Why now is the best time ever to invest

0:00Rob Bence:If you already own a property or two and it felt like a lot more work than it should have been, then you are not alone. We've seen a lot of portfolios over the years and what we've noticed is what separates the ones that work from the ones that don't isn't the amount of effort that someone puts in. It's the core approach that they take. The people who end up doing best in property have just got a few things right from the start and they've stuck with them. We've written all of this up into a free guide. It's basically our complete investment philosophy, and you can grab it for free at propertyhub.net slash strategy.

0:31Rob Bence:That's propertyhub.net slash strategy.

0:36Rob Dix:Hey everyone, it's Robby here with Rob D, and you are listening to The Property Podcast. Today we're going to tell you something that you've not been told before. We're going to give you the reality of where the UK property market is right now. And it's a reality that nobody else is talking about but we're all living it and once you understand this moment in time once you understand what is at play you're going to be shocked that you hadn't already noticed but you're going to be excited and start thinking about how you are going to take advantage of it i promise you you're going to absolutely love this week's podcast welcome to the podcast thank you for

1:17Rob Bence:joining us. In case you don't know, we run a business that buys more than£100 million worth of property every year. You can find out more about that at propertyhub.net slash invest. And from having done this for a long time and from doing this at scale, we've got a perspective on the market that's a little bit different from everyone else. We're seeing something that, frankly, a lot of people seem to have missed. And we're going to share that with you today.

1:36Rob Dix:It's time for our new story of the week now. And Rob D for tooth and nail to make sure we talk about this subject because he lost sleep over it. He's so desperate to talk about it. Rob, what is this exciting topic that's kept you up all night about?

1:50Rob Bence:Well, look, don't pretend you're not all so excited about energy performance certificates. We have all been waiting with bated breath to find out what is going to happen around this new requirement to reach a grade C. When is it coming into effect? I can hear you scream. What is the cap going to be? Well, we can answer those questions for you. So much like rental reform, talk about EPC reform has been going on for years, as long as I can remember. And the one constant has been that deadline keeps getting pushed back. but it's happened again so previously for new tenants the deadline for having a grade c was going to be 2028 that's been pushed back to 2030 and the other good news is that the maximum that you'll need to spend on trying to achieve a grade c was going to be 15 000 pounds it's now 10 000 pounds so a couple of bits of good news there as i've said before i am convinced that the deadline is going to change again there's absolutely no way that in four years time all the work can be done to get this up to a grade C.

2:45Rob Bence:So I think either the deadline will change again, or the requirement to meet a C will be watered down because they're also relooking at the methodology at the moment. But that is where we are as of now. We will touch on this again in our market update, which is coming up next week, as well as bring you all the latest with house prices, mortgage rates, and all the stuff that we like to round up so we can tell you everything that's been happening from the last month that you need to know about as an investor. So make sure you join us for that next

3:09Rob Dix:week now i know epc certificates would probably fall under important but not exciting but this week's episode on the pod i think ticks both boxes in fact i know it ticks both boxes because this is not the first time we've talked about this but i'm still excited to talk about it today because we've not given it the full podcast treatment but today we will because i want as many people to be aware of what is happening right now because I think you're going to thank us I really do I think this is one of those moments in time that if you establish what is happening here you really understand it and then once you understand it you take advantage of it you will do incredibly well and then at that point I want you to recall this podcast this point in time when it all clicked into place for you I promise you what we're going to cover now will have you excited by the end and it will be really important as well.

4:03Rob Bence:It will because I think if you're getting your view of the world, you're getting your news from the normal sources, you'll probably have a warped view of what's been happening with property because you're always hearing how property is unaffordable, prices are out of control, all this kind of thing. People are worried that property prices are unsustainably high and if so they've got to crash. But that is based on a misunderstanding and the misunderstanding comes from the fact that we're measuring everything in pounds so you're looking at the price of property in pounds and when you look at that then yes property prices are more expensive than they've ever been before but you could say the same for your groceries you could say the same for your salary average wages are higher than they've ever been before and it's because the thing that you're measuring in men pounds is losing value and when you adjust for inflation everything is completely different and rob we'll describe this verbally but there is an amazing chart that really shows this.

4:55Rob Bence:It's from nationwide, you can go and look it up. It's real house prices, so house prices adjusted for inflation. And when you look at that, you can see that after adjusting for inflation, prices are back at 2013 levels. What that means is that house prices haven't actually grown for well over a decade. And in fact, it's been one of the worst decades, if not the worst decade in memory for property. Let that sink in, that property

5:18Rob Dix:prices when you strip back inflation are exactly the same levels as 2013. So when you remove inflation, they haven't grown for 13 years, which is very close, Rob, to when a certain podcast started as well. We've picked the perfect time to be podcasting. But this is important because you could see this as the crash. We've called this the silent property crash. We've talked about this on the podcast before. But property prices in real terms have fallen. And now affordability for property prices is the best it's been for a long, long time. Now, there will be many people saying the property market's overvalued, look at how expensive they are.

6:00Rob Dix:And I get that and I understand that. But the data is the data. You can argue with the data if you want to, but I don't like to argue with data because it's not emotional. The data shows us the affordability is the best it's been in a long time. Property prices are all the way back to 2013 levels. We'll share this chart on our social channels on the day the podcast comes out so you can see for yourself. And what you will see is a trend line of where property prices should be if they moved up steadily. And we are massively below that trend line currently, massively below. And that means we are in a unique period in time.

6:36Rob Dix:But no one's realised, no one's talking about this. No one's referencing this chart, which is freely available, that you can now go and see for yourselves on our social channel. When you understand how undervalued property is against the long-term trend, you start to think, wait a minute, is this going to last forever? Well, if you look back at the chart, it's waves. It goes up. It exaggerates over the trend line and exaggerates under the trend line. And we are what it looks like at the bottom of that exaggeration, where the property prices now are in this really interesting period in time, that we're in this really interesting cycle.

7:12Rob Dix:You could argue the worst. Yes, it may be the worst. But because it's the worst, it's also interesting. We're at a point in history that we've not been at for a long, long time, but nobody is talking about it.

7:23Rob Bence:And that's what makes it so interesting. There will come a point where everyone starts to get enthusiastic about property again, because that's how these things work. It overcorrects, it undercorrects. And there's a point where everyone goes, huh, this property thing actually is looking pretty good. So more and more people get interested, our podcast and book sale numbers start to look better, but also viewings become more competitive. It gets harder to secure a discount. But at the moment, we're not there. In fact, I cannot remember in all the years we've been podcasting, a time when people have been so down on property.

7:52Rob Bence:So if you look at people who are in property, you look at Landlord Confidence, there's a Landlord Confidence Index put out by the NRLA. It is bad. It's not at its absolute rock bottom, but it is still strongly negative. And there are reasons for that, right? People who've been in property for a long time, they've seen a lot of change, rental reforms on the horizon. So there are reasons why they feel like everything's getting harder. But outside of landlords, I can't remember a time when people have been so, not even down on property. I think so many people have just given up on property. There's just this perception that it doesn't work anymore, that the numbers don't make sense.

8:25Rob Bence:And we were talking about it last year, Rob, and it continues to be true for now at the moment that there is just this great setup but no one is paying any attention to it

8:33Rob Dix:and that's why most people missed the 2025 window because well sentiment was well probably the lowest it's been since post 08 it's really on the floor that's really interesting because it doesn't correlate with the reality because things are getting much better but because of that sentiment Nobody has noticed. And you could argue, and I think quite rightly, that a perfect storm is being created. Because what you have is you have interest rates are falling, okay? When interest rates fall, mortgage rates follow. So mortgage rates are lower now than they were 12 months ago, are lower now than they were 24 months ago, and so on.

9:15Rob Dix:They are falling down. They are trending down. The amount of products in the market is increasing all the time. That's mortgage products. so you've got a finance market that is going in your favor a borrowing market a market to use you should absolutely always use leverage we talk about it so much but you've got that in place then you've got an undersupply of property so the government have set a new homes target of 1.5 million it is not happening and it's not just us that say that your savils of research has confirmed the government will fall far short that's the to quote their words fall far short not just miss it be miles away from that target.

9:54Rob Dix:So we're not building enough homes. We also are seeing rents going up as well. So rents have calmed down. Everyone thinks our rents have settled now. They still have grown 4.4 % in the last 12 months. That's really strong growth. So you've got cheap borrowing, you've got not enough being built, you've got rents going up, and because of rents going up, your yields are improving as well. The UK average yield has now risen to 5.9%. And our deals that we've been doing at Property Hub Invest on average have been 7%. And we invest in really, really good stuff as well. But of course, we try and beat the average and that's why we delivered stronger numbers.

10:36Rob Dix:But even if you're just doing average, you're seeing better returns. So your borrowing costs are going down, not enough is being built, everyone is scared, Yields are going up. Rob, all this is happening. And again, no one is noticing this perfect storm for property investors is building, but people are still on the beach. People aren't seeing that this storm is approaching, a positive storm that no one yet is going to take advantage of. But this just can't carry on.

11:05Rob Bence:It can't carry on. That's right. So let's think about what that means. What it means is that if you see this and if you decide to buy at the moment, so you either start investing or you add to your portfolio, then it's easier now than it has been in well over a decade to go and get a discount. Over a third of all the properties on the market at the moment have already had a price reduction and the average size of that reduction is 7%. What that means is that anyone who is strongly motivated to sell their home or in the case of developers, anyone who's strongly motivated to hit their sales target will need to be agreeing discounts.

11:37Rob Bence:And that is amazing because it means that you're setting yourself up for success from the very beginning. And this is the crazy thing about market psychology. The times when everyone is really enthusiastic about investing is normally when the numbers are not so good. And then it's also becomes really, really hard to get a discount. It's very easy to get yourself sucked into a bidding war and overpay. So you're starting from a weakened position at a time like this, when actually the numbers are really good. No one's that interested, which means you can go and get yourself a discount and make the numbers look even better.

12:07Rob Bence:So it's a time when you can be starting off in a really strong position. But the great thing is, Rob, you don't have to start off now based on the hope that things are going to get better. It seems highly likely that at some point things will get better, because as we said, things undershoot and they overshoot. So you can expect the market of the future to be better than the market of today. But you don't need that. We've just had the worst decade ever. But even if we have another worst decade ever, you can still end up doing spectacularly well.

12:34Rob Dix:You really can. You just need to take advantage of the magic formula we talk about so often, which is you use leverage, you use discounts, you get yourself a deal, and you give it time. So let's just say that the next 10 years grow roughly the same as they have the last 10 years, which have been awful, which is nearly 4 % a year when you average it out. When you use leverage, and this doesn't even apply with the discount, but when you use leverage, the 10-year ROI would be 9.3 % per year. So you are growing by 4%, but because you're leveraging your ROI across the 10 years averages out at 9.3 % per year.

13:17Rob Dix:That is without rent, okay? That's without rent. And why that is important, because as we've said, rental yields have gone up and up and up at the moment. So you do not need to come to the point of view that we have, which is we are at a very unique moment in time for the UK property. You don't have to believe that. You can be negative. You can say it's going to be as bad as the last 10 years. But the great thing is, compared to 10 years ago, yields are much better now. Yields are far superior than they were 10 years ago. So because you can earn such great wealth by leveraging at 9.3 % a year, if you then add your rental return the returns become spectacular so we said it's just shy of six percent the average yield at the moment that then would put you at a 15 return each year if you buy a discount that return would go up even further and remember we're just saying it's going to be as bad as the last 10 years which have been terrible like they've been a terrible 10 years but because yields are so much better now if it just matches you're going to do insanely well But here's the thing, as you can probably tell, we don't think the last 10 years are going to be anything like the next 10 years.

14:32Rob Dix:Because money eventually will find the market. And what I mean by that is if returns continue to get stronger, finance costs continue to get lower, people who don't buy property with the belief of it going up in the long term will still be attracted to this market because they'll buy just for yield alone. the yields are starting to get so attractive that it will attract non-property people or it'll attract unemotional money people who will just go in for that return and just be grateful if they see any capital growth but when these people start coming to the market then prices will come up because so many people are getting into the market because people are excited by the yields and then what will happen is yields will diminish why because there's more competition but what is happening at the same time, prices are going up because there's an excitement about the property market again.

15:25Rob Dix:And then people start to invest because of the capital growth. So people switch off to yield, but then they're excited because capital growth could be over 10%. I know that this feels like a wild scenario, but this is what happens. People will come in for yield and then stay and then continue to be attracted for capital growth. But like I've said, you don't have to buy into our way of thinking. You don't have to agree that this is a unique moment in time, because if you just apply the magic formula and we have another bad 10 years, you'll do fabulously well just because yields are up. So the worst case looks great and the best case looks, well, we haven't even talked about those numbers because they'd be insane.

16:05Rob Dix:So this is just a phenomenal point in time. It's the first time this type of environment has existed since we started podcasting. And when you look at the numbers, it's the first time this environment has existed for decades. It's been a long time since there was such value in the market. And Rob, if that doesn't get you excited about property, I don't think anything will.

16:26Rob Bence:No, and this is the benefit of looking at things a little bit differently. Because why is no one else seeing this? Well, it's because there's so much negativity around. There are so many negative headlines. And of course, headlines are normally negative because they get more clicks. And there are reasons to be negative. But the thing is, all of those reasons mostly affect other people. If you're someone who's in property for the long term, and you're doing it deliberately, and you're doing it deliberately, and you're taking it seriously, and you're setting up the correct structure, then almost everything that the headlines are complaining about doesn't affect you.

17:02Rob Bence:So for accidental landlords, there's a lot not to like. All the rental reform is going to be a real pain, the taxes are pain, and all the rest of it. If you are what we sometimes call a legacy landlord, So you're someone who's been in the game for 20 years, you just got a couple of properties in your personal name, and you're going, oh, well, I feel like I'm not getting the growth anymore, everything's getting harder, I've got all these regulations to deal with, I'm getting taxed to death, then yeah, you're going to be feeling negative. And these are all great things to create headlines around because it gets attention and it plays into this narrative.

17:31Rob Bence:but I think that's why we've got this opportunity now Rob everyone's got that in their head they're focusing on those issues which are real issues but they're issues that don't actually affect people who are investing in property in the way that we're talking about and it's distracting everyone

17:47Rob Dix:from the opportunity that's right there and you better hope and pray they stay distracted because that's what you want this will not last this can't last because there's too much value in the market and I think yields will improve even over the next few months because borrowing costs will continue to come down and rents will continue to go up. So your ROIs will just improve. That will not last. When there's value in the market, when there's opportunity in the market, when there's just easy returns, which is what it's starting to become, then people are going to come into the market and you need to take advantage of this.

18:24Rob Dix:You don't have to work with property of invest do it yourself you can get a discount in this market you can take action by yourself of course we'd love to help you but we have so many people listen to this podcast we couldn't actually help everyone at the moment anyway because we don't have enough people in our business to do that the amount of people who listen to this podcast is crazy in a great way so use this share this help people understand what is happening because it's an incredible moment in time and I want you please please please to take advantage of this because it will not last and like I said earlier I want you to reference back to this point in time and go ah I remember when those guys on that podcast said this was an opportunity and it was the starting point of something more and I truly believe we're at that moment now okay Rob this got very excitable

19:17Rob Bence:very passionate I feel like we can't just end the podcast now it's like going to bed straight after watching an action movie you need to wind down a bit so should we have a little chat about ai

19:24Rob Dix:before we finish a sub extra you're gonna get me more excited like i'm gonna geek out on this

19:29Rob Bence:though i absolutely love it so i've not really spoken about it this year but i know that we both did a lot of messing around with ai over christmas and you've kind of got to keep messing around with it because things change all the time and the big change that i've made is that i've been using gemini a lot more a lot more in fact breaking news rob i've cancelled my chat gpt subscription wow oh man i need to sell my microsoft shares it's crazy but gemini is honestly so good there are specific features that make it good i think the canvas feature is way better the image generation is the best obviously you've got ties in with the rest of the google ecosystem but more than anything it just feels smarter and i trust it more i've been lied to by chat gpt too many times and gemini to me seems like much less agreeable it's not just saying what it thinks you want to here it's actually giving you decent information i just find it far more enjoyable to interact with so like i said things change all the time but the best today won't be the best next month so if you haven't used gemini for a while i think it's well worth going and checking it out i also will echo

20:27Rob Dix:that i'm not as far into gemini as you are rob because i feel it takes time to build it up with the knowledge it needs to understand you your needs and gemini is already showing great promise I'd already left ChatGPT behind for a while now, a while being probably a few weeks, but that's a long time in AI world. And I'd been heavily investing my time into Claude, which I'm still absolutely delighted with. So I will give a special mention to Claude. I'm flitting between Claude and Gemini at the moment. And I'm using ChatGPT as just a glorified Google search at the moment. I'll just use it for search, which is what I use the perplexity for, which I hardly ever use now.

21:05Rob Dix:so chat gpt has been downgraded just to a search engine for me i'm sure google gemini could do just as a good job but that's just my habit so i do a lot of heavy lifting for the business in claude where i get it to question me because it knows so much about the business and me now but i'm putting more and more effort into gemini because i'm seeing such promise there as well so while i'm fearful for my microsoft shares i've got more optimism with my google shares so maybe i've managed to balance that out but wherever you are currently using if you're quite heavy on chat gbt i would highly recommend for you to have a play around with google gemini and maybe claude as well because they seem far superior in many ways to chat gbt at the moment and like rob said they may catch up but at the moment for me those two are miles ahead yeah and we haven't even got into

21:53Rob Bence:claude code which is a whole other thing i've been playing with but we'll talk about that another day for now that is the end of the podcast thank you for joining us i think this has been a really important episode and I hope it's given you a useful perspective. I hope it's got you motivated to go out there and get deals done because now is the time. Like I said, we'll be back next week with Market Update rounding up everything you need to know from the last month. So we will see you then. Bye-bye. Bye-bye.