Property prices are recovering we’re told…….at last ay!?
‘Recovering” is an estate agent term meaning increasing ludicrously and there is concern that we are developing another bubble. The government publish figures showing the average House Price/Earnings ratio for areas of England. Sorting this by the 2013 figure it looks like Kensington and Chelsea is the most expensive with average house price just over 27 times the average salary. But even Hackney is around 10 times. But don’t stop at London. Brighton and Hove is around 10 times average salary, Cambridge just over 8 and if you want to get under 4 times you will have to go and live in Hull!
I had started to come around to the idea that London is becoming like New York. Property there is very expensive, everybody knows that and they’ve just got used to it. Londoners too, will have to accept that living in shoe boxes is the new normal. However, a quick check of some stats by Forbes magazine reveals that the Median Home Price to Median Annual income in 2012 for New York overall is 5.2, about the same as Preston in England! Or about half the price of Hackney and about one sixth the price of Kensington and Chelsea.
But British property pundits regard all this as acceptable. Apparently it’s OK for someone to pay their entire salary for 11 years for somewhere to live. Or half their salary for 22 years. Or a third of their salary for 33 years. And so on. Either this bubble must burst or we are selling our kids into indentured servitude. Nominally our kids will be free citizens (able to pay taxes, die in wars etc) but if they stop working for more than a few days then they’ll be homeless.
The word is that much of the cause of the high prices in London is from Johnny Foreigner who wants somewhere safe to park his money while the global economy is going sideways. Last August This Is Money reported that “foreign investors snap up 70% of all central London new build homes fuelling a surge in prices”. British business’ obsession with London and the mass immigration under New Labour can’t have helped. Luckily our politicians have woken up to the obscene prices of housing and are addressing the problem with imaginative new policies…..oh, no wait….they haven’t have they……..The FT reported today that the instability in Ukraine and the threatened sanctions are causing East European oligarchs to snap up London property. Oh well then. Our kids are screwed.
The full list can be found here. (Table 577)