Looking for any more proof that the London property market has come very firmly off the boil? In Monday's post we noted that rents have been falling in central London (though interestingly, LCP data suggests they have been rising for very small flats).
But almost of more interest is the news that Barratt has been reduced to cutting prices at the high end by 10%, and to selling its London homes in bulk deals to investors to cope with the fall off in demand for them. By the end of December last year it has completed on 367 houses and flats. That's under half the number of completions at the end of December 2015.
And it isn't just Barratt that has noticed the huge change in the London market. In our roundtable two weeks ago, one of our participants suggested that anyone who wanted to be in the residential or commercial property markets should head for Birmingham. And that is exactly what Berkeley Homes is in the middle of doing. It has made its first shift out of the southeast in ten years and opened a division there.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
This all makes complete sense. I wrote about Birmingham a year and a half ago. I was a tad early to the party but the arguments I made then stand. It offers good value. Large firms have been moving staff and opening offices there. It's technology and manufacturing sectors are showing good growth. It is the top regional city destination for young people leaving London (it beats Bristol!). It has a can do council. And finally it has some really nice places to live both in and around the city.
If you are investing or building it is clearly a better place to be doing so that London is today. It's worth remembering as you mull this one over that cities in the UK rise and fall London hasn't always been the best of the bunch. Proof? Here's what I wrote about Birmingham in 2015. Sounds like London today doesn't it?
In the 1960s the UK had what some of the press referred to as a "Birmingham problem". The city was too big. It was creating too many jobs. Too many people lived there. And too many more people wanted to live there.
The five counties in and around Birmingham lie at the strategic heart of manufacturing Britain," said the now-defunct Statist magazine. They have the "fastest rate of population growth and the highest ratio of working population to total population in the UK...they help to underpin the whole nation's economy by their output of capital goods, their direct exports and their supplies of products and work to other regions."
Average wages were higher in Birmingham than in London. This sounds impressive. But to the government of the day the intense concentration of commerce and wealth was considered to be a very bad thing.
It caused housing problems (a study in the early 1960s suggested that more than 500,000 people needed to be "decanted" from the region to prevent overcrowding); it meant the area was always "chronically short of labour"; and it created endless rows about slum clearances, housing policy and the value of Birmingham's proposed greenbelt. So instead of nurturing Birmingham's brilliance, the UK's increasingly centralised state made it share: between 1945 and 1963 "some 200 industrial firms or projects had been steered out of the region" to "parts of Britain with labour to spare."
-
RICS: Housing market continues to strengthen but 2025 could be challengingThe latest survey by the Royal Institution of Chartered Surveyors reports a resilient UK housing market, but warns of headwinds next year
-
Bitcoin price one of the most-asked questions on Alexa - here's how to buy the cryptocurrencyAccording to figures from Amazon, which cover September 2023 to November 2024, pop star Taylor Swift and Bitcoin were named among the most popular Alexa queries of 2024
-
House prices to crash? Your house may still be making you money, but not for much longerOpinion If you’re relying on your property to fund your pension, you may have to think again. But, says Merryn Somerset Webb, if house prices start to fall there may be a silver lining.
-
Prepare your portfolio for recessionOpinion A recession is looking increasingly likely. Add in a bear market and soaring inflation, and things are going to get very complicated for investors, says Merryn Somerset Webb.
-
Investing for income? Here are six investment trusts to buy nowOpinion For many savers and investors, income is getting hard to find. But it's not impossible to find, says Merryn Somerset Webb. Here, she picks six investment trusts that are currently yielding more than 4%.
-
Stories are great – but investors should stick to realityOpinion Everybody loves a story – and investors are no exception. But it’s easy to get carried away, says Merryn Somerset Webb, and forget the underlying truth of the market.
-
Everything is collapsing at once – here’s what to do about itOpinion Equity and bond markets are crashing, while inflation destroys the value of cash. Merryn Somerset Webb looks at where investors can turn to protect their wealth.
-
Value is starting to emerge in the marketsOpinion If you are looking for long-term value in the markets, some is beginning to emerge, says Merryn Somerset Webb. Indeed, you may soon be able to buy traditionally expensive growth stocks on the cheap, too.
-
ESG investing could end up being a classic mistakeOpinion ESG investing has been embraced with enormous speed and zeal. But think long and hard before buying in, says Merryn Somerset Webb.
-
UK house prices will fall – but not for a few yearsOpinion UK house prices look out of reach for many. But the truth is that British property is surprisingly affordable, says Merryn Somerset Webb. Prices will fall at some point – but not yet.
