago, the quality of the stock wasn't as strong we're now achieving these kinds of discounts on really incredible super prime stock the point of sharing this is to say that if we are achieving this if we are doing particularly well at the moment then whoever's listening whatever they're going after whatever type of deals they are might not be the same as what we're doing but this is across the market if we're doing better than usual everyone should be able to be better than usual so the first part of this public service announcement is now is the time to push really hard you have the power so use it.

3:14And the second part of it, Rob, is we don't believe this is going to last for much longer. No, we don't. And in fact, we can see that window closing already. The discount is trending back down for deals that we're working on right now, moving into next year. And why? Because there's more optimism in the market with developers. I'm not saying it's suddenly back down to 8%, but there's been a shift recently where developers are just feeling that little bit more confident than they were. Now, you have to realize that they were feeling terrible. The market felt terrible, and that's why we've been able to achieve these record level discounts.

3:48So don't just take this as, oh, wow, I could do a great deal. I'll make sure I'll get onto that next year. Take this as, do this now. This window is shutting. This opportunity, a once in a decade opportunity is here right now and it's going to be closing. We can see it already happening. That's why we share this stuff to get you ahead. And this isn't an advert for Property Hub Invest. Of course, you can contact us if you want, but it's about you doing your deals wherever you are in whatever market you operate and pushing harder than you've ever pushed before right now. Because we believe, because we are doing it, that the best deals for a decade are being done right now.

4:29So take action. if you have no idea what you're doing give us a call if you have an idea of what you're doing put an offer in make it aggressive don't wait this is an opportunity for now this is not a moment for the procrastinators this is a moment for the action takers but sometimes at this time of year we know people get sleepy so we're waking you up to say don't write your year off yet in fact do your best work of the year right now and when you've done it send us a message let us know If you take advantage of this advice that we're giving you, this unique insight that we get into the market that just isn't shared elsewhere.

5:04Well, we're giving you that power now. Go and use it. Good luck. We've been putting out this podcast every week for over 10 years. And over that 10 years, we've seen an enormous amount of change. But we've been thinking, what's the property market going to look like in another 10 years? There are so many trends that it feels like we're just at the beginning of, and so much technology that's potentially going to completely disrupt how property and everything works. So today, we're going to look forward to 2035. We're going to cover the trends that we think were at the beginning of now that we're going to accelerate.

5:35We're going to make some slightly wilder, more out there predictions. I'm going to look at overall what the property market might look like in 10 years time. And the great news, Rob, someone's going to have to be really committed if they want to come back and prove us wrong and say, ha, you completely missed this. Well, great. That means you had to listen for 10 years. So to win for us anyway. Yeah, that's our whole strategy of this episode to keep you listening for another 10 years. But hopefully the content is so good today that you want to. Right, so let's start, Rob. Let's start with the more obvious stuff.

6:02The stuff that no one's going to give us an award for, but we should cover because these are important trends. This is where the market is moving. So let's cover off some of the things that I think most of our listeners would certainly be in agreement with. And the first one on the list is that limited companies will become the norm. They are the norm now for new buyers with buy-to-let. The vast majority of new buy-to-lets are done through a limited company. But as a percentage overall, it's still the minority, which may surprise many podcast listeners. It actually surprised me when I realized how far it still had to go.

6:35But that will change in the next 10 years, and it will become the dominant method of owning property in the UK. And Rob, that's very much driven by the government and how they've treated landlords, particularly legacy landlords. we recently recorded an episode on the death of legacy landlords if you've not listened to that make sure you do because it goes into this in a bit more depth but rob the trend train on this one is not slowing down and this will just become the norm yeah and i think this is obvious to people who are listening probably not to the public at large but we've seen how this has already moved and i think as well as the tax the legislation that's forcing things in that direction cultural memory will become a part of it as well you end up with cultural views being formed about things based on how things were at a point in time.

7:15So because we had such a huge boom in the early 2000s, you've ended up having this belief that, oh, property's great, it's always a win, can't go wrong. And I feel like that's persisted for a long time. But going from where we are now, another 10 years of it, then I think you might end up in a situation where almost the dominant cultural view is that having a property, doing the classic thing of moving in together and keeping your old home, or you inherit a property and you keep renting it out, that might just become accepted that that doesn't work anymore. And this reality that we see us in the very early stages of moving towards, where you don't have accidental landlords anymore, where you have property investors who do things a certain way and they achieve a certain type of scale, I think it might just take root as being normal.

7:55And we said that these are the safe and obvious ones, Rob, but I think I've actually taken it into something which is a bit more controversial, which is that maybe in 10 years, the UK would have slightly relaxed its property obsession a bit. Well, not with us, at least anyway, and our listeners, but maybe. I think that's already occurred. I don't feel there's a mania around property, far from it. There's a general interest, but that mass enthusiasm for property has certainly disappeared and weakened over time. Even if you look at the programs on TV, that's always a great indicator. There are some property programs still out there, but nowhere near as many as there used to be.

8:29And it doesn't feel like there's a huge influx at the moment either. So I think that's actually happened. Something else that will become the norm is renting. It's still not quite there. It's on its way to becoming a normal thing to do, and I mean renting for the long term, but it's still not there yet. And that's partly because some of the rights for tenants aren't strong enough, and that's been addressed and changed. And with those changes, which are coming and will continue to come, and that's one of our other predictions as well, is stronger rights for tenants, there'll be a normalisation around renting.

9:01It won't be seen as something you do if you can't buy. It's a choice, a choice that people will make over buying. And some people will always choose buying and that's absolutely fine, but it won't be just because you can't buy. And there is plenty of people who rent at the moment who have the ability to buy, but they're the outliers. They're not the norm, but I think it will become the norm. Some people just go, you know what? It's not for me. And I'm okay with that because renting now is really attractive. Not only are my rights really strong, but also the quality of what I can rent is really strong as well.

9:35And that's one of our other predictions is that the quality of stock, rental stock, will be even stronger in 10 years time. Again, it's trending this way already, but it'll be unusual to see rundown properties. The standards of rental stock across the UK will continue to improve. And Robin, that's partly driven by our next prediction, which is build to rent will become a meaningful player. Because we talk a lot about build to rent on this podcast. But again, some people may be surprised to hear that it just makes up a small fraction of the overall rental stock in the UK at the moment. But we expect that percentage to grow over the next 10 years.

10:12Yeah, I think it's something like 1%, if that, at the moment. It's really not a lot, but it has grown quite quickly from literally nothing. And we've seen so much interest in it over the last few years. For a long time, pension funds and big operators had this view that it's just too fiddly having all these individual tenancies, far better to just have an office block or a shopping centre and be done with it all much neater. But I think obviously because of everything that happened over COVID, the risks of that became clear and residential property really proved itself. It proved its endurance.

10:40So as a result of that, there's a lot more interest in build to rent. We've already seen it moving out of city centres, which was originally the only place it was, into more suburban individual houses. And I do just see that increasing because, well, investment money's got to go somewhere. And if you're looking for steady inflation-linked long-term returns, it's a pretty good place to go. So like you said, Rob, that is going to be a driver of pushing standards up. It means individual landlords, my individuals still mean those who are owning companies, they will have to raise their standards to match.

11:09And that combined with the fact that there's more security around renting means that we could well have moved closer to the european model by then where yeah lots of people want to own and do own and that's fine but renting won't be the second class stopgap kind of option anymore so i think it's all pretty safe bets but there's one rob that i think is the safest bet of them all yeah this one is the easiest one if i was going to put money on any of these predictions for the future it would be this one and it's that governments will continue to miss house building targets because they they have for the longest time we've been recording this podcast for over 10 years and we've been mocking the predictions and the efforts that have transpired after those predictions when it comes to house building in the UK.

11:50The government, red, blue, or maybe different in the future, who knows, we have seen successive governments miss this target year after year after year. They set big numbers, eye-catching numbers, numbers that will please the public, impress the public. They put these numbers in their manifestos and then they quickly go quiet on them. and that is what's happened again we are miles away from hitting the current targets i can't see a world where they are going to be hit anytime soon privately they've described them as soft targets to developers anyway so they're starting to reel back on it already and that will continue that is our safest bet of all our safe bet predictions but rob let's get into the sexier stuff let's get into the less obvious the stuff that people may have not thought of who are listening to this and i'm quite excited by the first one and i see a world where this can really happen is that there's a north south divide currently i think that divide narrows i don't think it becomes aligned i think london will remain the powerhouse in the uk but for so long for so many decades london has been the ultimate powerhouse basically looking after the rest of the country economically driving everything forward bringing in international investments but we now have other cities in the midlands and the north that are really doing special things by themselves birmingham manchester leeds come to mind and those places are getting better in terms of places to live but also economic strength the infrastructure going into those areas i think hs2 a very controversial subject but i think that's a bit of a game changer when it arrives into Birmingham I think that will then make people think oh well the north is accessible it is really easy to get to and again I want to repeat I don't suddenly think that Birmingham Manchester Leeds are competitors to London but they're just not miles away like they used to be 10-20 years ago we have a nation where we have these strong hubs across the country which is a great thing I really hope it happens closer to what we see in Germany it's not just one city that rules all the wealth is distributed across many cities and I think that gap that quite significant gap that exists today will be narrowed in 10 years time I think so too I think they'll happen in all the ways that you've described and that will of course be reflected in property prices so I crunched the numbers on this for a YouTube video a while back and found that there's this ratio of prices in London and the southeast to prices in broadly the north.

14:27So London's basically always been more expensive, but how much more expensive has changed over time? It comes closer, it goes further apart, and now there is this massive divergence. By any metric you look at, value is better in the north. But because the north is already growing faster than the south, that's projected to continue for the next five years at least, then that ratio is going to come in. That gap is going to narrow, which I think is a good thing for the country. It's a good thing for anyone who's already invested in the north because they're going to keep seeing a load of growth. But it's also a good thing in 2035 for anyone who wants to invest in the south, because at the moment, it's just so screamingly obvious that you have to invest in a certain part, half of the country pretty much for the growth.

15:04But if this plays out, Rob, then London won't be the only economic centre of the country, which is a good thing. But also London and the southeast will be investable again. So it's good for people who live in the south and want to invest closer to home as well. We do like a win-win, but maybe you won't consider our next prediction a win. Maybe you might be scared of it because the robots are coming. Yes, we believe robots will be part of the house building process. And just before you start to think, oh God, they've gone nuts, robots can already contribute towards home building. And there are machines, robots that do bricklaying.

15:35Now, it's not really practical yet. And the technology is at a stage where it's certainly nowhere near mass adoption. But we believe that with the combination of AI and robotics improving over the coming years, that I actually think things like bricklaying will be done by more robots than humans in 10 years. Rob, I don't know how you feel about that prediction because that's quite a bold one, but I think it will be the norm. The efficiencies are obvious. The people challenges won't be there. AI is going to replace a lot of jobs over the next 10 years already. I think that's widely accepted and robots will do the same for some of the simpler tasks on a building site.

16:13rob have i gone a bit too far a bit too joe rogan here or you you still with me i think it's less crazy than it sounds i was actually reading an article about this the other day about humanoid robots like so basically you couldn't like operate in space and do human like physical tasks and there are essentially two problems with it it's like there's the fact that all the individual movements are quite difficult but the technology for that has come on a very long way they can move around and make very precise movements but the other hard part is the like call it the software like the reasoning and knowing what to do but also that has apparently come on a really long way recently so in the same way as you can give chat gpt an instruction and it'll kind of infer what you mean figure out the steps to take and all the rest of it robots can do the same thing so there are robots where you can now say to them tidy the room and you can do a really vague instruction and it'll know what that ultimately means and the steps it needs to take and figure it out or you can say put the groceries away and it will know what needs to go in the cupboards versus what goes in the fridge even if it's never seen those items before it can figure it out as it goes so from all those things that are happening right now, you can see how we're going to get to what you described.

17:14It's possible that 10 years isn't enough, because think about self-driving cars, right? So from when people start talking about it to when it becomes technically possible to actually being widespread, it takes a lot longer than anyone expects. So maybe in 10 years it won't be everywhere, but it'll be somewhere. It'll be possible and it'll be on its way, I think. Another thing that will be a lot more common in our opinion is VR viewings. Now, I'm not saying that that's going to replace physical viewings but there's a world where a vr viewing is normal it's not a weird sci-fi type thing to do it's something that you will do from the comfort of your home because it's easier a lot of agents now will do video calls walking around a property to show you it that is quite normal already so to take it a step further and just send you something where you can virtually move through that property i think is not a big leap i think it's something that will happen something that i i was quite excited to see rob and this is one of your predictions here which is the birth of the instant mortgage offer that sounds lovely how's that going to work but depends on everything being digitized but in theory if you think about all the steps involved in making a mortgage offer which includes getting the property valued looking into finances getting proof of address and income and all the rest of it most steps in that process could already be done way faster than they are with today's technology it's just that embedding that technology and changing the processes of how the whole industry operates is really expensive and a giant pain.

18:41So I think rather than this happening as some big bang, we'll just see incremental improvements over time. Some big lender will have to go first and actually make the investment to do this. And hopefully they'll win business as a result of doing that and everyone else will follow suit. Maybe I'm overselling it with instant, I don't know. But I'd like to think in 10 years time we can get down from the multiple months that it takes for a limited company application right now. It's insane that it takes so long now. So maybe we won't get to instant, but a couple of weeks. I don't know. Maybe I'm dreaming too big.

19:10I like it, Rob. If you're going to dream, dream big. But it's time for us to dream or make some predictions around the property market in 10 years time. What will that look like? Now, the interesting thing here is the notes we've put together have been shared so far. But where we think the property market will be in 10 years, we've deliberately left blank. So we're both coming to this with our raw opinions and thoughts. We haven't discussed it before going into this podcast. I suppose I'm at the point where I'm going to go first. Sounds like it. And I'm going to predict something that I don't think many people listening would.

19:46And I'm not sure you will either, Rob. And I think that we will have some version of a boom in property prices in the next 10 years. Now, as crazy as that may sound to some people, especially from where we are right now, you have to remember that we will have another government in the next 10 years, maybe two. There may be some bolder policies that come through. We also currently have a US president that is very bold in some of the things that he is doing, whether you like them or not, very bold in his actions, which at some point could stimulate a boom in America, which then would probably follow on to ourselves.

20:25That tends to happen. We tend to, whatever happens in America tends to be replicated over here. And I also see that currently in the property market, there's a lot more value than the sentiment. And if it continues like this for maybe another year or two, I don't think it'll even last that long. but if this negative sentiment continues for the year or two but the value keeps on improving and the yields keep improving because they are spectacular at the moment like people just aren't seeing how good the deals are in this property market right now and if you're not doing great deals you should be there's no excuse for it it's doable i can promise you we're doing it week in week out with all that value building up people are eventually going to see it and go wait a minute i get these returns in property and then it all kicks off now i'm not saying that it's going to be like 2000 to 2008 again that is a boom and a half but i do think we will have a boom and i don't think many other people would predict that but i'm just going to be a bit out there i'm going to push the boat out a bit and i'll wait for your reaction good sir what do you say to that oh this is so boring but i was going to say the same thing no you really was

21:3610 years is a long time right i think where i'd not disagree but differ gently is in the timing i think where i disagree or maybe not because you haven't exactly stated but i think i'd probably think it's going to take longer because i do think in the next 10 years we'll have a boom it's just like how long will it take will happen in the next two years seemed exceptionally unlikely next five years maybe but maybe it will take longer than that but i do think we'll get there at some point because history tells us that this happens every so often so i think the sideways market will continue for at least a couple years more but that's what's needed like i said the early 2000s was such a crazy boom if you look at the charts we're still kind of getting over that i think the reason that the last 10 years has been so slow is that the previous 10 years was so huge but eventually we will hit a point where that has fully happened and then you just need that trigger and i don't know what it's going to be but that trigger always comes it does and i agree rob i don't think it'll be in the next two years that's for sure we are approaching nearly 20 years since the last crash yeah we've got a couple years to go but it's approaching that and normally you would have expected another whole cycle to have taken place in that time frame so we haven't even begun a boom yet so maybe to us it seems logical and likely that it will occur just because it eventually markets behave that way it may just feel quite shocking to people listening that we are both taking that view i thought you may have played it safer rob because that's the easier thing to do so i commend you on the bravery as well some people would call us stupid but brave or stupid often you know they intermingle but i don't think it is as brave or as stupid as people may originally feel when they've processed what we've just said i think it's more likely to happen than not just because history tells us that.

23:26And there'll be some people immediately go, well, just because something's happened before doesn't happen again. But these are cycles. These are human behaviors. These are just things that repeat over time. Sometimes the cycles are shorter and sometimes they're longer. We had a particularly short cycle last time. So we're having a particularly long cycle this time, but it will come. And you quite rightly say, Rob, 10 years is a long time. So we have plenty of time for this to play out. And then we will see. And to the super hardcore listeners who will stick with us, hopefully for the next 10 years.

23:54They can either congratulate us or condemn us in 10 years' time when we listen back. We'll have to mark this episode, Rob, and go back and listen to ourselves in 10 years and see how we got on. Well, believe it or not, I know there are people who have been listening to this podcast from the very start, so hopefully they'll still be with us in another 10 years. Yeah, and if you're listening, Mum, thanks very much. But I think the only thing we know for sure, apart from the fact that the government will miss their housing targets, I'm pretty confident of that one, The only other thing we can say for sure is that property prices in 10 years time will be higher than they are today.

24:26And in 2035, there'll be a lot of people thinking about investing who really wish that they'd started now. Because think about everything we've been through over the last 10 years. It's been one of the worst decades of a property on record. But if you use leverage, you'll be absolutely miles ahead over that period. So imagine what having a good decade will be like. And pretty much the constant, Rob, in property is everyone wishes they'd started earlier and that's something i don't think is going to change no that trend will always continue i think you're absolutely right rob it's time for hub extra now the part of the show where we give you more and i'm going to give you an interesting one this week it's a getaway recommendation because most of our listeners are in the uk in europe and hello to you and i appreciate to those elsewhere this hub extra may not be that useful but if you do live in the uk we are then very fortunate that we have so many wonderful places that are accessible even in just a weekend and I'm going to give you one of those places because there's a non-obvious one it's not one that people often talk about but it's Cork I went to Cork recently and really enjoyed it it's a lovely city very beautiful can do it all easily in a weekend there are multiple flights out there from across the UK so it's super easy to get to you can go after work on a Friday come back Sunday evening and I think you will feel like you've done a lot of it I think coming up to christmas as well it'd make a great christmas break the irish music and some of the like traditional bars and stuff is wonderful to see and take part and i wasn't playing instruments just watching but it was absolutely brilliant so i highly recommend it now one of the things with cork is the hotels are expensive flights are cheap but hotels are expensive and known for being expensive so hopefully you are following on from our other hub extra recommendation that we made many many years ago is that you do your spends through a credit card that rewards you each and every month and clear it in full every month as well so just treat it like your debit card have the financial discipline to not overspend and clear it every month and you will quickly rack up points or if you travel a lot for work you will get hotel points and just quickly rack those up as well and you'd be surprised that places like cork and others that you can do in a weekend where you can get a hotel then for one or two nights for nothing because of just spend you would have done anyway so a bit of a dual recommendation here that make sure you're getting your rewards for the spend that you're making anyway and don't forget we live in an amazing continent with loads of places that you can easily visit in a weekend and with a bit of effort you can have a really fun weekend break so that is my hub extra a bit different to normal rob but really enjoyed it and i thought you know what i need to do more of this myself i'm going to share it on the podcast i love that that's somewhere that was not on my radar at all and now it is so thank you for sharing well that is us done for this week hope you've enjoyed our little glimpse into the future but we'll be coming back to the present and dealing with the here and now in next week's podcast so until we see you again have a great week bye-bye bye-bye