The Volvo effect on house prices

Volvo's decision to go solely electric could create an opportunity for canny buyers in the housing market, says Merryn Somerset Webb.

Something's changed in the oil market: even the most stubborn of bulls are "losing their religion" and accepting that they may never again see the price back above $100 a barrel. Look at the dynamics of supply and demand and you can see why. On the supply side it's all about shale. And on the demand side, all the bulls need to look at to chuck in the towel is Volvo. The firm announced last week that it intends to stop producing petrol and diesel engines from 2019 they will all be hybrid or electric only.

This could also mark something of an inflexion point in the history of energy. While we wait to see if it does, a quick thought on what this news might prompt you to sell and to buy. For the former, think about Tesla. Earlier this year its market cap overtook those of both Ford and GM. It has fallen off, but is still "offensively overpriced" and now about to lose its "rarity value" to an efficient global brand, says Jonathan Allum of SMBC Nikko. For the latter, how about a great house on a really busy road? These sell for 20% to 40% less than those away from roads. Buy a nice foursquare Georgian rectory at the end of a pretty lane today, says buying agent Henry Pryor, and you'll pay a good 30% more for it than its twin on an A road.

That makes perfect sense at the moment busy roads are dangerous (emissions and collisions) and the noise can be miserable. But the rise of the electric car will get rid of both these problems.The danger should go the emissions will be confined to the power plant producing the electricity and the risk of accidents will fall with the concurrent rise of sensor technology. At the same time the noise will vanish. Once all that is done, the discount on houses on busy roads should all but disappear.

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One to look at might be The Manor House in Fordwich near Canterbury (on sale with Humberts). It's Grade II-listed, comes with a gorgeous garden and sits pleasingly close to the main road. Without the road it would be priced at about £1.1m. But it could be yours for a mere £895,000 (or possibly less). This is clearly a long-term bet electric cars come with lots of short-term problems (battery strength, charging infrastructure). But if, like many of our readers, you just can't be put off investing in residential property, I don't think it's a bad one. If you can, there are (as usual) other ideas aplenty in the magazine see our cover storyfor a cheap French car firm that is also beginning to turn electric.

Finally, I wanted to let you know about a change here at MoneyWeek. We have been owned by US publishing firm Agora for many years, but have just been bought by Dennis Publishing owner of The Week and The Week Junior. We are hugely grateful to Bill Bonner (owner of Agora) for supporting us in the past and we look forward enormously to working with Dennis in the future.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.