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.
(Source: John D Wood & Co.)
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.
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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.
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?
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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.
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