Merryn's Blog

A warning from Blackpool about London house prices

One side effect of QE has been to prop up house prices in expensive areas while those in poorer areas decline. Just look at this chart showing the gap between price growth in Kensington and Blackpool. The only question now, says Merryn Somerset Webb, is what will close that gap?

There was much competition for best chart of the day at the MoneyWeek conference last week.

UK-Residential-Property-Sharp

(Source: John D Wood & Co.)

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

The chart shows the way in which house price growth in Blackpool and Kensington converges over time (the blue line shows Kensington prices, the grey line Blackpool prices). They often pull apart dramatically as they have recently. But so far they have always come back together.

You can make a case for prices in London being structurally higher forever thanks to globalisation and its role as a financial hub if you like. But it is hard to argue that the two lines won't move together to at least some degree from here given their history.

Advertisement
Advertisement - Article continues below

It is just a question of whether price growth in Kensington falls or price growth in Blackpool rises. I know which we think is most likely. You?

Advertisement

Recommended

Visit/investments/property/house-prices/600638/uk-house-prices-may-be-heading-for-a-boris-bounce
House prices

UK house prices may be heading for a Boris bounce

The latest survey of estate agents and surveyors from the Royal Institution of Chartered Surveyors is "unambiguously positive" – suggesting house pric…
16 Jan 2020
Visit/520591/are-uk-house-prices-really-on-the-rebound
Property

Are UK house prices really on the rebound?

The latest house price data from the Office for National Statistics paint a picture of a housing market that is showing signs of rallying. That's not …
15 Jan 2020
Visit/519165/have-uk-house-prices-turned-the-corner
House prices

Have UK house prices turned the corner?

The average price of a house in the UK rose by 0.8% on the year in November, the fastest pace since April.
5 Dec 2019
Visit/518950/house-prices-are-still-far-too-high-but-things-are-improving-slowly
House prices

House prices are still far too high – but things are improving slowly

UK house prices crept higher in November, with the strongest growth since April. But the drift towards greater affordability in Britain’s most dangero…
29 Nov 2019

Most Popular

Visit/investments/stockmarkets/600878/coronavirus-pandemic-financial-markets
Stockmarkets

A global coronavirus pandemic seems inevitable – are markets still too complacent?

Coronavirus is going global. It’s only a matter of time before it’s classed as a pandemic. John Stepek looks at the markets’ reaction, and explains ho…
24 Feb 2020
Visit/investments/property/buy-to-let/600849/come-back-buy-to-letters-all-is-forgiven
Buy to let

Come back buy-to-letters, all is forgiven

The government is winning its war against small private buy-to-let landlords. But who benefits?
23 Feb 2020
Visit/personal-finance/pensions/pension-tax/600877/why-it-makes-sense-to-scrap-higher-rate-pensions-tax
Pension tax

Why it makes sense to scrap higher-rate pensions tax relief

The point of pensions tax relief is to keep you out of the means-tested benefits system. The current system is ridiculously generous, says Merryn Some…
24 Feb 2020
Visit/investments/commodities/600729/the-rare-earth-metal-that-wont-be-a-secret-for-long
Sponsored

The rare earth metal that won't be a secret for long

SPONSORED CONTENT – You can’t keep a good thing hidden forever; now is the time to consider Pensana Rare Earths and the rare earth metals NdPr.
31 Jan 2020