Kwarteng’s Masterplan for the Property Market

Thank goodness I sold all my dollars at the start of the year.

Oh! Hold on, that’s not good.

Sterling is at $1.07 as I write and was lower.

Ha! Don’t worry I didn’t sell my dollars/dollar denominated assets, but obviously it is the talk of the town. The general consensus is that the tag team of Truss and Kwarteng are sinking the UK into a pit of debt quicksand from which we will never escape.

So, what is their plan? Well, it seems to go something like this:

Target = Win the next election

Strategy = Buy votes (and growth) at all costs

Tactics = Make people feel richer by a) slashing taxes b) boosting house prices and c) making it easier to access debt

Frankly, they are far from the first politicians to come up with this plan and they won’t be the last. Nevertheless, markets don’t like to be surprised and are signalling that they are unamused.

But our intrepid duo are unlikely to be shaken from their course. Indeed, they have made it very clear that there is more stimulus to come and they have been quite clever: by giving tax breaks to the rich now, they know that most of the anger will have dissipated by the time of the next election. However, it means that they can shower cash on the “swing voters” nearer the next election to shore up votes.

Of course, the argument against this is that interest rates will go through the roof and that we will have an epic recession before they see any growth/make it to the election. Except history suggests that any recession will be very mild and short-lived.

Meanwhile, what they are doing almost guarantees higher property prices, especially in London where “dollar buyers” are rubbing their hands at the recent discount that they have been handed (I have received several calls from dollar buyers wanting my help just in the last 24 hours).

By the way, weaker GBP will not be the main driver of property prices. There are other stronger forces at play – stronger even than interest rates (at this stage of the cycle).

This is not to say that there won’t be a property crash. There always is in every cycle, but it will just be later than the pundits expect, and prices will have surged between now and then.

I know you are probably thinking that I am living in cloud cuckoo land and that property prices in the next few months will come crashing down. And I certainly can’t guarantee that they won’t. But can you or anyone else guarantee that they will?

And how much of the history of the UK property market have mainstream commentators studied? Because if you look at the predictions of the so-called “experts” who have been forecasting collapsing prices for goodness knows how long, citing various different reasons – none of which were right – then is it possible that conventional wisdom will prove to be wrong once again because they are looking at the wrong indicators? The very same indicators they used when they insisted the boom of 2002-2007 wasn’t possible and then failed to predict 2008/the biggest financial disaster since 1929!!!

I will go into this in more detail in my next Prime London Property Letter which is coming out soon.

In the meantime, if you are planning to acquire a property you must still be selective and ensure that you follow our “best in breed” strategy. I recently published a report called The Six Worst Purchases of 2022 so far, which highlights some of the expensive mistakes buyers have made. Please don’t fall into the same traps.

If you would like a copy of the report, simply email [email protected] or call 02034578855 (+442034578855 from outside the UK).