Home—Blog—A warning from Blackpool about London house prices
Jun 21, 2011, 12:01
Posted byMerryn Somerset Webb
Comments (62)
There was much competition for best chart of the day at the MoneyWeek conference last week (if you missed it, you can find out how to get hold of a recording of the whole thing here – I thoroughly recommend it).
I thought I had nailed it with my long-term chart of UK bank rates. But I mentioned one of James Ferguson’s in a blog yesterday (The truth about soaring cash sales in the housing market) and have had a number of requests for it since. So here it is:
(Source: John D Wood & Co.)
(Click on the chart for a larger version)
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.
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?
Published in Blog More articles by Merryn Somerset Webb
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By David Stevenson, May 16, 2012
By Merryn Somerset Webb, May 10, 2012
By John Stepek, May 03, 2012
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(21 June 2011, 02:07PM) Complain about this comment
Oh there's far too many nonsense charts out there to need to add one more like this! Pull out a chart of any two things and argue correlation and mean reversion. Here's a great example of a no-lose buying opportunity chart... http://bit.ly/kzYsEe
(21 June 2011, 02:09PM) Complain about this comment
Before you inflict any more of your theories on your readers perhaps you should update them on how your previous predictions have fared?How about you start with your article from September last year - http://www.moneyweek.com/blog/prime-house-prices-may-crash-harder-than-the-rest-00239Your rigged figures from an agent without a sales office in Holland Park claimed we were about to witness a double digit drop. According to Knight Frank, prime central London values have increased approx 8% since then, though by more in Kensington/Holland Park.Your latest "data" are similarly dodgy. Firstly, how was the data produced? Even on your own terms, house prices have not "always" come together, they have done so only once. I assume the initial coincidence is due to rebasing? More dodgy data, more subjective opinions and no mention of the mainstream estate agent, commentators and major investment funds all of whom predict solid growth in prime central London in the medium term.
(21 June 2011, 02:13PM) Complain about this comment
While I'm not planning to invest in UK property, the lesson of the chart is clear: Property in Kensington is generally worth far more than property in Blackpool, and increases steadily in value, except when there are extreme global events - so Kensington is the place to invest as an inflation hedge. When the price of property in Blackpool trends towards the same value as in Kensington:- look out, the world is going potty, a property bubble is forming.
(21 June 2011, 05:24PM) Complain about this comment
This chart is about house price growth, not values -- I really am failing to see the relevance apart from pointing out that for the vast majority of years Kensington is well ahead of Blackpool. Notwithstanding the huge difference in the actual prices (not just the growth).
(21 June 2011, 06:12PM) Complain about this comment
@ Colm. That last round of QE launched in the US made a colossal difference to the London economy. Bankers rewarded themselves handsomely off the back of debased currencies. And this, without a mention of .5% base rates. An interesting graph would be the professions of those who paid over £1m for a house in London in the last year. I imagine bankers would be well represented. But you are right. It is impossible to make any predictions because the central banks, with the endorsement of government, have decided who gives and who gets and are prepared to use all the power at their disposal to get the outcome they want. RIP - free market economy.
(21 June 2011, 06:52PM) Complain about this comment
@Ellen. Financal-sector workers represent about 40% of buyers in Prime Central London (PCL) according to Knight Frankhttp://www.knightfrank.co.uk/news/Average-house-prices-in-central-London-have-risen-£767-every-day-over-the-last-year-0607.aspxWe can argue as to what is the cause of the current increase in PCL property prices but they have long risen at about 10% per annum irrespective or interest rates and with or without QE. I would argue that last autumn it was clear from comments made by market participants (Knight Frank, Savills) that one could easily predict the PCL market was strengthening.The issue is that this blogger appears to misinterpret even the weakest shred of data and has no interest in relaying all the facts to readers.
(21 June 2011, 06:58PM) Complain about this comment
Its a good graph which clearly shows house price mania. Yes there main be a case for reasonable and steady growth in Kensington, but equally there is no case for Blackpool to go crazy once the daily mail and tabloids jump on the bangwagon.
(21 June 2011, 07:39PM) Complain about this comment
You could shift the Blackpool line up three notches and "prove" that property in Blackpool has been overpriced and has just come down to what it should be.Superimposing two price graphs and selecting an arbitrary point where they coincide shows absolutely nothing whatsoever.
(21 June 2011, 07:51PM) Complain about this comment
Oh dear! well I've taken the plunge and made an offer on a place in Harringay. I can afford the mortgage repayment if interest rates rise to 5% and at least I will be able to paint and put in a new kitchen. Spare room for lodgers if I need cash ...
(21 June 2011, 08:06PM) Complain about this comment
Good luck Neil. I hope it works out well for you.
(22 June 2011, 12:18AM) Complain about this comment
@ ColmI have to say it is nice to see a few others, such as Colm notice the broadbrush approach of merryn which fails to really acknowledge the very different nature of property markets around the country. No regard is made for location and sector allocation. Merryn claims property is a bad inflation hedge, and yet again this is half truths!! Sometimes property has been a very good hedge and sometimes not so bad. I feel money week and co have to stick with their ultra pessimistic view on housing simply in order to not lose face.
(22 June 2011, 12:19AM) Complain about this comment
(22 June 2011, 12:20AM) Complain about this comment
Prime property in a dynamic economy with loose capital controls will always perform better in more austeer times, whether property in the likes of Blackpool, Rotherham, Wakefield, Hull, Liverpool, Sunderland and any other declining northern conurbation will is debateable.Figuring out which location will benefit from future economic growth is what money week should focus on, not this broadbrush approach that all property is going the same way regardless of whether its located next to booming population base, transport links, growth industries, etc, etc....sometimes a little knowledge is dangerous..and while I definately don't think property is something I would be buying as an investement anytime soon, doesn't mean that you can't find the right deal with the right yield and potential. Property can be developed and changed to higher uses and you can ADD VALUE!! Wake up money week!!
(22 June 2011, 08:29AM) Complain about this comment
I doubt if lots of people from Asia, Europe etc are queuing up to buy property in Blackpool - I mean - have you been there?Apart from highly paid financial employees much of the rise in London prices is drived by overseas investors, the low £ is in their favour.
(22 June 2011, 08:40AM) Complain about this comment
While prices at the very top end may be volatile, Kensington seems to be one of those areas generally immune from sustained price falls. Somewhere on the net is a chart of London house prices during the last crash, 1989-1993. While prices in many other London boroughs fell, in Kensington prices rose 30% during that period. The same seems to be the case this time. The rate of growth may slow, but apart from blips in 1994 and 2008, that's a pretty significant upward trend over 20 years. Unlike the Blackpool graph which shows far bigger swings.House prices in London are completely crazy, but just because they ought to fall, it doesn't mean they will. People making bold, negative predictions about London house prices both here and elsewhere on the web have consistently got it wrong.
(22 June 2011, 09:05AM) Complain about this comment
Yes, a spurious conclusion: a trend derived from a single inflection in data. The inflection is real, but the trend is imaginary, and there is no justification for the statement that prices in Blackpool and Kensington "...always come back together", as "always" appears to be based on a single instance.And this was presented at a conference of economic commentators? Be careful Moneyweek -- any more garbage like this and you'll be competing with Marketoracle...
(22 June 2011, 10:09AM) Complain about this comment
I think charts like that are often very useful, an equally useful chart is one of Japanese birth rates versus temperatures at the North pole, there is a clear negative correlation between the two over the past 50 years, a smart play on this trend is to invest in Japanese air-conditioning manufacturers catering to retail homes, as the Japanese will sooner or later have to cool down their bedrooms in an attempt to get pro-creating and reverse there popultion decline.
(22 June 2011, 01:08PM) Complain about this comment
Alex that sounds like a hot tip to me. Any ideas for specific shares.Thanks in advance.
(22 June 2011, 01:16PM) Complain about this comment
Irrelavant data, yet again, from which an entirely spurious conclusion is drawn.However MW's previous blog which I mentioned above is even more alarming in its attempt to knowingly mislead.It includes the definitive and bald statement: "In the last quarter the price of a house in Kensington or Holland Park has fallen by around 18%"MW failed to provide any details on the data (no. of sales etc.) when asked, instead reverting to the respected Knight Frank Prime Central London Index which gave a 0.2% monthly fall. (Static, by any objective assessment). However MW claimed this proved her previous ramblings. MW, please reopen comments on that blog. Also correct your false and entirely misleading statements.
(22 June 2011, 01:35PM) Complain about this comment
Well said COLM
(22 June 2011, 10:42PM) Complain about this comment
Some interesting comments here. It would be good to hear what MSW says in reply. I have always respected her views and there is strong criticism here. Her response is becoming conspicuous by its absence. Perhaps she is busy and will respond soon.
(23 June 2011, 07:18AM) Complain about this comment
I superimposed the average retail price of a jar of gherkins with Apple's share price and the lines intersect in 3 occasions. It is hard to argue with the lines sometimes converging sometimes moving away from each other. I reckon that the next time they cross it signifies a strong buy opportunity for Apple, or for gherkins, I am not sure yet but I'll make sure to read this blog to learn more useful investment tips.
(23 June 2011, 08:25AM) Complain about this comment
It would be quite a fun ( if nerdy ) excercise to setup a whole website devoted to spurious statistical correlations and charts. Along the lines of the lines of the excellent 'Bad Science' website which does a great job of consistently ridiculing the way that statistics are manipulated in order to mislead.
(23 June 2011, 12:16PM) Complain about this comment
I'm not sure there is any relevance in this article. To make it relevant, you have to consider the economic circumstances of the two regions.Knightsbridge is a high level play area for the world's richest people.Blackpool on the other hand has very poor infrastructure, few insutrial props in the region and a declined tourist position. The money simply isn't there in the region. I'd say it has been in constant decline for 30 years. If you want to draw some parallels with areas perhaps you should pick the footballing belt of cheshire to compare with Knightsbride, and not Blackpool.Also the graph shows only one occassion of convergence and a broad gap ever since. There really is little correlation highlighted in this chart and is unrepresentative of the arguments put forward in the text of the article.
(23 June 2011, 02:36PM) Complain about this comment
Just come across a very comprehensive piece of research from D&G Asset Management on the past performance of prime central London property versus other asset classes together with some projections:http://www.primelondoncapitalfund.co.uk/assets/files/Reports/DnGAM-report-PCL-residential-property-May-2011.pdfA legible and properly understood/explained version of the graph above appears on page 10.Most significantly this research (Graph 20, page 11) shows that prime central London property has given better total returns over 5, 10 and 20 years than equities or gilts as well as significantly outperforming mainstream UK residential & commercial property. While PCL property is not immume from downturns it has recovered first and fastest since 1989. (Versus UK residential & commercial property & FTSE 100). PCL property is also recovering first and fastest from the 2008 recession. I continue to await corrections to the drivel MW has previously posted.
(23 June 2011, 09:19PM) Complain about this comment
have we still not heard from merryn to any of our points?
(23 June 2011, 09:25PM) Complain about this comment
@ gamesinvestorplus the axis are'nt ever readable..this sort of thing really undermines money week and questions the credibility of it's editor's. Spurious to say the least!!
(24 June 2011, 09:41AM) Complain about this comment
The graph is taken from Land Registry and only shows the relative movements in the two areas. They each have different 'drivers'.If you want a good analysis of what happens to the Property Market in the wake of a financial collapse read www.voxeu.org and Professor Carmen Reinhart's work. She has issued a paper with her husband Professor Vincent Reinhart ("The decade after the fall"), which shows on average house prices fall 35.5% in real terms after the collapse.If you look at Land Registry and adjust for inflation using RPI it is suggesting falls in real terms of circa 24-25% in real terms over the last few years. Even if you look at central London using our indices (available at John D Wood & Co. under surveyors and publications), prime areas are starting to show price falls in real terms. If you actually want to understand the market please read our Working Papers on Deferment Rates and all the attached references. James Wyatt
(24 June 2011, 11:03AM) Complain about this comment
Hmm, I think I may cancel my subscription to this magazine.
(25 June 2011, 09:34AM) Complain about this comment
Do people actually subscribe to this?!James, Knight Frank Prime Central London Index showing annualised growth of 14.8% in the last quarter against an RPI in the last quarter of 5.3%.
(25 June 2011, 10:44AM) Complain about this comment
Ok so maybe this isn't Merryn's best article but over the last 3 years I have found MW to be insightful and perceptive in terms of the one eyed leading the blind.
(25 June 2011, 12:54PM) Complain about this comment
Surely the rises in demand in central London are attributable to large capital inflows attracted by the massive devaluation of sterling. They would dry up tomorrow if some other western country competitively reduced its taxes on residential property to the UK level, or if London houseprices continued to fall (as they have been doing, in real terms.) Cost inflation does not really worry these people (many do not live here much of the time). Even falling prices don't worry them. Only a wealth tax would alter their established behaviour.If I had a few billion, I'd certainly want to put some of it into a flat in K&C, but as a PI, it seems of academic interest, except to developers and estate agents. (Knight Frank's surveys btw are to be taken with a large pinch of salt.)
(25 June 2011, 02:48PM) Complain about this comment
Here are a few observations from a recent day trip to Blackpool.First, among the people who holiday there are families of crack addicts. I saw with my own eyes more than one family with that wasted look pushing buggies down the prom. Second, it very popular for the traditional British hen or stag do. Alcopops, fat women in tint dresses and projectile vomiting. Third, there were no Porches, Sloanes, Sheikhs or Russians.Fourth, Prince Harry was not seen falling out of a nightclub with Pippa Middleton.Fifth - it's not bloody Kensington FFS.
(25 June 2011, 02:54PM) Complain about this comment
You re-iterate the line 'if it seems to good to be true...etc' a lot and yes that is good but why is my copy of MW full of leaflets promising me avg 59pc returns. You're in league with liars. WHERE IS THE INTEGRITY IN THIS?
(25 June 2011, 04:21PM) Complain about this comment
All charts are open to interpretation and this one - like many - isn't meant to prove anything, just to suggest a thought. It also isn't about absolute house prices - just about relative prices in Blackpool and London. But it is often the case that when there is a divergence in a trend it converges again. Relative asset prices tend to remain constant over the long term. That's all! This clearly isn’t a very long-term chart so its value is as much to create debate as anything else. It seems to have done that. As for whether prime prices will now fall or not, I was obviously completely wrong in thinking they would fall this year. They haven't (although they did fall back last year). Will they now? I still think they should – they are too out of whack with historical norms not to – but they could easily continue to be held up in the short term by capital flight from parts of Europe and MENA as well as by continued falls in the pound.
(25 June 2011, 04:22PM) Complain about this comment
If you buy a London house today you are betting on global unrest, a weak pound and falling currency confidence: London prices are currently being almost entirely being set by foreign buyers. However transactions remain low – even with prices apparently at all time highs the value of total transactions in prime London remains well below it’s 2007 highs as does the actual number of transactions (nearly 4000 in 2006, well under 2000 in 2010) - and all the factors that affect the rest of the market should eventually affect the London market too. Things that rise fast on very little volume often provide fall back fast. Let’s also not forget that despite all the talk in 2008 of prime property prices being immune from a crash, they weren’t.
(25 June 2011, 04:23PM) Complain about this comment
There is also uncertainty about tax in London – the mutterings about wealth taxes isn’t going away. It is also worth remembering that the Savills data most used for “proving” that prime London prices outperform other house prices only goes back 21 years. It is therefore of only the same value as the Blackpool chart above here – as a talking point. For more on this see our house price indicators
(25 June 2011, 04:27PM) Complain about this comment
The pound sterling is a terrible numéraire. With fiat currency you don't really get deflation/disinflation as such - it's papered over.Clearly housing is in a silent decline that will leave most people completely unaware as they are deliberately distracted from value by prices. The oldest magic trick in a central bank's box.Measured in tangible commodities such as gold and silver - house prices have absolutely collapsed and are still collapsing.
(26 June 2011, 11:57PM) Complain about this comment
Merryn, Your initial article and subsequent comments contain so many misleading comments and errors that responding to each is impossible. To quote from your article, "The chart shows the way in which house price growth in Blackpool and Kensington converges over time" It proves absolutely nothing and you should have the integrity to state that you were incorrect in your assertion. Objective readers of this blog are aware of this - I would suggest that this is the reason that this article has generated such a response. Prime Central London property price did not fall last year, they rose by 5 - 8% depending on the survey.Transaction values are back to pre-2007 norms, please see reference in post 25, unreferenced or unsupported opinions are of no value.Can you please either correct the nonsense in the blog "Prime house prices may fall harder than the rest" or reopen comments so that the many disingenuous statements may be discussed.
(27 June 2011, 12:26AM) Complain about this comment
More disingenuous nonsense in Merryn's reply (Post 36)In the UK and global boom early 2000's - 2007, Prime Central London property prices increased massively - (Ref. Post 25) Merryn now appears to be suggesting that PCL property prices will only increase while there is global turmoil. They did rather well in the global boom Merryn.
(27 June 2011, 12:28AM) Complain about this comment
Merryn's response (Post 36) includes the statement "London prices are currently being almost entirely being set by foreign buyers" (sic).The majority of the more expensive properties – between £2,000 and £2,500 per square foot – are going to UK buyers:http://www.thebuyingsolution.co.uk/news-and-press-coverage/Another quote states: "Things that rise fast on very little volume often provide fall back fast" (sic). Prime Central London prices have recovered first and fastest from the last three downturns. (Ref. Post 25) In summation, Merryn's responses to multiple comments questioning her sources and objectivity have not in any way been treated in a professional manner. Your readers/subscribers deserve better than this deliberately misleading and wholly one-sided view.
(27 June 2011, 12:42AM) Complain about this comment
I think we are all right to some degree, it is just a matter of timing, personal observation, perception, and attitude to risk. It is true that using unsubstantiated stats is unwise, but we all tend to accept the stats which support our view, rather than view with a truly open mind and being prepared to modify our views.I reckon Merryn is right on average, but pockets of the country will always enjoy above average performance for local reasons. These include overall historic / desirability but also due to gentrification and local infrastructure improvement. Parts of London will always be popular due to City and overseas buyers who don't need mortgages and are thus insulated from the ups and downs of our economy.I started Buy to Let in 1998, adding one a year until 2004 when yields fell below my cutoff and thus the risk went over my threshold. I sold one in 2006 for £200k, they sell for £180k now.Was I clever, lucky or stupid ? We won't know yet until . . . when ?
(27 June 2011, 12:53AM) Complain about this comment
Anything which booms or busts on small volumes has to be viewed with care . . . see daily instances on the stock and commodity markets !What is the right price for a property ? Most say what someone is prepared to pay on the day !General "Supply and demand" play a part, but supply of money is key. If here is little available money / credit in the UK due to a banking or economic crisis, on average, prices will fall. However, some areas, notably central London, will be somewhat immune as their HNW buyers, foreign or not, don't always need mortgages.
(27 June 2011, 07:44AM) Complain about this comment
Merryn,You have misread the graph in my reference which appears to be the basis of your comment on total PCL transactions.In 2006 the total number if transactions was just over 2500, not "nearly 3000" and in 2010 the transaction level was just under 2500, not "well under 2000" (Ref 25, page 4)Total transactions in Q1, 2011 annualised are significantly greater than even in 2007. I assume that you can read a graph so can only suggest that this is yet another attempt to mislead.
(27 June 2011, 07:47AM) Complain about this comment
Reference for 2011 transaction volumes:http://www.beauchamp.co.uk/pdfs/Beauchamp%20April%202011%20AZ%2009%2005%2011.pdf
(27 June 2011, 09:51AM) Complain about this comment
In terms of volumes if you look at the Land Registry data volumes are down around 55% from the peak for Kensington and Chelsea. The first quarter of this year had a large number of transactions pushed into February/March as people decided to buy ahead of the 5% stamp duty introduction.The top end of the market is very sensitive and our indices, independently compiled by the LSE, use actual transactional data and shows deep falls in 2008 (from mid 2008 for the very top end as oil fell and Russia closed its stockmarket). The market has regained the previous peak according to our indices and backed up by the Land Registry. However, you need to look at the 'real' movement by adjusting for inflation.Whilst many of the buyers are international, many of the sellers are as well. James
(27 June 2011, 11:36AM) Complain about this comment
James, PCL growth running at approx three times RPI in last quarter. In the 26 months to May 2011 PCL growth of 33%, cumulative RPI approx 10% over same period.
(27 June 2011, 01:29PM) Complain about this comment
One of the main worries for buyers at the moment has got to be tax. How far can PCL prices rise before the wider democracy decides to take a larger cut. Note the fact that discussions about a mansion tax just won't go away.
(27 June 2011, 07:23PM) Complain about this comment
Merryn,A so-called wealth or mansion tax has been ruled out by the Treasury, (Sunday Times, 26th March 2011). It would be extremely regressive and unworkable.You have no foundation for any of your arguments apart from misinterpreted or blatantly misquoted references provided by other readers. This blog includes the definitive statement, "The chart shows the way in which house price growth in Blackpool and Kensington converges over time"It clearly shows nothing of the sort which you accept in a subsequent comment. This is similar to the falsehoods you published last September on this site where you stated categorically that house prices in Kensington had fallen by 18%. Can you please correct that statement, reopen comments on that blog and do your readers the courtesy of checking the validity of your statements.
(28 June 2011, 12:29AM) Complain about this comment
Merryn, James Ferguson + co. have been found out here.....they talk so much about the property market with their warning emails telling us "to get out of property"....etc, but anyone who is a professional investor in property is not a complete mug!! Many were quite well aware that the massive credit bubble was blowing a huge boom, however there plain and simple economic reasons why property goes up and how careful asset selection can generate much better returns than on most stocks. Your spiel seems to assume that brain dead numb numbs who bought their 250k city centre flat in Leeds should get out of property...do you really think anyone that naive and stupid would bother reading/be interested in a money magazine? I don'tMerryn and co/s blanket covering of property and tarnishing it with the same "its all on the way to a long decline" mantra is tired. And do you really think the mansion tax would ever get introduced? That would result in mass rioting and pillaging!!
(28 June 2011, 09:21AM) Complain about this comment
The only tax change likely in the next few years will be the reduction of the top rate of income tax back to 40%, perhaps as early as 2013:http://www.telegraph.co.uk/news/politics/georgeosborne/8441669/George-Osborne-50p-tax-rate-could-be-scrapped-by-2013.htmlThis would see the take home pay of top earners in the city increase by almost 25%.This combined with increasing global interest in the aftermath of the Olympics will drive PCL price growth in the next few years.
(28 June 2011, 09:29AM) Complain about this comment
The property market is a myriad of micro markets and even different price strata behave differently. Nationally the market is down 25-30% in real terms depending upon the index, so Merryn et al are right. But by the same token individual areas have reached new highs (foreign money, bonuses etc). We created a set of indices for central London to show how differently markets behave even within the same borough. Kensington did drop as did much of central London, but it has since climbed back (see John D Wood & Co. website). Our latest indices for Kensington and PCL will be released next week once the LSE have compiled them (they are probably the most accurate as they use exchange data adjusted by area).
(28 June 2011, 09:31AM) Complain about this comment
In terms of a 'Georgist' land tax it is unlikely in this country unless other taxes were repealed. However, in a country such as Greece where everyone seems to be avoiding tax it may be the only answer. People either register their property and pay tax or the country confiscates it and sells it on the open market. Desperate times call for desperate measures.
(28 June 2011, 06:59PM) Complain about this comment
James, This discussion is about prime central London property prices. PCL property prices have been increasing at approx 15% per annum for over 2 years. While I understand you have no data to back up your argument you may not now change the discussion to the national market and declare that you are right!
(28 June 2011, 07:03PM) Complain about this comment
Merryn is right and as always calm and measured. She will be proved right. The current scramble for PCL properties is led by the more shady money getting out of the kleptocracies of Europe before it all combusts. When their back-at-home holdings become worthless they will need to sell PCL to fund the losses. In my very much PCL street the whole dynamic of the last two years has been like watching removal vans bring in the whole board room of Dr Evil. For the foaming at the mouth BTLs clogging up this blog, get over it - the world knows where you are coming from and it is generally quite embarrassing.
(28 June 2011, 07:40PM) Complain about this comment
Alex (Or is it Merryn, your incoherence may have given you away),Merryn is unable to read a graph (which I referenced) without attempting to mislead. There is nothing calm and measured about deliberately and repeatedly misintrepreting and misquoting data.Several totally false statements have also been made and not yet corrected.
(29 June 2011, 02:29PM) Complain about this comment
Colm thank you for your comments. However, I have more than enough data to back up my opinion. If you take the time to look at the indices produced by the London School of Economics in conjunction with ourselves at John D Wood & Co. you will see an interesting picture starting to emerge. Our indices for quarter two will be released next week. The indices are not seasonally adjusted like the land registry and do not rely upon agents opinions like other agents indices, but instead use pounds per square foot at the date of exchange.
(30 June 2011, 11:23AM) Complain about this comment
Thanks for the clarification James.The breakdown of your data into areas of PCL is certainly interesting though the large month-to-month jitter (due to the smaller number of sales) makes it difficult to determine the trend over any period less than approx 6 months.However your index is also currently trending strongly upwards.I understand that the Knight Frank index is also produced from prices at exchange but uses significantly more data. I look forward to your Q2 results next week.
(30 June 2011, 11:33AM) Complain about this comment
Colm, our index shows the underlying volatility, hence the jitter. Having been an agent for many years myself, I know the market does jump and drop (stamp duty, bonuses, weather, school holidays etc) and a good index will replicate this. I was previously at Knight Frank and their methodology is the same as Savills i.e. their agents opinion on a basket of properties. Our indices have thousands of transactions from all leading agents and has been adopted by other surveyors and agents. My email is on the website should anyone wish to contact me.
(11 July 2011, 01:44PM) Complain about this comment
ColmWe are about to release our Q2 figures which do show a large upswing for PCL and Chelsea over the last few months and the last year. They should be posted on our website shortly.James
(11 July 2011, 06:22PM) Complain about this comment
James,Many thanks for the update, I will read with interest.A very interesting article was published over the weekend which you may have read:http://www.ft.com/cms/s/0/049afce0-a98e-11e0-a04a-00144feabdc0.html#axzz1RjBPzsB7In short, quarter 2 was a record in terms of number and aggregate value of sales in prime central London.Recent conversations with estate agents in Kensington and Holland Park provide further evidence that prime central London residential property is currently undergoing a fundamental re-pricing.Colm
(12 July 2011, 11:31AM) Complain about this comment
The indices are up on our website and Prime Central London hits new highs (along with Chelsea) due to the influx of foreign money. Values have risen by over 20% for both flats and houses.James Wyatt
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