Happy new year, everyone. I'm Rob B with Rob D. You are listening to Property Podcast. It's 2025. We bring you another year of amazing podcast. Well, that's our intention anyway. And this one is going to get your year set right because we are going to remind you why property investment is so special. It does not matter if you're a newbie. It does not matter if you're an expert. In this episode, you are absolutely going to get something out of it.
Yes, welcome back to another year of the property podcast. In case you don't know by now, we run a business that buys more than 100 million pounds worth of property every year. You can find out about that at propertyhub.net slash invest. And this is the show where we bring you some of what we've learned along the way. The year is getting off to a heck of a start because next year, my book, seven myths about money is coming out, which means this is my last chance to remind you about the bonuses that are on offer if you pre order. So if you have any interest in personal finance,
I think you're going to love this book. This is everything I've learned from the last 15 years of investing, saving, running a business. I've tried out all the normal advice. I've tried out a lot of fairly unconventional stuff. And I pulled it all together into something that I believe could make a dramatic difference to your ability to build wealth, both in property and beyond.
Now the book comes out on the 9th of January, you can get it as a hardback, as an audio book or as an e-book. But if you buy before the 9th of January and place your pre-order, then there are some exclusive bonuses that you'll be able to access. So I'll be doing an exclusive live masterclass teaching some of the concepts from the book and a Q&A, you can come along to that.
your access to the secret bonus podcast feed where some of the views that I have there were a little bit too controversial for the book found their way. So it's a bit like the director's commentary, I suppose. And also by pre-ordering, you get ended into a competition where 50 people will win a limited edition signed insert and five people will get a one-on-one call with me to talk about whatever you want.
So to find out more about the book and to get your order in before the 9th of January, when these bonuses go away, just go to 7mythsaboutmoney.com. That's 7mythsaboutmoney.com and you'll find the link in the show notes. This is now the 12th year of the podcast.
unbelievably. It's just insane to look back. But the funny thing is, we've been talking about this with great enthusiasm for 12 years. It's not been a great 12 years for property. There has been no boom. We had like a little mini boom post COVID, but this has not been like the early 2000s. This has not been boom time for property. And if you only think about how things work when we started, investing is undoubtedly harder now than it was back then. The tax situation is different. There's more regulation. It's not the kind of casual endeavor that it used to be.
But we're still here and we're arguably more enthusiastic than ever because we've seen property work first hand for ourselves and others overall this time. And because Rob there are some fundamental characteristics that mean whatever's going on, whatever the noise, whatever the reasons go on, but it's probably still a good thing. There is fundamentals that just make it work and work so well.
really well, so well that we are in the longest property cycle that we've ever been in, which is another way of saying that it's the slowest growth that we've seen in property since records began in the UK. But despite that being the case, despite COVID, Brexit, tax changes, so much has gone on in the world over the last 12 years since we've been recording.
But despite all of that, we've done well from property. And more importantly than us doing well, many, many of you have done well, thousands and thousands and thousands of you have done well. We've had the emails, we've worked directly with you. The results have been incredible. So those results have been achieved in what has been a very weak cycle.
Now, that may be a very different cycle over the next 12 years. You would expect things to improve. But even if they maintain the same, because of these fundamentals, you will do well. And these are the things that people overlook. And that's why we wanted to start the year by going over these fundamentals to remind you, if you're already an investor, why you do this? And if you haven't started investing yet, to pump you up, because these are the things that are so important. But sometimes we just don't get around to discussing them.
So let's start, and the first one is an obvious one, but it is that long term growth that property investment brings you. Over the long term, property prices come up. Even in this cycle we've just talked about, prices are significantly higher than they were 12 years ago. They may not have gone as fast as they have in previous cycles, but they have still gone up.
And over the long term, property prices do very, very well. The data shows that. And it has them so well, in fact, that it outperforms inflation over the long term. And it depends on time frame you use, but somewhere between one and a half and 2%, which doesn't sound a lot. But actually, when we talk about the next reason why we love property, it's a huge amount. And not many assets in the world continue to outperform inflation. The property in the UK does.
Yes, there are occasional crashes. But they are blips when you look at a chart over the long time and stretch it out. Those crashes don't look so scary. When you're living it, like an O8, it is scary. But then when you get to 2012, remember that? And that's the point of our property. It's a long-term game and your emotion should be long-term as well. But it is indisputable.
that property over the long term has gone up and nothing is out there at the moment that suggests that's going to change. There may be short-term blips along the way but over the long term you are investing in an asset that's going to look after you. But it's the second reason Rob. The second reason that turns it from good to incredible.
That's right, because I think people have the idea that property is this kind of super asset that goes up in price faster than anything else. But it really doesn't. Yes, it goes up. Sometimes it goes up faster than the general stock market. Sometimes it goes up slower than that. But it's not a dramatic difference. So why then do you see people who have invested in property and they've done far, far, far better than their friend who's just taking the same amount of money
put it into a tracker fund within their pension? Well, the answer is leverage, in other words, using a mortgage. Because by using a mortgage, just like you might use a mortgage on your own home to buy somewhere bigger than you could afford with just your own cash, you can do the same thing with investment properties. You end up making a bigger investment than you could with your own cash alone. And this is not something that you can safely do with other assets. You can apply leverage to other assets, but for various reasons, not a good idea.
And the effect that that has is that this leverage amplifies changes in price. So I can give you a real example of how this would have played out over the last 10 years. So 10 years ago, the average property cost 190,000 pounds. That's according to Nationwide. So if you were using a mortgage and you're borrowing 75% of that, which is kind of normal, that's sort of the level that people tend to go to.
then you might need to put in £57,000 of your own cash, which would cover a 25% deposit and your costs. So you're putting in £57,000 of your own cash and you're acquiring an asset that's worth £190,000. Fast forward to today, and that property, the average property, would now be worth £266,000.
And of course, the mortgage that you took out, assuming that you're just paying the interest, is worth the same as it was back then. Your mortgage is no higher, but the value of the property is significantly higher. The effective fact is that over those 10 years, you've more than doubled your money. So the £57,000 that you put in, you've more than doubled it, even before thinking about the rental income.
So that's pretty good. But the truly amazing thing is that it's happened over a 10 year period when property prices actually haven't quite kept up with inflation. I know it may be hard to believe. In fact, most people probably won't believe this and want to go off and check it for themselves. But it is true. Property prices haven't quite kept up with inflation over the last 10 years. Said it hasn't been a great time for property. But despite that rub, you could still double your money, just off a little bit of growth, not even dramatic growth, not even starting to think about the rent. So imagine what I could do if you had a good time for property.
Exactly. That 57,000 pounds that you've put in has turned into 76,000 pounds in growth. Now, of course, there will be some costs when you went in. But let's just say those costs took it down to another 57. That's 100% return on your investment over the 10 years. That's an amazing return. But it's not been an amazing time for property because property on average, and this is a very rough average, because again, it depends on what time period you pick.
Over the long-term property, you can say roughly doubles every 10 years. But in the last 10 years, it's gone from 190 to 266. Now, we're near doubling, not even close. But yet, you've made 100% return on your money. Now, if the next 10, 12 years bring a doubling in property prices, which is historically what happened, then that multiple doesn't give you 100 times return on your money.
It could give you 200, 300, 400 times return. And that's not if a boom market happens. That's if a normal market cycle happens. This is why we're so motivated historically in the worst cycle that we've seen in terms of property price growth, you would have achieved over 100% return in a normal market cycle.
Which could be next? That could be a 400% return. I think it's important to emphasise the point they're up. This is because you've leveraged. If you just purchased in cash 10 years ago for £190,000 then your return is significantly reduced. It's because you've leveraged. It's because you've only put a small proportion of the money in yourself.
that's allowed you to generate such an amazing return. And remember, rent has been paying your mortgage and giving you a profit as well. None of that return we've talked about includes rent. So when you're factoring rent, that total return goes up even bigger. And we're not even going to go and work out the total return because you'll stop believing it. That's the thing. You will stop believing the numbers because they'll sound too good to be true. But trust me,
If you are making 100% return, more than 100% return in the worst property cycle that we've seen since records began, then imagine what you can do just in a normal cycle. And why does this happen, Rob? Why do property prices continue to keep on going up? I think actually, if I honest, that's probably one or two episodes in itself, but there is a core reason, many more beyond it, but there is a core reason why property prices do continue to go up over the long term.
There is a big part of that reason is just the existence of inflation in general, inflation of everything. This is something we talked about extensively on the podcast in the past, but in the same way as you go back and look at property prices from 10 years ago and they look low, you could do the same with absolutely everything. There's loads I could go off into on this, but the point is if you've got a mortgage that is fixed, that's not going to go up and you've got an asset that is going to go up because everything goes up, then that is a good situation to be in.
But of course, within inflation in general, everything has its own inflation rate. And if you look at something like the price of comparable TVs over the last 10 years, the price has probably come down because technology tends to get cheaper. So why does that not happen with property? Why does property go up at least in line with inflation typically and over the long term go up by more than general inflation? Well, the answer in the UK at least is supply and demand. There is high demand for property and limited supply of property.
There's always a limited supply of property, because of course, the country is only a certain size, there's only a certain amount you can build on, and even if you went and paved over the whole countryside, supply in the locations that people really want to live is limited. Because location, as a TV show once reminded us, is very important in property.
So there's a fundamental scarcity, but there's also the fact that the UK population has consistently grown faster than the rate at which new homes are being built. One of the few constants that we've seen in our 12 odd years of doing this is that every time a new government comes in, they always come in with ambitious plans for how many houses they're going to build, and they plan that out based on need and what they think is going to be required to match the growing population.
Without exception, those targets are always missed, always, often by quite a long way. So what that means is that as time goes on, the supply of housing relative to demand just gets more and more limited. And we're focusing on like fundamental long term forces here. But if we do look to the future and what might happen to prices for a little bit, we recently reported on some population figures that imply that the supply and demand balance could become even more skewed.
Quite staggering numbers, actually. The population in the UK has increased by 900,000 in 2023 and 700,000 in 2024. That's huge numbers. In fact, that's record breaking numbers.
So the amount of people coming into the country right now and the population growth we're seeing is at record levels. And that has an obvious impact on property prices. But actually, the first place it hits is rents because a lot of people when they come to the UK,
They rent first, not all, but the majority. And they then may go on to home ownership. So there's a bit of a delay before it becomes a home ownership thing, but the supply and demand imbalance is there. But what Robert's talked about is absolutely correct, and it's been a constant for decades.
However, the rental market over the last few years has boomed because we've seen this surge in the population numbers, but there aren't enough rental homes. In fact, there's a chronic shortage. And because of that, rental growth in some years has hit double digit numbers. And this is not something that you can stop overnight, despite what politicians tell you.
It's going to take a huge seismic shift in how we operate for those numbers to reduce. And I do not see any signs of that stopping soon. So the population growth will continue. And as that continues, this rental supply and demand imbalance
will only grow, which if you are renting is not great news or if you are a property investor you can benefit from. Now some of this may sound unfair, but you know what, a lot of this is unfair. Investing in general is unfair.
But that's the point of this podcast and what we do is that if you understand the game, if you understand the rules that we operate in, you can take an unfair market to your advantage. And then hopefully you go on to educate others as well, because once you understand the rules, you can profit from it. And this is the whole point of the property podcast is to inspire you and to help you benefit from what goes on out there.
Now the great thing about rents long term, even if this does settle down, is the long term data shows that rents stay in line with inflation over the long term. So over the short term, it's been beating inflation. Even with the high inflation that we've had, rents have been higher. However, over the long term, rents at least keep in line with inflation. So as an asset, you've got an asset that outperforms inflation, and then the income that asset gives you is in line with inflation. It's like
Someone's created the dream asset. But that's what property investment over the long term is. And you'll notice we're saying something over and over again here, long term. You will get people who are emotional in the short term. Maybe you are one of those people. But over the long term, property investment is incredibly rewarding. But long term is in sexy. That's why not many people talk about it. But that's why we wanted to kick off the year talking about this because we think long term is sexy.
And when you take into account what happens long term of property prices, what happens long term of rental prices, even though in the short term it's very favorable right now, it makes property for us an unbeatable asset.
Rob, we think it's always an unbeatable asset to invest in over the long term, but in the short term, it's a great entry point right now. Because of what's gone on over the last 10, 12 years, and property prices have been kind of subdued, and in real terms, a point falling, there's a strong argument to be made that property right now because of what's gone on is in a very, very favorable position.
That's right. And at first, if you're new to this, that might sound like a really strange statement because property prices at the moment, depending on who you listen to, are either at an all-time high or are extremely close to an all-time high. And you'll also know that mortgage rates are much higher than they were a few years ago.
So you might be paying five points something percent for your mortgage rather than three points something. So why would that make this a good entry point? Well, the first thing I'd say is that prices are almost always at an all time high. Again, look beyond property. The price of most things are higher than they have been in the past because of inflation. Prices being at their highest makes headlines, but it's not actually surprising when you think about it.
Property doesn't have the week-to-week kind of volatility that you see in the stock market. The way property prices tend to work is although gradually gradually up for a long time, then they'll have a sudden correction and then they'll start going up again. As we've said though, property prices have not had a good 12 years since we started the podcast. In fact, once you correct for inflation, property prices are lower in inflation-adjusted terms than they were a decade ago. That is very unusual. So property prices, like we said, have just not been doing much over the last decade.
But rents have. Rob's just spoken about that. And over the last couple of years, in particular, rents have been absolutely booming. House prices have been doing virtually nothing. The effect of that is rents have gone up. House prices haven't. Therefore, the rental return you can make on your investment is looking better than it has done for a very long time. So our business as we go out to developers, negotiate deals,
secure a great price on a great development and put it forward to our clients. So we're always running the numbers, putting together different analyses. And when we look at the numbers of the deals that we've done over the last year or so, we're seeing better returns than we have done for years. And that is because rents have performed so strongly. So you're getting in at a point where the rental return that you can make is really strong. You've also got an asset value that's been held back by various factors and therefore there's room for that to grow.
You don't hear many people talking about this, but I really do think, Rob, that a lot of people could be looking back in the future and going, if only I'd been there in 2025, what a great year that was to get started in property. I think you're right, Rob, because all cycles have to come to an end. All boom cycles have to come to an end, but all low growth cycles have to come to an end as well. And I think it's important to acknowledge where interest rates are right now.
Over the last 12 years we've expressed concern about how low interest rates have been for the wider economy and that sounds a bit nuts right but I'll explain why because if there was a market crash when rates were low then where'd you go?
You don't have any levers left. There is no way to get out of it. The way the UK, US and others have gotten out of sticky situations has been able to drop interest rates to stimulate the economy. We're back at what is normal levels out. These aren't high interest rates that we have from the Bank of England. These are normal interest rates.
But it looks like it's very much topped out right now. And we expect them to fall gradually, nowhere near back to where they were, but gradually over the next few years. There's a bit of a secret out there right now that people aren't seeing. So that returns in UK property are pretty attractive. And we get a podcast on this later this year. But returns are better than people realize, because they assume that because rates have gone up, that returns aren't great right now. But with rates softening and rents accelerating,
It's actually happening in plain sight. Property investment returns are strong. And when returns are strong and potentially going to get stronger, what happens, what normally happens at least, is that property prices follow. Because people say, wait a minute, I can get such a great return there. I'll invest just for the return, even if I don't believe in long term growth, which obviously we, and I'm sure you do based on what we've talked about today. But.
people will go in just for the return alone. So right now it's actually pretty exciting and I think over the next 12 months it's going to get more favourable because I don't mean this is going to be something that suddenly everybody clicks on and realises.
What we try to do on the property podcast is keep you ahead of the curve, whether it's picking the right areas or seeing what's happening in the market. And what we are talking about right now is what we are seeing in the market, really strong returns, but expect them to improve across this year. And that is exciting for the longterm potential of property prices. And that's why this game is so easy, Rob, that property investment
If you stay for the long term we should do a game if it wasn't dry Jan do a game every time said long term you have to do a shot. If you stick with property over the long term it is the easiest investment to do. Yes we'll give you short term headaches we're not saying property is perfect you know you will have things go wrong that happens but
Over the long term, you won't remember those niggles. What you remember is the returns that you've made and the change it's made to your life financially. And that is the beautiful thing about property. It can change your life. One of the first episodes we ever put out on the podcast is how property can change your life. And what we've covered today
is an absolute echo of that. Property investment, if you play it safe, if you play it for the long term and take advantage of things like leverage like we discussed, it will do amazing things for you. That's right, Rob, but I'm putting myself in the shoes of someone who's listening for the first time now and thinking how crazy we might be coming across because this is not something you're going to be hearing much of elsewhere. There's not a lot of enthusiasm about property out there. You're not going to read on the front page to the papers about how great property investment is.
In fact, over the course of this year, you're going to read a lot of negative things about property because of various short term legal things that are rumbling along. But everyone always over fixates on the short term. And something else that we have seen over the long, long time now that we've been doing this is at a time when everyone else is enthusiastic about property.
are probably the worst time to get into property. We saw it long, long ago in the run up to the financial crash. If you were buying at the time when everyone else was buying and everyone was super keen on the idea of property, then okay, you probably would have done okay by now, but it's one of the worst times to be buying.
We saw a mini version of that a few years ago in 2021 in the mini boom that followed covid suddenly everyone was super keen on property and prices were going up and again anyone who bought in those years in 10 years time will be looking back being very very glad that they did but it was not one of the best times the best time to be getting started in property and the times that we get most excited about property
is when no one else is seeing it yet, when no one else is that into, because that is when the deals are there to be done. That's when the numbers going in are looking their best. And if you want a bit more of a clue, at a time when lots of people who've been in property for 20, 30 years are grumbling about how much harder it's got and are choosing now to retire and get out, at the same time as you're reading about that in the papers, what you're not reading about, unless you read the specialist business press, is that big companies are choosing now to invest billions and billions of pounds into UK property.
So I would suggest that they probably know a thing or two. If they think now is a good time, if they're not worried about property prices being high or rental reform or any of the other things that people get sidetracked by in the short term, I'd suggest that they've probably done their research and you should probably feel the same way.
So will this be your year? You know who only can answer that as you. You may let other people tell you stories to why you shouldn't build on your portfolio, or even start your portfolio. And that might be people you know, or it might be the media. There's lots out there to stop you progressing. There's loads out there. But you know what, when you get to the end of this year, when you assess what you've achieved,
If you've done well, it's down to you and if you haven't, the brutal truth is, it's down to you. If you haven't hit your goals, it's because you couldn't turn off the noise. Now, we'll try and help you this year. We're going to be that voice in your ears to remind you of what you're doing, why you're doing, and hopefully keep you on track. We'll even work with some of you through Property Hub Invest, but we want to inspire many more.
Don't let people stop you from achieving your financial dreams. There's loads of reasons why you can't do it, but they are reasons. And another word for a reason is a story. Don't listen to BS stories to why you can't do stuff. You're in control. Go for it. Good luck. Remember these reasons on why you're doing it. So when you have those tough days, you persevere and you push on. But if you do persevere and you do push on, then in 10 years time, you'll be looking back at what you've achieved.
And financially, that's going to be a beautiful thing. Good luck. Let's go. Let's and we are here to help you the whole way through the year. We're here in the podcast. We're over on YouTube. We're in the Sunday times every week. And of course, there's our free newsletter at property hub.net slash pulse. So go follow us on any of those, whichever appeals to you to make sure that you stay motivated and active throughout 2025. Thank you for listening. Have a great start to your year and we'll see you soon. Bye bye. Bye bye.
